XML 23 R14.htm IDEA: XBRL DOCUMENT

EQUITY COMPENSATION

6 Months Ended

Jun. 30, 2021

Share-based Payment Arrangement [Abstract]

7. EQUITY COMPENSATION

The Company accounts for the issuance of equity awards to employees in accordance with ASC Topic 718, which requires that the cost resulting from all equity payment transactions be recognized in the financial statements. This pronouncement establishes fair value as the measurement objective in accounting for equity payment arrangements and requires all companies to apply a fair value based measurement method in accounting for all equity payment transactions with employees. All equity compensation is included in operating expenses for the periods as follows:

SCHEDULE OF STOCK BASED COMPENSATION


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Compensation cost recognized:
Selling, general & administrative	$	650,958	$	96,958	$	4,922,750	$	176,247
Research & development		98,402		6,752		371,625		13,505
Share-based Compensation Expense	$	749,360	$	103,710	$	5,294,375	$	189,752

Stock Options

The Company uses the Black-Scholes option pricing model to value the options on the grant date. For the awards which were modified and are no longer classified as equity awards, the Company uses the share price as of each reporting period to calculate the fair value of the options. The table below presents the weighted average expected life of the options in years. The expected life computation is based on the time to option expiration. Volatility is determined using changes in historical stock prices. The interest rate for periods within the expected life of the award is based on the U.S. Treasury yield curve in effect at the time of grant.

As discussed above, certain option awards no longer qualify as equity awards and instead are classified as liability awards. The fair values of these awards are determined at each reporting period utilizing a Black-Scholes option pricing model, and the associated compensation expense for the reporting period is recorded. The Company recorded $3,662,759 of additional compensation expense in the six months ended June 30, 2021 as a result of this award reclassification.

Stock option activity under the 2015 Stock Option Plan (the “Plan”) during the period indicated below were as follows:

SCHEDULE OF STOCK OPTION ACTIVITY

	Number of Shares Subject to Issuance			Weighted- average Exercise Price		Weighted- average Remaining Contractual Term		Aggregate Intrinsic Value

Outstanding at December 31, 2020		637,882		$	2.50		2.55 years	$	5,686,421
Granted		221,843			10.38
Exercised		(357,301	)		2.34
Outstanding at June 30, 2021		502,424		$	6.09		3.50 years	$	1,602,561

Exercisable at June 30, 2021		135,860		$	2.72		2.39 years	$	767,728

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had they all exercised their options on June 30, 2021. This amount changes based upon the fair market value of the Company’s stock.

Restricted Stock Units

The Company issues Restricted Stock Units (“RSUs”) which are equity-based instruments that may be settled in shares of common stock of the Company. During the six months ended June 30, 2021, the Company issued RSUs to its officers and certain employees and to certain directors as compensation. RSU agreements can vest immediately or with the passage of time. The vesting of all RSUs is contingent on continued board and employment services.

The compensation expense incurred by the Company for RSUs is based on the closing market price of the Company’s common stock on the date of grant and is amortized ratably on a straight-line basis over the requisite service period and charged to general and administrative expense with a corresponding increase to additional paid-in capital.

	Number of Shares			Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value

Outstanding at December 31, 2020		1,754		$	11.40	$	-
Granted		416,926			10.55
Vested and settled in shares		(8,915	)		8.97
Outstanding at June 30, 2021		409,765		$	10.59	$	11,375

Performance Stock Units

On August 7, 2020, the Company issued 265,942 Performance Stock Units (PSUs) to its officers and certain employees as compensation. For these PSU agreements, 50% vest based on the Company’s market price and 50% vest based on its Adjusted EBITDA performance metric. Both the conditions are to occur over a passage of a specified time and is contingent on continued employment services.

For the market condition, compensation expense is based on a Geometric Brownian Motion valuation model based on the closing market price of the Company’s common stock on the date of grant and is amortized ratably on a straight-line basis over the requisite period. For the performance condition, the Company reviews the probability of achieving this goal on a periodic basis. If the Company determines that it is probable that the performance criteria will be achieved, the amount of compensation cost derived for this performance metric is amortized over the anticipated service period. If these criteria are not met, no compensation cost is recognized and any previously recognized compensation cost would be reversed. For both conditions, compensation expense is charged to selling, general and administrative and research and development expense with a corresponding increase to additional paid-in capital.

SCHEDULE OF PERFORMANCE STOCK UNITS

	Number of Shares			Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value

Outstanding at December 31, 2020		265,942		$	7.91	$	-
Forfeited		(32,094	)		7.91
Outstanding at June 30, 2021		233,848		$	7.91	$	-

As of June 30, 2021, there was $5,330,023 of total unrecognized compensation cost, net of estimated forfeitures, related to all unvested stock options, RSUs and PSUs, which is expected to be recognized over a weighted average period of approximately 2.46 years.

The Company had 1,471,526 shares available for future grants under the Plan at June 30, 2021.

Warrants

All previously granted warrants were issued with an exercise price that was equal to or above the fair market value of the Company’s common stock on the date of grant. During the six months ended June 30, 2021, there were 9,000 warrants exercised at an exercise price of $2.20 per share. As of June 30, 2021, the Company had no remaining warrants available to exercise.