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Stock-Based Compensation
 12 Months Ended
Dec. 31, 2021
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation

Note 11 – Stock-Based Compensation

 

Stock Incentive Plans

 

The Co-Diagnostics, Inc. 2015 Long Term Incentive Plan (the “Incentive Plan”) reserves an aggregate of 6,000,000 shares of common stock issuable upon the grant of awards under the Incentive Plan. The number of awards available for issuance under the Incentive Plan was 2,095,266 at December 31, 2021.

 

 

Stock Options

 

The following table summarizes option activity during the years ended December 31, 2021 and 2020:

       Number of Options   Weighted Average Exercise Price   Weighted Average Fair Value   Weighted Average Remaining Contractual Life (Years) 
Outstanding at December 31, 2019    2,021,817   $1.69   $0.83      
Granted    150,000    8.14    4.74          
Expired    -    -    -      
Forfeited/Cancelled    -    -    -      
Exercised    (871,229)   1.68    0.89      
Outstanding at December 31, 2020    1,300,588   $2.44   $1.24      
Granted    -    -    -      
Expired    -    -    -      
Forfeited/Cancelled    -    -    -      
Exercised    (189,225)   2.38    1.12      
Outstanding at December 31, 2021    1,111,363   $2.12   $1.31    6.62 
                      
Exercisable at December 31, 2021    1,094,697   $2.01   $1.18    6.59 

 

The total intrinsic value of options exercised during the years ended December 31, 2021 and 2020 was approximately $1.3 million and $11.8 million, respectively. The aggregate intrinsic value of outstanding options at December 31, 2021 and 2020 was approximately $7.6 million and $7.1 million, respectively. As of December 31, 2021, there were 16,666 unvested options and $78,115 of unrecognized stock-based compensation expense related to options. The unrecognized stock-based compensation expense is expected to be recognized over 0.5 years.

 

Stock-based compensation cost is measured at the grant date based on the fair value of the award granted and recognized as expense over the vesting period using the straight-line method. The Company uses the Black-Scholes model to value options granted. The following weighted average assumptions were used in estimating the grant date fair value of options:

 

   Years Ended December 31, 
   2021   2020 
Risk-free interest rate   -    1.05%
Expected life (years)   -    7.3 
Expected volatility          -    62.82%
Expected dividend yield   -    None 

 

 

Restricted Stock Units

 

The grant date fair value of RSUs granted is determined using the closing market price of the Company’s common stock on the grant date with the associated compensation expense amortized over the vesting period of the awards. The following table sets forth the outstanding RSUs and related activity for the years ended December 31, 2021 and 2020:

 

   Number of RSUs   Weighted Average Grant Date Fair Value 
Unvested at December 31, 2019   -   $- 
Granted   549,500    10.49 
Vested   (27,000)   10.49 
Forfeited/Cancelled   -    - 
Unvested at December 31, 2020   522,500   $10.49 
Granted   1,217,500    9.76 
Vested   (438,502)   10.10 
Forfeited/Cancelled   (34,083)   9.91 
Unvested at December 31, 2021   1,267,415   $9.94 

 

As of December 31, 2021, there was $11.6 million of unrecognized stock-based compensation expense related to outstanding RSUs which is expected to be recognized over a weighted-average period of 2.3 years.

 

Warrants

 

The Company has issued warrants related to financings, acquisitions and as compensation to third parties for services provided. The Company estimates the fair value of issued warrants on the date of issuance as determined using a Black-Scholes pricing model. The Company amortizes the fair value of issued warrants using a vesting schedule based on the terms and conditions of each warrant if granted for services.

 

The following table summarizes warrant activity during the years ended December 31, 2021 and 2020:

 

    Number of Warrants   Weighted Average Exercise Price   Weighted Average Fair Value   Weighted Average Remaining Contractual Life (Years) 
Outstanding at December 31, 2019    983,535   $1.44   $1.03      
Granted    20,000    1.40    15.19      
Expired    (9,090)   6.00    0.17      
Forfeited/Cancelled    -    -    -      
Exercised    (924,445)   1.42    1.43      
Outstanding at December 31, 2020    70,000   $1.83   $5.21    3.3 
Granted    456,281    9.13    3.83      
Expired    -    -    -      
Forfeited/Cancelled    -    -    -      
Exercised    -    -    -      
Outstanding at December 31, 2021    526,281   $8.15   $4.01    4.7 

 

The intrinsic value of warrants exercised during the years ended December 31, 2021 and 2020 was $0 and approximately $9.7 million, respectively. The aggregate intrinsic value of outstanding warrants at December 31, 2021 was approximately $497,000.

 

 

70,000 warrants are exercisable at December 31, 2021. As discussed in Note 3 and Note 4, approximately 456,000 warrants to purchase shares of the Company’s common stock were issued in connection with the acquisition of ACI and IdMo. The ability to exercise the warrants is contingent upon the achievement of certain development and revenue milestones on or before January 1, 2027. There was no unrecognized stock-based compensation expense related to warrants.

 

See Note 4 for additional information regarding the fair value calculation of the warrants issued during the year ended December 31, 2021. The fair values for the warrants issued during the year ended December 31, 2020 were estimated at the date of grant using the Black Scholes model with the following weighted average assumptions:

 

   Year Ended December 31, 
   2020 
Risk-free interest rate   0.34%
Expected life (years)   5.0 
Expected volatility   61.42%
Expected dividend yield   None 

 

Stock Issued for Services

 

The Company has issued restricted stock to third parties for services provided. The grant date fair value of the restricted stock granted is determined using the closing market price of the Company’s common stock on the grant date with the associated compensation expense amortized over the vesting period of the stock awards. The Company issued 5,548 and 83,935 shares of restricted stock for services during the years ended December 31, 2021 and 2020, respectively, and there was no unrecognized stock-based compensation expense related to restricted stock issued.

 

Stock-Based Compensation Expense

 

The Company recognized stock-based compensation expense related to the types of awards discussed above as follows:

 

   2021   2020 
   Years Ended December 31, 
   2021   2020 
Options  $292,754   $901,345 
Restricted stock units   5,164,750    500,861 
Warrants   -    303,802 
Stock   51,900    1,032,033 
Total stock-based compensation expense  $5,509,404   $2,738,041