7. Stock Based Awards

Equity Incentive Plans

The Company adopted an equity incentive plan in 2007 (the “2007 Plan”) under which 1,786,635 shares of common stock have been reserved for issuance to employees and nonemployee directors and consultants of the Company. Recipients of incentive stock options granted under the 2007 Plan shall be eligible to purchase shares of the Company’s common stock at an exercise price equal to no less than the fair market value of such stock on the date of grant. The maximum term of options granted under the 2007 Plan is ten years. The options generally vest 25% after one year, with the remaining balance vesting monthly over the following three years. As of December 31, 2021, all future options available under the 2007 plan have expired and no options remain available for future grant under this plan.

The Company adopted a second equity incentive plan in 2015 (the “2015 Plan”) under which 1,666,667 shares of common stock have been reserved for issuance to employees, and nonemployee directors and consultants of the Company. Recipients of incentive stock options granted under the 2015 Plan shall be eligible to purchase shares of the Company’s common stock at an exercise price equal to no less than the estimated fair market value of such stock on the date of grant. The maximum term of options granted under the 2015 Plan is ten years. The options generally vest 25% after one year, with the remaining balance vesting monthly over the following three years. As of December 31, 2021, approximately 7.5 million options remain available for future grant under the 2015 Plan.

The following table summarizes stock option transactions for the 2007 Plan and 2015 Plan, collectively, for the year ended December 31, 2021 and 2020 (table in thousands, except per share amounts):

 Schedule of Share-based Compensation, Stock Options, Activity

During the year ended December 31, 2021 the Company granted stock options to officers, directors, employees and consultants to purchase a total of 1,037,000 shares of common stock. The options have an exercise price of $1.11 per share, expire in ten years, and vest as follows: one half vests on the one-year anniversary of the grant date and the remainder will vest in eight equal quarterly increments with the first such quarterly increment vesting on September 30, 2021. The total fair value of these options at the grant date was approximately $965,000 using the Black-Scholes Option pricing model. The Black-Scholes option pricing model includes the following weighted average assumptions for grants made during the year ended December 31, 2021:

 Schedule of Weighted Average Assumptions Used for Grants

During the year ended December 31, 2020 the Company granted stock options to officers, directors, employees and consultants to purchase a total of 928,000 shares of common stock. The options have an exercise price of $1.33 per share, expire in ten years, and vest as follows: one half vests on the one-year anniversary of the grant date and the remainder will vest in eight equal quarterly increments with the first such quarterly increment vesting on September 30, 2021. The total fair value of these options at the grant date was approximately $944,000 using the Black-Scholes Option pricing model. The Company did not grant any stock options during the year ended December 31, 2019. The Black-Scholes option pricing model includes the following weighted average assumptions for grants made during the year ended December 31, 2020:

The Company accounts for share-based awards to employees and nonemployee directors and consultants in accordance with the provisions of ASC 718, Compensation—Stock Compensation., and under the recently issued guidance following FASB’s pronouncement, ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. Under ASC 718, and applicable updates adopted, share-based awards are valued at fair value on the date of grant and that fair value is recognized over the requisite service, or vesting, period. The Company values its equity awards using the Black-Scholes option pricing model, and accounts for forfeitures when they occur. For the years ended December 31, 2021 and 2020, equity-based compensation expense recorded was $724,00 and $662,000, respectively.

As of December 31, 2021, there was $1,292,000 of total unrecognized compensation expense related to non-vested stock options that is expected to be recognized over a weighted average period of 9.1 years. For options granted and outstanding, there were 2,473,000 options outstanding which were fully vested or expected to vest, with an aggregate intrinsic value of $0.00, a weighted average exercise price of $1.98, and weighted average remaining contractual term of 8.0 years at December 31, 2021. For vested and exercisable options, outstanding shares totaled 984,000, with an aggregate intrinsic value of $0.00. These options had a weighted-average exercise price of $3.05 per share and a weighted-average remaining contractual term of 6.4 years at December 31, 2021.

The aggregate intrinsic value of outstanding and exercisable options at December 31, 2021 was calculated based on the closing price of the Company’s common stock as reported on the Nasdaq Capital Market on December 31, 2021 of approximately $0.65 per share less the exercise price of the options. The aggregate intrinsic value is calculated based on the positive difference between the closing fair market value of the Company’s common stock and the exercise price of the underlying options.

Common Stock Reserved for Future Issuance

The following table presents information concerning common stock available for future issuance as of December 31, (in thousands):

Schedule of Common Stock Reserved for Future Issuance