Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.21.1
Stock-Based Compensation
3 Months Ended
Mar. 31, 2021
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation

Note 12. Stock-Based Compensation

 

The Company has three legacy equity incentive plans: the Cancer Genetics, Inc. 2008 Stock Option Plan (the “2008 Plan”) and the Cancer Genetics Inc.2011 Equity Incentive Plan (the “2011 Plan”), and the StemoniX Inc. 2015 Stock Option Plan (the “2015 Plan”, and together with the 2008 Plan, and the 2011 Plan, the “ Frozen Stock Option Plans”). The Frozen Stock Option Plans as well as the 2021 Plan (as defined below) are meant to provide additional incentive to officers, employees and consultants to remain in the Company’s employment. Options granted are generally exercisable for up to 10 years. Effective with the Merger, the Company is no longer able to issue options from the Frozen Stock Option Plans.

 

Effective with the Merger, the Vyant Bio 2021 Equity Incentive Plan (the “2021 Plan”) came into effect, pursuant to which the Company’s Board of Directors may grant up to 4,500,000 of equity-based instruments to officers, key employees, and non-employee consultants. On March 30, 2021, the Company granted 1,151,500 stock options to officers and other employees, 78,090 stock options to independent Board members and a restricted stock unit (“RSU”) of 8,676 shares to the Company’s Board chair. The options granted to officers and employees vest 25% one year from the grant date and thereafter equally over the next 36 months. The options granted to Board members vested upon grant. The Board chair RSU vests one year from the grant date.

 

 

As StemoniX was the acquirer for accounting purposes, the pre-Merger vested stock options granted by CGI under the 2008 and 2011 Plans are deemed to have been exchanged for equity awards of the Company. The exchange of StemoniX stock options for options to purchase Company common stock was accounted for as a modification of the StemoniX stock options; however, the modification did not result in any incremental compensation expense as the modification did not increase the fair value of the stock options.

 

For StemoniX stock options issued prior to the Merger, the expected volatility was estimated based   on the average historical volatility of similar entities with publicly traded shares as StemoniX’s shares historically were not publicly traded and its shares rarely traded privately. After the Merger, the Company used Vyant’s historical volatility to determine the expected volatility of post-Merger option grants. The risk-free rate for the expected term of the option is based on the U.S. Treasury yield curve at the date of grant.

 

The Company uses a simplified method to determine the expected term for the valuation of employee options. This method effectively assumes that exercise occurs over the period from vesting until expiration, and therefore the expected term is the midpoint between the service period and the contractual term of the award. The simplified method is applicable to options with service conditions. For options granted to nonemployees, the contractual term is used for the valuation of the options.

 

As of March 31, 2021, there were 3,261,734 additional shares available for the Company to grant under the 2021 Plan. The grant-date fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option-pricing model. There were no stock options granted during the quarter ended March 31, 2020. The assumptions for stock option grants during the quarter ended March 31, 2021 are provided in the following table.

 

    2021  
Valuation assumptions        
Expected dividend yield     0.0%
Expected volatility     119.0% 123.0%
Expected term (years) – simplified method     5.5 6.0  
Risk-free interest rate     0.98% 1.12%

 

Stock option activity during the for the three-month periods ended March 31, 2021 and 2020 is as follows:

 

      Number of Options     Weighted average exercise price     Weighted average remaining contractual term  
Balance as of January 1, 2020       509,173     $ 1.30       7.4  
Granted       -       -          
Additional options grant StemoniX holders       -       -          
Options assumed in Merger       -       -          
Exercised       (12,000 )     1.94          
Forfeited       (12,438 )     1.35          
Expired       (6,125 )     1.24          
Balance as of March 31, 2020       478,610     $ 1.28       6.5  

 

Balance as of January 1, 2021     756,383       1.82          
Granted     1,229,590       4.61          
Additional options grant StemoniX holders     292,995       4.61          
Options assumed in Merger     55,840       45.95          
Exercised     (29,916 )     1.24          
Forfeited     (29,349 )     2.00          
Expired     (7,000 )     1.39          
Balance as of March 31, 2021     2,268,543     $ 4.79       8.1  
Exercisable as of March 31, 2021     390,109     $ 8.00       7.5  

 

 

The weighted average grant-date fair value of options granted during the three-month periods ended March 31, 2021 was $3.89. No options were granted in 2020. The aggregate intrinsic value of options outstanding as of March 31, 2021 was $2.4 million. The intrinsic value of options exercisable was $1.1 million as of March 31, 2021. The total intrinsic value of options exercised was $23 thousand and $1 thousand for the three-month period ended March 31, 2021 and 2020, respectively.

 

The Company recognized stock-based compensation related to different instruments for the three-month periods ended March 31 as follows:

 

    2021     2020  
Stock options   $ 366     $ 42  
Shares issued to nonemployees     -       30  
Total   $ 366     $ 72  

 

As of March 31, 2021, there was $4.7 million of total unrecognized compensation cost related to unvested stock options granted under the Plan. That cost is expected to be recognized over a weighted average period of 3.95 years.