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Stock-Based Compensation

3 Months Ended

Mar. 31, 2022

Share-Based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

NOTE 14: STOCK-BASED COMPENSATION

A summary of outstanding options is included below:

Time Vesting Options

						Weighted
						Average				Weighted								Weighted
						Remaining				Average								Average
Range of Exercise		Number				Contractual				Exercise				Options				Exercise
Prices between		Outstanding				Life				Price				Exercisable				Price
$0.01 - $3.00			1,780,000				8.74			$	2.59				628,333			$	3.44
$3.01 - $7.50			184,830				4.10			$	6.72				176,497			$	6.69
$7.51+			103,979				3.20				11.55				103,845			$	11.55
			2,068,675				7.43			$	3.51				908,675

Performance Vesting Options

						Weighted
						Average				Weighted								Weighted
						Remaining				Average								Average
Range of Exercise		Number				Contractual				Exercise				Options				Exercise
Prices between		Outstanding				Life				Price				Exercisable				Price
$0.01 - $3.00			800,000				8.18			$	2.53				266,667			$	2.53
			800,000				8.18			$	2.53				266,667

		Time Vesting Options								Performance Vesting Options
						Weighted								Weighted
						Average								Average
		Options				Exercise				Options				Exercise
Date/Activity		Outstanding				Price				Outstanding				Price
Balance, December 31, 2021			2,068,809			$	3.48				800,000			$	2.53
Granted			-				-				-				-
Exercised			-								-				-
Forfeited or expired			(134	)			160.50				-				-
Balance, March 31, 2022			1,813,809				3.48				800,000			$	2.53

The weighted average remaining contractual life for options exercisable is 7.26 years as of March 31, 2022.

Valuation Information for Stock-Based Compensation

For purposes of determining estimated fair value under FASB ASC 718-10, Stock Compensation, the Company computed the estimated fair values of stock options using the Black-Scholes model. On June 1, 2020 the Board of Directors of the Company granted 10-year options to purchase an aggregate of 2,380,000 shares of its common stock to employees of the Company. Of the 2,380,000 options awarded, 1,580,000 vest over 3 years and have an exercise price of $2.53, the market value of the Company’s common stock on the grant date. The fair value of the options on the grant date was $1.87 and was determined using the Black-Scholes model.

The remaining 800,000 options awarded vest in equal installments over a three-year period subject to satisfying the Company revenue target and earnings before interest, taxes, depreciation and amortization (“EBITDA”) target for the applicable year. In each of calendar years 2020, 2021 and 2022, one-third of the total shares may vest (if the revenue and EBITDA targets are met), and the shares that are subject to vesting each year are allocated equally to each of the revenue and EBITDA targets for such year.

These performance options include a catch-up provision, where any options that did not vest during a prior year due to the Company’s failure to meet a prior revenue or EBITDA target may vest in a subsequent vesting year if the revenue or EBITDA target, as applicable, is met in the future year. The revenue and EBITDA targets for the three years are as follows:

Calendar Year			Revenue Target		EBITDA Target
2020			$32 million		$2.2 million
2021			$35 million		$3.1 million
2022			$38 million		$3.5 million

The exercise price of the foregoing options is $2.53 per share, the closing price of the Company’s common stock on the date of issuance. The options were issued from the Company’s 2014 Stock Incentive Plan. The fair value of the options on the grant date was $1.87 and was determined using the Black-Scholes model. These values were calculated using the same weighted average assumptions as the time vesting options issued. Performance against the identified revenue and EBITDA targets will be assessed quarterly by the Company in order to determine whether any compensation expense should be recorded.

During the three months ended March 31, 2022, the Company deemed it probable that the Company would achieve both the Revenue and EBITDA targets for Calendar Year 2022 and recorded catch-up compensation expense in the Condensed Consolidated Statement of Operations with respect to these awards of $112 during the three months ended March 31, 2022, specifically related to the Revenue Target. These awards have not yet vested and are subject to actual results for the full fiscal year 2022. Should this target not be achieved, amounts recorded as expense in the Condensed Consolidated Statement of Operations would be reversed. The Company anticipates recording approximately $225 during each subsequent quarter of 2022 related to the Revenue target for Calendar Year 2020 and 2021 portion of these awards. During the three months ended March 31, 2021, the Company deemed it probable that the Company would achieve the EBITDA target for Calendar Year 2021 and recorded catch-up compensation expense in the Consolidated Statement of Operations with respect to these awards of $263 during the three months ended March 31, 2021.

Stock Compensation Expense Information

ASC 718-10, Stock Compensation, requires measurement and recognition of compensation expense for all stock-based payments including warrants, stock options, restricted stock grants and stock bonuses based on estimated fair values. Under the Amended and Restated 2006 Equity Incentive Plan, the Company reserved 1,720,000 shares for purchase by the Company’s employees and under the Amended and Restated 2006 Non-Employee Director Stock Option Plan the Company reserved 700,000 shares for purchase by the Company’s employees. There are 12,001 options outstanding under the 2006 Equity Incentive Plan.

In October 2014, the Company’s shareholders approved the 2014 Stock Incentive Plan, under which 7,390,355 shares were reserved for purchase by the Company’s employees. In August 2018, a special meeting of shareholders was held in which the shareholders voted to amend the Company’s 2014 Stock Incentive Plan to increase the reserve of shares authorized for issuance thereunder, from 7,390,355 shares to 18,000,000 shares. Following a 1-for-30 reverse stock split, the shares authorized for issuance under the Company’s 2014 Stock Incentive Plan was reduced to 600,000. On July 10, 2020, the Company’s shareholders approved an amendment to the Company’s 2014 Stock Incentive Plan to increase the reserve of authorized for issuance thereunder to 6,000,000. There are 2,696, 674 options outstanding under the 2014 Stock Incentive Plan, including those Performance Awards.

Compensation expense recognized for the issuance of stock options, including those options awarded to our Board, for the three months ended March 31, 2022 and 2021 of $646 and $539, respectively, was included in general and administrative expense in the Condensed Consolidated Statement of Operations. Amounts recorded include stock compensation expense for awards granted to directors of the Company in exchange for services at fair value of $82 and $27 for the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, there was approximately $1,420 and $674 of total unrecognized compensation expense related to unvested share-based awards with time vesting and performance vesting criteria, respectively. As of March 31, 2021, there was approximately $2,113 and $1,236 of total unrecognized compensation expense related to unvested share-based awards with time vesting and performance vesting criteria, respectively. Generally, expense related to the time vesting options will be recognized over the next two- and one-half years and will be adjusted for any future forfeitures as they occur. Compensation expense related to performance vesting options will be recognized if it becomes probable that the Company will achieve the identified performance metrics.