Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Equity

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Stockholders' Equity
 3 Months Ended
Mar. 31, 2022
Stockholders' Equity Note [Abstract]  
Stockholders' Equity Stockholders' Equity
Common Stock

The Company is authorized to issue 100,000,000 shares of common stock with a par value of $0.0001 per share. Holders of the Company’s common stock are entitled to one vote for each share. At March 31, 2022 and December 31, 2021, there were 22,042,583 shares and 21,303,500 shares of common stock outstanding, respectively.

Preferred Stock

The Company is authorized to issue 10,000,000 shares of preferred stock with a par value of $0.0001 per share with such designation, rights and preferences as may be determined from time to time by the Company’s Board of Directors.

As of March 31, 2022 and December 31, 2021, there were 2,120,000 shares of preferred stock outstanding. See Note 7 Redeemable Preferred Stock.

Warrants and Options

As of March 31, 2022, the Company had the following warrants and options outstanding: 15,063,800 warrants outstanding, each exercisable for one share of common stock at an exercise price of $11.50 including 11,468,800 in Public Warrants, 3,000,000 in Private Placement Warrants, 445,000 in Private Warrants and 150,000 in Working Capital Warrants, 75,000 Unit Purchase Option “UPO” units that are exercisable for one share of common stock at an exercise price of $10.00 and warrants exercisable for one share of common stock at an exercise price of $11.50. The Public Warrants expire in December 2025.
Warrant Liability

The Company has certain warrants which include provisions that affect the settlement amount. Such variables are outside of those used to determine the fair value of a fixed-for-fixed instrument, and as such, the warrants are accounted for as liabilities in accordance with ASC 815-40, Derivatives and Hedging, with changes in fair value included in the condensed consolidated statements of operations.

The liability classified warrants were priced using a Dynamic Black Scholes model. This process relies upon inputs such as shares outstanding, estimated stock prices, strike price, risk free interest rate and volatility assumptions. The warrant liability was $3.2 million and $2.7 million at March 31, 2022 and December 31, 2021, respectively. The loss on change in value of warrant liability for the three months ended March 31, 2022 and 2021 was $0.5 million, and $4.9 million, respectively, and is recognized in the accompanying condensed consolidated statement of operations.

The following is an analysis of changes in the warrant liability for the three months ended March 31, 2022:

(in thousands) Level 3 (Black Scholes)
Liability at December 31, 2021 $ 2,706 
Loss during the three months ended March 31, 2022 534 
Liability at March 31, 2022 $ 3,240 

The fair value of the warrants are determined using the publicly-traded price of our common stock on the valuation dates of $4.17 on March 31, 2022 and $5.67 on December 31, 2021.

Share-Based Compensation

The Company has the ability to grant stock options, stock appreciation rights, restricted stock, restricted stock units, other stock-based awards and performance compensation awards to current or prospective employees, directors, officers, consultants or advisors under the Company’s 2020 Omnibus Equity Incentive Plan (the “Plan”).

On January 3, 2022, the Company filed a Registration Statement with the SEC to register 1,065,175 additional shares of common stock, $0.0001 par value per share, of the Company under the Plan, pursuant to the “evergreen” provision of the Plan providing for an automatic increase in the number of shares reserved for issuance under the Plan.

As of March 31, 2022 and December 31, 2021, there were approximately 410,000 and 35,000 shares of common stock available for future grants under the Plan, respectively.

Restricted Stock Unit Awards

The following table summarizes activity of restricted stock units during the three months ended March 31, 2022:

Number of Restricted Stock Units Weighted Average Grant Date Fair Value
Non-vested at December 31, 2021 1,783,698 $ 14.18 
Granted 377,847 3.34 
Vested (83,750) 13.30 
Forfeited (142,120) 9.04 
Non-vested at March 31, 2022 1,935,675 $ 13.07 

Share-based compensation recognized during three months ended March 31, 2022 was approximately $7.4 million, inclusive of restricted stock unit grants of $3.6 million and stock grants of $3.8 million. Share-based compensation recognized for financial reporting purposes during the three months ended March 31, 2021 was $0.5 million, comprised of
restricted stock unit grants. As of March 31, 2022, there was approximately $16.6 million of total unrecognized compensation cost related to unvested restricted stock units or performance-based restricted stock unit awards to be recognized over a weighted average period of 2.96 years.

The unrecognized portion of share-based compensation for unvested market condition restricted stock units (included in above) is approximately $1.3 million over 1.5 years. As detailed below, the fair value of the market condition restricted stock units was determined using a Monte Carlo simulation model.

Performance-Based Restricted Stock Unit Awards

The Company grants performance-based awards (restricted stock units) to certain officers and key employees. The vesting of these awards is contingent upon meeting one or more defined operational or financial goals (a performance condition) or common stock share prices (a market condition) or employment conditions.

The fair values of the performance condition awards granted were determined using the fair market value of the Company’s common stock on the date of grant. Share-based compensation expense recorded for performance condition awards is reevaluated at each reporting period based on the probability of the achievement of the goal. Certain goals were achieved and probable as of March 31, 2022. Accordingly, the Company recognized share-based compensation expense of approximately $2.9 million in relation to these awards during the three months ended March 31, 2022.

The fair value of market condition awards granted were estimated using the Monte Carlo simulation model. The Monte Carlo simulation model utilizes multiple input variables to estimate the probability that the market conditions will be achieved and is applied to the trading price of our common stock on the date of grant. During the three months ended March 31, 2022, the Company modified the terms related to certain service, performance, and market condition awards that the Compensation Committee previously approved. As a result of this modification, the Company recorded additional share-based compensation of $0.4 million during the three months ended March 31, 2022 for these modifications.

The input variables are noted in the table below:

2022 2021
Risk-free interest rate
0.4% to 1.2%
 1.0  %
Expected life in years
0.6 to 3.2
 3.0
Expected volatility 65.9  % 65.9  %
Expected dividend yield * —  % —  %
* The Monte Carlo method assumes a reinvestment of dividends.

Share-based compensation expense is recorded ratably for market condition awards during the requisite service period and is not reversed, except for forfeitures, at the vesting date regardless of whether the market condition is met. During the three months ended March 31, 2022 and 2021, $0.4 million and $0.2 million, respectively, was recognized ratably as share-based compensation expense for the market condition awards.

Service-Based Restricted Stock Unit Awards

The Company grants service-based awards (restricted stock units) to certain officers and key employees. The vesting of these awards is contingent upon meeting the requisite service period. The fair value of restricted stock unit awards is determined using the publicly-traded price of our common stock on the grant date. During the three months ended March 31, 2022 and 2021, $0.5 million and $0.2 million, respectively, was recognized ratably as share-based compensation expense for the service condition awards.

The following table summarizes activity of the restricted stock units during the three months ended March 31, 2022:
Performance Condition Service Condition Market Condition
Restricted Stock Units Weighted Average Grant Date Fair Value Restricted Stock Units Weighted Average Grant Date Fair Value Restricted Stock Units Weighted Average Grant Date Fair Value
Non-vested at December 31, 2021 1,251,698  $ 15.15  252,000  $ 15.79  280,000  $ 8.42 
Granted 132,000  5.41  115,847  6.26  130,000  1.84 
Vested (8,750) 10.66  (60,000) 15.78  (15,000) 4.96 
Forfeited (97,120) 14.32  —  —  (45,000) 3.34 
Non-vested at March 31, 2022 1,277,828  $ 14.23  307,847  $ 14.27  350,000  $ 7.75