Quarterly report pursuant to Section 13 or 15(d)

Share-Based Payment and Related Stock Option Plan

v3.21.2
Share-Based Payment and Related Stock Option Plan
 9 Months Ended
Sep. 30, 2021
Share-based Payment Arrangement [Abstract]  
Share-Based Payment and Related Stock Option Plan
NOTE 10 – SHARE-BASED PAYMENT AND RELATED STOCK OPTION PLAN
During 2020, the Company granted awards to certain employees and Board members of the Company. Under the 2014 Equity Incentive Plan (the “Plan”), the Board is authorized to grant stock options to eligible employees and directors of the Company. The fair value of the options was expensed on a straight-line basis over the requisite service period, which is generally the vesting period.
In connection with the Business Combination a modification in the existing terms of the options was introduced to add contingent cash-settlement feature pursuant to which each option holder entered into option cancellation agreement (“Cancellation Agreements”), whereby option holders agreed to surrender all options outstanding as of the closing of the Business Combination for cancellation effective immediately prior to the closing. In exchange for the cancellation of the vested and unvested options, option holders are entitled to right to receive payment of Option Cash Consideration equal to

$4,075,000 and Option Share Consideration,
 
of
432,500 common shares ($3,377,825
value)
 
in the surviving entity less applicable withholding taxes and without interest, paid on the first payroll cycle following the closing of the Business Combination. Upon the closing of the Business Combination, the Company recognized a liability for the fair value of the Option Cash Consideration and Option Share Consideration. An expense was recognized for the difference between the previously recognized portion of grant date fair value and the fair value of the recorded liability.
Stock based compensation expense during the three-month period ended September 
30
,
2021
, and September 
30
,
2020
was $
3.9
and $
0.3
 million respectively. Stock based compensation expense during the nine-month period ended September 
30
,
2021
and September 
30
,
2020
was $
4.6
 million and $
0.8
 million, respectively.
The Company has determined its share-based payments to be a Level 3 fair value measurement and has used the Black-Scholes option pricing model to calculate its fair value using the following assumptions:
 
    
September 30, 2020
 
Risk-free interest rate
     
1.58 - 2.47%
 
Expected term (life) of options (in years)
     
2-4
 
Expected dividends
      0%
 
Expected volatility
     
67.9 - 86.3%
 
 
The Company did not grant any awards during the nine month period ended September 30, 2021. The expected term of the options granted are determined based on the period of time the options are expected to be outstanding. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. In selecting similar entities for determining expected volatility, the Company considered industry, stage of life cycle, size and financial leverage. The dividend yield on the Company’s options is assumed to be zero since the Company has not historically paid dividends.
The following is a summary of the Company’s stock options as of September 30, 2021 and September 30, 2020 and the stock option activity from December 31, 2020 through September 30, 2021 and December 31, 2019 through September 30, 2020:
 
                                                                                                                 
    
Number of
Options
     
Weighted
Average
Grant Date
Fair Value
per Option
(Amount)
     
Weighted
Average
Exercise
Price
(Amount)
     
Weighted
Average
Remaining
Contractual
Term
(Years)
  
Balance, December 31, 2020
   
 
34,977
 
   
 
191
 
   
$
1,750
 
   
 
7.7
 
    
 
 
     
 
 
     
 
 
     
 
 
  
Granted
   
 
—  
 
   
 
—  
 
   
 
—  
 
   
 
—  
 
    
 
 
     
 
 
     
 
 
     
 
 
  
Exercised
   
 
—  
 
   
 
—  
 
   
 
—  
 
   
 
—  
 
    
 
 
     
 
 
     
 
 
     
 
 
  
Forfeited
   
 
—  
 
   
 
—  
 
   
 
—  
 
   
 
—  
 
    
 
 
     
 
 
     
 
 
     
 
 
  
Expired
   
 
—  
 
   
 
—  
 
   
 
—  
 
   
 
—  
 
    
 
 
     
 
 
     
 
 
     
 
 
  
Cancelled
   
 
(34,977
) 
   
 
(191
) 
   
 
(1,750
) 
   
 
(7.7
) 
    
 
 
     
 
 
     
 
 
     
 
 
  
Balance, September 30, 2021
   
 
—  
 
   
$
—  
 
   
$
—  
 
   
 
—  
 
    
 
 
     
 
 
     
 
 
     
 
 
  
 
                                                                                                                 
    
Number of
Options
     
Weighted
Average
Grant Date
Fair Value
per Option
(Amount)
     
Weighted
Average
Exercise
Price
(Amount)
     
Weighted
Average
Remaining
Contractual
Term
(Years)
  
Balance, December 31, 2019
   
 
32,280
 
   
 
196
 
   
$
1,750
 
   
 
8.4
 
    
 
 
     
 
 
     
 
 
     
 
 
  
Granted
   
 
5,181
 
   
 
167
 
   
 
1,750
 
   
 
—  
 
    
 
 
     
 
 
     
 
 
     
 
 
  
Exercised
   
 
—  
 
   
 
—  
 
   
 
—  
 
   
 
—  
 
    
 
 
     
 
 
     
 
 
     
 
 
  
Forfeited
   
 
(2,484
) 
   
 
195
 
   
 
1,750
 
   
 
—  
 
    
 
 
     
 
 
     
 
 
     
 
 
  
Expired
   
 
—  
 
   
 
—  
 
   
 
—  
 
   
 
—  
 
    
 
 
     
 
 
     
 
 
     
 
 
  
Balance, September 30, 2020
   
 
34,977
 
   
$
191
 
   
$
1,750
 
   
 
7.9
 
    
 
 
     
 
 
     
 
 
     
 
 
  
 
The following is a summary of the Company’s share-based compensation expense during the respective three-month and nine-month reporting periods:
 
    
Three months ended
September 30,
     
Nine months ended
September 30,
  
(in ‘000)
   
2021
     
2020
     
2021
     
2020
  
Total share-based compensation expense
    $  3,933      $  315      $  4,564      $  846  
As of September 30, 2021, there was no unrecognized compensation cost related to outstanding stock options.