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Equity Incentive Plans and Share-Based Payments
 3 Months Ended
Mar. 31, 2022
Share-Based Payment Arrangement [Abstract]  
Equity Incentive Plans and Share-Based Payments

19. Equity Incentive Plans and Share-Based Payments

 

2021 Omnibus Incentive Plan

 

In 2021, our Board of Directors adopted, and our shareholders approved the 2021 Omnibus Incentive Plan (“2021 Plan). Under the 2021 Plan, 2,750,000 shares are reserved and authorized for awards and the maximum contractual term is 10 years for stock options issued under the 2021 Plan.

 

Non-qualified stock options

 

During the quarter ended March 31, 2022, the Company granted non-qualified stock options to certain employees to purchase 28,378 shares of common stock under the 2021 Omnibus Incentive Plan. The options were granted to employees on March 2, 2022 with an exercise price of $2.96 and a contractual term of ten years. These stock options had a grant-date fair value of $44,000 and vest annually over a three-year period, subject to the recipient’s continued service with the Company through the applicable vesting dates.

 

The Company recognizes the grant-date fair value of share-based awards granted as compensation expense on a straight-line basis over the requisite service period. The fair value of stock options is estimated at the time of grant using the Black-Scholes option pricing model, which requires the use of inputs and assumptions such as the fair value of the underlying stock, exercise price of the option, expected term, risk-free interest rate, expected volatility and dividend yield. The Company elects to account for forfeitures as they occur.

 

The fair value of each option grant was estimated on the grant date of March 2, 2022, using the Black-Scholes option pricing model with the following assumptions: fair value of the underlying unit of $2.96, expected volatility of 55.0%, risk free rate of 1.79%, term of 6 years and a dividend yield of 0.

 

Share-based compensation expense of approximately $0.1 million was recorded in selling, general and administrative expenses on the accompanying statement of operations for the three months ended March 31, 2022. There was no stock based compensation for the three months ended March 31, 2021.

 

Options outstanding and exercisable under the employee share option plan as of March 31, 2022 and a summary of option activity during the three months then ended is presented below.

 

   Shares   Weighted Average Exercise Price   Weighted Average Remaining Contractual Term  

Aggregate Intrinsic Value (1)

(in 000’s)

 
Outstanding at December 31, 2021   613,614   $4.77    9.94    1,687 
Granted   28,378   $2.96           
Exercised   -   $-           
Canceled or forfeited   (38,096)  $4.77           
Outstanding at March 31, 2022   603,896   $4.68    9.53   $10 
Exercisable at March 31, 2022   -   $-    -   $- 

 

  (1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair value of the common stock for the options that were in the money at March 31, 2022.

 

As of March 31, 2022, there was $1.3 million of unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of approximately 2.70 years.

 

Share-Based Compensation (RSUs)

 

There were no RSU’s granted during the three months ended March 31, 2022. During the year ended December 31, 2021, the Company granted to certain members of management 170,068 restricted stock units, or RSUs. The fair value of each RSU is estimated based on the closing market price of the Company’s common stock on the grant date.

 

The RSUs had a grant-date fair value of $0.8 million and will be fully vested on June 9, 2022, six months after the grant date, subject to the recipient’s continued service with the Company through the applicable vesting dates. Share-based compensation expense of $0.4 million for the RSUs was recorded in selling, general and administrative expenses in the accompanying statement of operations for the three months ended March 31, 2022. There was no share-based compensation for the three months ended March 31, 2021.

 

 

As of March 31, 2022, there was $0.3 million of unrecognized compensation cost related to unvested RSUs, which is expected to be recognized over a weighted-average period of approximately 0.19 years.