Quarterly report pursuant to Section 13 or 15(d)

Stock Based Awards

Stock Based Awards
6 Months Ended
Jun. 30, 2023
Share-Based Payment Arrangement [Abstract]  
Stock Based Awards

6. Stock Based Awards


Equity Incentive Plans


The Company adopted an equity incentive plan in 2015 (the “2015 Plan”) under which 833,333 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. On June 16, 2021, the Company’s stockholders voted to approve an amendment to the 2015 Plan to increase the number of shares of common stock authorized for issuance under the 2015 Plan from 416,667 to 833,333 shares. As of June 30, 2023, 483,815 shares remain available for future grants under the 2015 Plan.



In July 2022, the Compensation Committee of the Company’s Board of Directors granted a total of 158,012 stock options with a fair value of $633,000 effective as of July 26, 2022. The Company granted the stock options to directors, executives, employees, and consultants. The options are ten-year incentive stock options exercisable at $0.42 per share and vesting as follows: one-half vested on the one-year anniversary of the grant date and the remainder vest in eight equal quarterly instalments on the last day of March, June, September and December, with the first such quarterly instalment having vested on June 30, 2023.


The following table summarizes stock option transactions for the 2015 Plan, collectively, for the six months ended June 30, 2023 (in thousands, except per share amounts):


    Number of
for Grant
Balance at December 31, 2022     484       350     $ 15.03     $ 0.00  
Increase in authorized options     -       -       -       -  
Exercised     -       -       -       -  
Granted     -       -       -       -  
Expired     -       -       -       -  
Cancelled     -       -       -       -  
Balance at June 30, 2023     484       350     $ 14.98     $ 0.00  


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. During the period ended June 30, 2023, the Company did not grant any stock options. For the three and six months ended June 30, 2023 and 2022, equity-based compensation expense recorded was $179,000 and $470,000 and $241,000 and $480,000 respectively.


The fair value of share option award is estimated using the Black-Scholes option pricing method based on the following weighted-average assumptions:


    2023     2022  
    Six Months Ended June 30,  
    2023     2022  
Risk-Free interest rate     1.64 %     1.04 %
Expected dividend yield     0.00 %     0.00 %
Expected volatility     87.82 %     76.24 %
Expected term (in years)     4.81       4.33  


As of June 30, 2023, there was approximately $582,000 of total unrecognized compensation expense related to non-vested stock options that is expected to be recognized over a weighted average period of 0.9 years. For options granted and outstanding, there were 350,000 options outstanding which were fully vested or expected to vest, with an aggregate intrinsic value of $0.00, a weighted average exercise price of $14.98 and weighted average remaining contractual term of 7.9 years at June 30, 2023. For vested and exercisable options, outstanding shares totaled 170,000, with an aggregate intrinsic value of $0.00. These options had a weighted average exercise price of $24.45 per share and a weighted-average remaining contractual term of 6.8 years at June 30, 2023.


The aggregate intrinsic value of outstanding and exercisable options at June 30, 2023 was calculated based on the closing price of the Company’s common stock as reported on The Nasdaq Capital Market on June 30, 2023 of $2.39 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 (in thousands) as of:


    June 30, 2023     June 30, 2022  
Stock options issued and outstanding     350       195  
Shares authorized for future option grants     484       639  
Warrants outstanding     13       20  
Total     847       10,253