SHARE-BASED COMPENSATION - Note 11

12 Months Ended

Dec. 31, 2020

Disclosure Of Compensation Related Costs

Share-Based Compensation - Note 11

11. SHARE-BASED COMPENSATION

We use the straight-line attribution method to allocate the fair value of share-based compensation awards over the requisite service period for each award. The valuation of and accounting for share-based awards includes a number of complex and subjective estimates. These estimates include, but are not limited to, the future volatility of our stock price, future stock option exercise behaviors, estimated employee turnover, and award forfeiture rates.

Description of Incentive Plan

Our 2020 Incentive Plan has 17.3 million shares authorized, of which 8.1 million shares were available for awards as of December 31, 2020.

Options Valuation Methodology and Assumptions

We use the Black-Scholes option valuation model to determine the fair value of options granted and use the closing price of our common stock as the fair market value of our stock on that date.

We consider historical stock price volatilities, volatilities of similar companies and other factors in determining estimates of future volatilities.

We use historical lives, including post-termination exercise behavior, as the basis for estimating expected lives.

Risk-free rates are based on the U.S. Treasury Yield Curve, as published by the U.S. Treasury.

The following table summarizes the weighted-average valuation assumptions and weighted-average grant date fair value of options granted during the periods shown below:

		Year Ended December 31,
		2020		2019
Assumptions (weighted-average)
Volatility		111%		78%
Expected term (in years)		4.0		4.0
Risk-free rate		0.3%		1.9%
Expected dividends		0.0%		0.0%
Pre-vest forfeiture rate		8.5%		8.5%
Grant date fair value of options granted	$	1.20	$	0.37

Options Activity and Positions

The following table summarizes activity and positions with respect to options for the periods shown below (in thousands):

				Weighted-average
				remaining		Aggregate
			Weighted-average	contractual		intrinsic
Options	Shares		exercise price	term (in years)		value
Outstanding as of December 31, 2018	4,646	$	2.27	7.0	$	-
Granted	1,636		0.65	-		-
Exercised	-		-	-		-
Forfeited or expired	(1,178)		2.66	-		-
Outstanding as of December 31, 2019	5,104		1.66	7.4		122
Granted	68		1.60	-		-
Exercised	(693)		1.44	-		-
Forfeited or expired	(1,198)		2.20	-		-
Outstanding as of December 31, 2020	3,281	$	1.51	6.6	$	12,784
Vested and expected to vest as of December 31, 2020	3,193	$	1.53	6.5	$	12,379
Exercisable as of December 31, 2020	2,086	$	1.86	5.6	$	7,413

No options were exercised during the year ended December 31, 2019.

The total grant date fair value of options vested during the years ended December 31, 2020 and 2019 was $604,000 and $801,000, respectively. As of December 31, 2020, our unrecognized share-based compensation was $376,000 related to options, which we plan to amortize over the next 1.2 years.

In 2020, we issued 111,000 RSUs as new hire grants to non-executive employees. These shares were valued based on the closing price of our common stock on the dates of grant. These shares vest on the earlier of a change of control of the Company or the one-year anniversary of the grant date.

In June 2020, we issued 1.2 million RSUs to non-executive employees for retention purposes. These shares were valued based on the closing price of our common stock on the date of grant. These shares vest on the earlier of a change of control of the Company or the one-year anniversary of the grant date.

In the fourth quarter of 2019, we issued 384,751 vested RSUs to our executives in lieu of cash for payment of short-term incentive bonuses earned in 2018.

On May 22, 2019, we issued 195,000 PSUs to our executive officers. The performance criteria for PSUs issued in May 2019 is the achievement of the Company's share price of $2.50 sustained for 60 of trailing 90 days before the PSUs are earned ("Earned PSUs").  To the extent the PSUs become Earned PSUs, the PSUs shall be eligible to vest as to one-third (1/3) of the PSUs subject to the Award on the each of the first three (3) anniversaries of May 22, 2019. If there are outstanding but unearned PSUs as of a vesting date and the PSUs become Earned PSUs prior to the next vesting date the Earned PSUs that would have vested on any earlier vesting date shall become immediately vested and deliverable.  The PSUs are valued using a binomial option pricing model using the following inputs: stock price, volatility, and risk-free interest rates.

We also issued 475,000 stock options to our executives on May 22, 2019, that vest one-third on each of the first three anniversaries of May 22, 2019.

On May 19, 2020 and May 22, 2019, we issued 120,000 and 180,000 RSUs, respectively, to members of the board, vesting ownership in the RSUs on the earlier of the day prior to the date of the Company's annual meeting of shareholders following the date of grant, or one year from the grant date, provided the member of the board continues to serve as a director on the vesting date. On November 11, 2019 we issued 163,734 RSUs to the members of the board in lieu of the annual cash fee. The members of the board vest ownership in the RSUs immediately.

As of December 31, 2020, our unrecognized share-based compensation related to the RSUs was $751,000 which we plan to amortize over the next 0.5 years. As of December 31, 2020, our unrecognized share-based compensation related to the PSUs was $5,000, which we plan to amortize over the next 1.0 years.