Share-Based Compensation

9 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Abstract]

As of September 30, 2021, the Company had 22.9 million options and 1.1 million warrants outstanding.

The Company awards common stock and stock options to employees, consultants, and directors as compensation for their services, and accounts for its stock option awards to employees, consultants, and directors pursuant to the provisions of ASC 718, Stock Compensation. For the options with market conditions, the fair value of each award is estimated on the date of grant using Monte-Carlo valuation model and recognizes the fair value of each option as compensation expense over the derived service period. For the options with performance conditions, the fair value of each award is estimated on the date of grant using Black-Scholes Merton valuation model and recognizes the fair value of each option as compensation expense over the implicit service period. For Restricted stock and option awards only with service conditions, the fair value of each option award is estimated on the date of grant using the Black-Scholes Merton valuation model. The Company recognizes the fair value of each option as compensation expense ratably using the straight-line attribution method over the service period, which is generally the vesting period.

Effective as of December 3, 2010 and amended on August 3, 2018, the Company’s Board of Directors approved the 2010 Stock Incentive Plan (“the 2010 Plan”) pursuant to which options or other similar securities may be granted. On October 22, 2020, the Company’s shareholders approved the amendment and restatement of the 2010 Plan. The maximum aggregate number of shares of common stock that may be issued under the 2010 Plan increased from 31.5 million shares to 56.8 million shares. As of September 30, 2021, options available for issuance are 16.3 million shares.

For the three months ended September 30, 2021 and 2020, total share-based payments expense was $15.2 million and $3.3 million, respectively, and $19.2 million and $8.8 million for the nine months ended September 30, 2021 and 2020, respectively.

(a)Stock Options

The following table summarizes stock option activity for the nine months ended September 30, 2021:


	Options Outstanding	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding at January 1, 2021	25,087,416	$	1.29	—	$	—
Granted	9,377,000	2.50		—	—
Exercised	(5,589,084)	1.50		—	5,588,929
Expired	(2,891,509)	1.73		—	—
Forfeited	(3,067,750)	0.63		—	—
Outstanding at September 30, 2021	22,916,073	1.77		8.48	10,518,390
Vested as of September 30, 2021	12,369,305	1.47		7.94	8,010,123
Expected to vest as of September 30, 2021	10,546,768	2.13		9.11	2,508,267

As of September 30, 2021, $19.1 million of total unrecognized compensation expense related to non-vested share options is expected to be recognized over a weighted average period of 1.6 years. The total intrinsic value of shares exercised in the nine months ended September 30, 2021 and 2020 was $5.6 million and $59,965, respectively. The total fair value of shares vested in the nine months ended September 30, 2021 and 2020 was $5.4 million and $8.8 million, respectively. Cash received from options exercised in the nine months ended September 30, 2021 and 2020 were $8.4 million and $0, respectively.

For the options with performance conditions and only with service conditions, the assumptions used to estimate the fair values of the stock options granted in the nine months ended September 30, 2021 and 2020 as follows:


	Nine Months Ended
	September 30, 2021		September 30, 2020
Expected term (in years)	4.79-7.17		5.37-5.46
Expected volatility	112.02%-129.63%		100.98%-101.55%
Expected dividend yield	—	%	—	%
Risk free interest rate	0.51%-1.1%		0.40	%

For the options with market conditions, the assumptions used to estimate the fair values of the stock options granted in the nine months ended September 30, 2021 as follows:


	Nine Months Ended September 30, 2021
Expected term (in years)	1.88
Expected volatility	106.92	%
Expected dividend yield	—	%
Risk free interest rate	1.31	%

(b)Warrants

In connection with certain of the Company’s service agreements, the Company issued warrants to service providers to purchase common stock of the Company. The weighted average exercise price was $4.00 and the weighted average remaining life was 0.9 years.


	September 30, 2021	December 31, 2020
Warrants Outstanding	Number of Warrants Outstanding and Exercisable	Number of Warrants Outstanding and Exercisable	Exercise Price		Expiration Date
Service providers	200,000	200,000	$	5.00	July 1, 2022
Service providers	700,000	700,000	2.50		February 28, 2022 - October 1, 2022
Service provider	100,000	—	7.50		January 1, 2023
Service provider	100,000	—	9.00		January 1, 2023
Total	1,100,000	900,000

(c)Restricted Shares

In July 2021, the Company granted 5.0 million restricted shares to seven employees and directors under the “2010 Plan” which was approved by the Board of Directors. The restricted shares were all vested immediately on the grant date. The aggregated grant date fair value of all those restricted shares was $12.4 million.

A summary of the unvested restricted shares is as follows:


	Shares	Weighted-average fair value
Non-vested restricted shares outstanding at January 1, 2021	—	$	—
Granted	5,025,000	2.46
Forfeited	—	—
Vested	(5,025,000)	2.46
Non-vested restricted shares outstanding at September 30, 2021	—	—

As of September 30, 2021, there was $0 of unrecognized compensation cost related to unvested restricted shares.