On October 8, 2019, upon emergence from chapter 11 bankruptcy, the Successor Company filed an amended and restated certificate of incorporation with the Delaware Secretary of State to provide for, among other things, (i) the total number of shares of all classes of capital stock that the Successor Company has the authority to issue is 101,000,000 of which 100,000,000 shares are common stock, par value $0.0001 per share and 1,000,000 shares are preferred stock, par value $0.0001 per share and (ii) a restriction on the Successor Company from issuing any non-voting equity securities in violation of Section 1123(a)(6) of chapter 11 of title 11 of the United States Code. In addition, pursuant to the Company’s certificate of incorporation, effective at the 2021 annual meeting of stockholders, the board ceased to be divided into two classes, and the provision for the right of removal of any directors designated as a Group II director by an increased voting threshold from a majority to 85% of the shares then entitled to vote at an election of directors shares expired.

On October 8, 2019, the Company entered into a warrant agreement (the Warrant Agreement) with Broadridge Corporate Issuer Solutions, Inc. as the warrant agent, pursuant to which the Company issued three series of warrants (the Series A Warrants, the Series B Warrants and the Series C Warrants and together, the Warrants, and the holders thereof, the Warrant Holders), on a pro rata basis to pre-emergence holders of the predecessor Company’s common stock pursuant to the Company’s plan of reorganization.

Each Warrant represents the right to purchase one share of common stock at the applicable exercise price, subject to adjustment as provided in the Warrant Agreement and as summarized below. On October 8, 2019, the Company issued (i) Series A Warrants to purchase an aggregate of 1,798,322 shares of common stock, with an initial exercise price of $40.17 per share, (ii) Series B Warrants to purchase an aggregate of 2,247,985 shares of common stock, with an initial exercise price of $48.28 per share and (iii) Series C Warrants to purchase an aggregate of 2,890,271 shares of common stock, with an initial exercise price of $60.45 per share. Each series of Warrants issued under the Warrant Agreement has a three-year term, expiring on October 8, 2022. The strike price of each series of Warrants issued under the Warrant Agreement increases monthly at an annualized rate of 6.75%, compounding monthly, as provided in the Warrant Agreement. As of December 31, 2021, the Company had 1.8 million Series A, 2.2 million Series B and 2.9 million Series C warrants outstanding with corresponding exercise prices of $44.95, $54.34 and $68.42, respectively.

The Warrants do not grant the Warrant Holder any voting or control rights or dividend rights, or contain any negative covenants restricting the operation of the Company’s business.

On January 29, 2020, the Company’s board of directors adopted the 2020 Long-Term Incentive Plan (the Plan) with an effective date of January 1, 2020 in which an aggregate of approximately 1.5 million shares of the Company’s common stock were available for grant pursuant to awards under the Plan. On June 8, 2021, Amendment No. 1 to the Plan to increase, by 0.3 million shares, the maximum number of shares of common stock that may be issued thereunder, i.e., a maximum of approximately 1.8 million shares, became effective. As of December 31, 2021 and 2020, a maximum of 0.5 million and 0.2 million shares, respectively, of the Company’s common stock remained reserved for issuance under the Plan.

The Company accounts for stock-based payment accruals under authoritative guidance on stock compensation. The guidance requires all stock-based payments to employees and directors, including grants of stock options and restricted stock, to be recognized in the financial statements based on their fair values. The Company has elected not to apply a forfeiture estimate and will recognize a credit in compensation expense to the extent awards are forfeited.

For the years ended December 31, 2021 and 2020, the Company recognized $2.0 million and $2.6 million, respectively, related to stock-based compensation recorded as a component of “General and administrative” on the consolidated statements of operations.

From time to time, the Company grants stock options under the Plan covering shares of common stock to employees of the Company. Stock options, when exercised, are settled through the payment of the exercise price in exchange for new shares of stock underlying the option. Awards granted under the Plan typically vest over a four year period at a rate of one-fourth on the annual anniversary date of the grant and expire seven years from the date of grant.

No stock options were granted during the year ended December 31, 2021. At December 31, 2021, the Company had $0.4 million of unrecognized compensation expense related to non-vested stock-options to be recognized over a weighted-average period of 1.2 years.

The aggregate grant date fair value of options granted during the year ended December 31, 2020 was $1.9 million. At December 31, 2020, the Company had $0.9 million of unrecognized compensation expense related to non-vested stock-options to be recognized over a weighted-average period of 1.7 years.

The following table sets forth the stock option transactions for the periods indicated:

(1)	The period end intrinsic value of stock options was calculated as the amount by which the closing market price on December 31, 2021 and 2020 of the underlying stock exceeded the exercise price of the option.

