|3 Months Ended|
Mar. 31, 2022
10. Share-based Compensation
On August 28, 2019, the Company adopted the 2019 Long-Term Incentive Plan (the “2019 Plan”). The 2019 Plan provides for the granting of incentive stock options, nonqualified stock options, restricted stock, stock appreciation rights (“SARs”), restricted stock units, performance awards, dividend equivalent rights and other awards, which may be granted singly, in combination, or in tandem, and which may be paid in cash, shares of common stock of the Company or a combination of cash and shares of common stock of the Company. The Company initially reserved a total of 57,143 shares of the Company’s common stock for awards under the 2019 Plan. Effective as of May 26, 2020 and May 3, 2021, respectively, the Board approved an increase of the number of authorized shares of common stock reserved under the 2019 Plan from 57,143 shares of common stock to 485,715 and from 485,715 shares of common stock to 571,429 shares of common stock, all of which may be delivered pursuant to incentive stock options. Subject to adjustments pursuant to the 2019 Plan, the maximum number of shares of common stock with respect to which stock options or SARs may be granted to an executive officer during any calendar year is 14,286 shares of common stock.
Incentive stock options
The following table contains information about the 2019 Plan as of March 31, 2022:
The following table summarizes the Company’s incentive stock option activity and related information for the period ended March 31, 2022:
As of March 31, 2022, vested outstanding stock options had $210 thousand intrinsic value as the exercise price is greater than the estimated fair value of the underlying common stock. As of March 31, 2022, there was approximately $138 thousand of total unrecognized share-based compensation related to unvested stock options, which the Company expects to recognize over the next 12 months.
The Company recognizes compensation expense for stock option awards on a straight-line basis over the applicable service period of the award. The service period is generally the vesting period. The following assumptions were used to calculate share-based compensation expense for year ended March 31, 2022:
The Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. Accordingly, the Company has elected to use the “simplified method” to estimate the expected term of its share-based awards. The simplified method computes the expected term as the sum of the award’s vesting term plus the original contractual term divided by two.
Based on the lack of historical data of volatility for the Company’s common stock, the Company based its estimate of expected volatility on a weighted-average of the historical volatility of comparable public companies that manufacture similar products and are similar in size, stage of life cycle, and financial leverage.
Restrictive stock awards
On March 8, 2021, the Company granted a restricted stock award of 39,524 shares of the Company’s common stock to the Adam Levy for his service as our Chief Executive Officer and Chief Financial Officer from October 1, 2020 through September 30, 2021, all of which shares vested immediately. Under ASC 718, Compensation-Stock Compensation (“ASC 718”), the Company has measured the value of the 39,924 shares granted based on a closing price of the closing price of the Company’s stock at the grant date of the RSU Grant ($2.10 per share).
The following table shows a summary of common stock warrants through March 31, 2022:
As of March 31, 2022, vested outstanding warrants had $139 thousand intrinsic value as the exercise price is greater than the estimated fair value of the underlying common stock.
The entire disclosure for share-based payment arrangement.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef