Quarterly report pursuant to Section 13 or 15(d)

EQUITY AND EARNINGS PER SHARE

v3.21.2
EQUITY AND EARNINGS PER SHARE
 9 Months Ended
Sep. 30, 2021
Stockholders' Equity Note [Abstract]  
EQUITY AND EARNINGS PER SHARE EQUITY AND EARNINGS PER SHARE
 
A. Stock Options

The following is a summary of the changes in the Company’s outstanding options for the nine months ended September 30, 2021:
Number of Options Weighted Average Strike Price Weighted Average Life Remaining (in years)
Balance at December 31, 2020 4,935,732  $ 2.57 
Exercised (1,353,184) 1.00 
Balance at September 30, 2021 3,582,548  $ 3.17  1.88
Exercisable at September 30, 2021 2,578,926  $ 3.24  1.94

As of September 30, 2021, the Company’s outstanding options were summarized as follows:
Number of Options
Held by a former Manager 2,578,593 
Issued to a former Manager and subsequently transferred to certain of that Manager’s employees (A) 1,003,622 
Issued to the independent directors 333 
Total 3,582,548 
Weighted average strike price $ 3.17 

(A)The Company and a former manager (the "Manager") agreed that options held by certain employees formerly employed by that Manager will not terminate or be forfeited as a result of the Termination and Cooperation Agreement, and the vesting of such options will relate to the relevant holder’s employment with the Company and its affiliates following January 1, 2018. In both February 2017 and April 2018, the former Manager issued 1,152,495 options to certain employees formerly employed by the Manager as part of their compensation. The options fully vest and are exercisable one year prior to the option expiration date, beginning March 2020 through January 2024. For the nine months ended September 30, 2021, the former Manager exercised 1,353,184 options at a weighted average strike price of $1.00 resulting in common shares issued of 916,783.

Stock-based compensation expense is recognized on a straight-line basis through the vesting date of the options. Stock-based compensation expense related to the employee options was $0.2 million and $0.6 million during the three and nine months ended September 30, 2021, and $0.3 million and $0.2 million during the three and nine months ended September 30, 2020, respectively, and was recorded in general and administrative expense on the Consolidated Statements of Operations. The unrecognized stock-based compensation expense related to the unvested options was $0.5 million as of September 30, 2021 and will be expensed over a weighted average of 1.3 years.

B. Restricted Stock Units ("RSUs")

The following is a summary of the changes in the Company’s RSUs for the nine months ended September 30, 2021.
Number of RSUs Weighted Average Grant Date Fair Value (per unit)
Balance at December 31, 2020 259,238  $ 3.72 
Vested / Released (68,251) $ 4.60 
Forfeited (53,002) $ 3.74 
Balance at September 30, 2021 137,985  $ 3.27 
The Company grants RSUs to the non-employee directors as part of their annual compensation. The RSUs are subject to a one-year vesting period. During the nine months ended September 30, 2021, the Company granted no RSUs to non-employee directors and 5,423 RSUs granted to non-employee directors vested. The Company also grants RSUs to employees as part of their annual compensation. The RSUs vest in equal annual installments on each of the first three anniversaries of the grant date. During the nine months ended September 30, 2021, the Company granted no RSUs to employees and 62,828 RSUs granted to employees vested. Stock-based compensation expense is recognized on a straight-line basis through the vesting date of the RSUs. Stock-based compensation expense related to RSUs was $0.1 million and $0.3 million during the three and nine months ended September 30, 2021, and $0.2 million and $0.5 million for the three and nine months ended September 30, 2020, respectively. Stock-based compensation expense was recorded in general and administrative expense on the Consolidated Statements of Operations. The unrecognized stock-based compensation expense related to the unvested RSUs was $0.2 million as of September 30, 2021 and will be expensed over a weighted average period of 0.48 years.

C. Dividends

No dividends were declared on the 9.750% Series B, 8.050% Series C or 8.375% Series D preferred stock, for the twelve-month period beginning February 1, 2020 and ending January 31, 2021. As of September 30, 2021, $5.6 million of dividends on the Company's cumulative preferred stock were unpaid and in arrears.

On March 12, 2021 the board of directors declared dividends on the Company’s preferred stock for the period beginning February 1, 2021 and ending April 30, 2021, payable on April 30, 2021 to holders of record of preferred stock on April 1, 2021, in an amount equal to $0.609375, $0.503125 and $0.523438 per share on the 9.750% Series B, 8.050% Series C and 8.375% Series D preferred stock, respectively. Dividends totaling $1.4 million were paid on April 29, 2021.

On May 7, 2021 the board of directors declared dividends on the Company’s preferred stock for the period beginning May 1, 2021 and ending July 31, 2021, payable on July 30, 2021 to holders of record of preferred stock on July 1, 2021, in an amount equal to $0.609375, $0.503125 and $0.523438 per share on the 9.750% Series B, 8.050% Series C and 8.375% Series D preferred stock, respectively. Dividends totaling $1.4 million were paid on July 30, 2021.

On August 9, 2021 the board of directors declared dividends on the Company’s preferred stock for the period beginning August 1, 2021 and ending October 31, 2021, payable on November 1, 2021 to holders of record of preferred stock on October 1, 2021, in an amount equal to $0.609375, $0.503125 and $0.523438 per share on the 9.750% Series B, 8.050% Series C and 8.375% Series D preferred stock, respectively. Dividends totaling $1.4 million were paid on October 29, 2021.

D. Earnings Per Share
The following table shows the Company's basic and diluted earnings per share (“EPS”):
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Numerator for basic and diluted earnings per share:
   Loss Applicable to Common Stockholders $ (10,246) $ (10,807) $ (25,909) $ (70,485)
Denominator:
Denominator for basic earnings per share - weighted average shares 92,085,846  67,212,532  88,938,344  67,131,827 
Effect of dilutive securities
  Options —  —  —  — 
  RSUs —  —  —  — 
Denominator for diluted earnings per share - adjusted weighted average shares 92,085,846  67,212,532  88,938,344  67,131,827 
Basic earnings per share:
Loss from continuing operations per share of common stock after preferred dividends $ (0.11) $ (0.16) $ (0.29) $ (1.05)
Loss Applicable to Common Stock, per share $ (0.11) $ (0.16) $ (0.29) $ (1.05)
Diluted earnings per share:
Loss from continuing operations per share of common stock after preferred dividends $ (0.11) $ (0.16) $ (0.29) $ (1.05)
Loss Applicable to Common Stock, per share $ (0.11) $ (0.16) $ (0.29) $ (1.05)

The Company’s dilutive securities are outstanding stock options and RSUs. During the three and nine months ended September 30, 2021, based on the treasury stock method, the Company had 329,724 and 584,360 outstanding stock options and RSUs, respectively, which were excluded due to the Company's loss position. During the three and nine months ended September 30, 2020, based on the treasury stock method, the Company had 450,498 and 632,722 potentially dilutive securities, respectively.

On February 2, 2021, the Company completed the public offering of 23,285,553 shares of common stock and the sale of 672,780 shares of common stock to the Chairman of our board of directors resulting in net proceeds to the Company of $54.6 million, after deducting the underwriters discount of $2.9 million. Other expenses related to the offering totaled $0.6 million. The Company intends to use all of the net proceeds from the offering to fund its Puttery expansion and for general corporate purposes.