Options outstanding at December 31, 2021 consisted of the following:


Outstanding						Exercisable⁽¹⁾
					Weighted Average						Weighted Average
			Weighted Average		Remaining		Weighted Average		Aggregate		Remaining
Range of Grant			Exercise Price		Contractual Life		Exercise Price		Intrinsic		Contractual Life
Prices Per Share		Number	per Share		(Years )	Number	per Share		Value		(Years )
$	18.91	159,384	$	18.91	5.2	—	$	—	$	—	—
	28.23	159,384		28.23	5.2	—		—		—	—
	37.83	159,384		37.83	5.2	—		—		—	—

(1)	At December 31, 2021, none of the Company’s stock options were exercisable due to service performance conditions or options exercise prices above current market value of the underlying stock.

The assumptions used in calculating the Black-Scholes-Merton valuation model fair value of the Company’s stock options for year ended December 31, 2020 are set forth in the following table:


	Year Ended
	December 31, 2020
Weighted average value per option granted during the period	$	3.36
Assumptions:
Stock price volatility⁽¹⁾		61.87	%
Risk free rate of return		1.21	%
Expected term		4.75	years

(1)	Due to the Company’s limited historical data, expected volatility was estimated using volatilities of similar entities whose share or option prices and assumptions were publicly available.

Restricted Stock

From time to time, the Company grants shares of restricted stock units (RSUs) under the Plan to employees of the Company. Under the Plan, employee RSUs will vest and convert to shares typically over a four year period at a rate of one-fourth on the annual anniversary date of the grant or when the performance or market conditions described below occur.

During the year ended December 31, 2021, the Company granted less than 0.1 million shares of RSUs which will vest over four years at a rate of one-fourth on the annual anniversary date of the grant. The aggregate grant date fair value of these RSUs was $0.1 million. At December 31, 2021, the Company had $2.2 million of unrecognized compensation expense related to non-vested RSU awards to be recognized over a weighted average period of 1.8 years.

During the year ended December 31, 2020, the Company granted 1.0 million shares of RSUs with the vesting conditions and fair values described below under the Plan to employees of the Company. At December 31, 2020, the Company had $4.1 million of unrecognized compensation expense related to non-vested RSU awards to be recognized over a weighted-average period of 2.5 years.

●

0.4 million RSUs granted will vest over four years at a rate one-fourth on the annual anniversary of date of the grant. The aggregate grant date fair value of these RSUs was $5.0 million.

●

0.2 million RSUs granted will vest in full only upon achievement of certain business combination goals, as defined in the awards agreements. The aggregate grant date fair value of these RSUs was $2.1 million. As of December 31, 2021, a business combination, as defined in the awards agreements, had not been

consummated and was not considered probable. As such, no expense has been recognized for the RSUs with business combination vesting conditions.

●

0.4 million RSUs granted will vest in full or in part or may terminate based on the Company’s total shareholder return relative to the total shareholder return of certain of its peer companies as defined in the awards agreements over the performance period ending on February 20, 2024. The aggregate grant date fair value of these RSUs was $2.3 million.

The following table sets forth the restricted stock transactions for the periods indicated:


	Number of Shares	Weighted Average Grant Date Fair Value Per Share		Aggregate Intrinsic Value⁽¹⁾(In thousands)
Unvested outstanding shares at December 31, 2019	—	$	—	$	—
Granted	987,590		9.46
Vested	—		—
Forfeited	(113,456)		9.36
Unvested outstanding shares at December 31, 2020	874,134	$	9.48	$	3,287
Granted	12,000		8.00
Vested	(95,994)		11.51
Forfeited	(14,625)		11.89
Unvested outstanding shares at December 31, 2021	775,515	$	9.16	$	2,914

(1)

The intrinsic value of restricted stock was calculated as the closing market price on December 31, 2021 and 2020 of the underlying stock multiplied by the number of restricted shares that would be issuable. The total fair value of shares vested was $1.1 million for the year ended December 31, 2021.

The assumptions used in calculating the Monte Carlo valuation model fair value of the Company’s RSUs with performance based vesting conditions for the year ended December 31, 2020 are set forth in the following table:


	Year Ended
	December 31, 2020
Weighted average value per performance based RSUs granted during the period	$	6.13
Assumptions:
Stock price volatility⁽¹⁾		51.79	%
Risk free rate of return		1.22	%
Expected term		3.9	years

(1)	Due to the Company’s limited historical data, expected volatility was estimated using volatilities of peer entities as defined in the award agreements whose share prices and assumptions were publicly available.