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Equity Incentive Plans and Share-Based Payments
 12 Months Ended
Dec. 31, 2024
Share-Based Payment Arrangement [Abstract]  
Equity Incentive Plans and Share-Based Payments

15. Equity Incentive Plans and Share-Based Payments

 

2021 Omnibus Incentive Plan

 

In 2021, the Board adopted, and our shareholders approved, the 2021 Omnibus Incentive Plan (“2021 Plan”), under which the maximum contractual term is 10 years for stock options issued. On June 12, 2024, the stockholders of the Company approved an amendment to the 2021 Plan to increase the number of shares authorized for issuance by 3,483,010 shares, from 266,990 shares to 3,750,000 shares. As of December 31, 2024, there were 1,915,602 shares available for future awards under the amended 2021 Plan.

 

Non-qualified stock options

 

We maintain the 2021 Plan for the benefit of our officers, directors and employees. Employee stock options granted under the 2021 Plan generally vest in equal annual installments over three years and are exercisable for a period of up to ten years from the grant date. Non-employee director options vest in equal monthly installments following the date of grant and will be fully vested on the one-year anniversary of the date of grant. All stock options are exercisable at a price equal to the market value of the common shares underlying the option on the grant date.

 

The Company recognizes the grant-date fair value of share-based awards granted as compensation expense on a straight-line basis over the requisite service period. The fair value of stock options is estimated at the time of grant using the Black-Scholes option pricing model, which requires the use of inputs and assumptions such as the fair value of the underlying stock, exercise price of the option, expected term, risk-free interest rate, expected volatility and dividend yield. The Company elects to account for forfeitures as they occur.

 

The fair value of each option was estimated on the date of the grant using the Black-Scholes option pricing model with the following assumptions:

 

   2024   2023 
Expected volatility   100%   70% - 95%
Expected term (in years)   5.24 - 6    6.0 
Risk-free interest rate   4.2% - 4.3%   3.54% - 4.66%
Expected dividend yield   0%   0.0%

 

 

The total grant-date fair value of options granted during the year ended December 31, 2024 was $1.1 million. The weighted average grant-date fair value of options granted during the years ended December 31, 2024 and 2023 was $0.82 and $6.40, respectively.

 

Share-based compensation expense related to stock options of approximately $0.8 million and $0.7 million was recorded in selling, general and administrative expenses on the accompanying consolidated statement of operations for the years ended December 31, 2024 and 2023, respectively.

 

Options outstanding and exercisable under the employee share option plan as of December 31, 2024 and 2023, and a summary of option activity during the year then ended is presented below.

 

   Shares   Weighted Average Exercise Price   Weighted Average Remaining Contractual Term   Aggregate Intrinsic Value (1) 
Outstanding at December 31, 2022   86,951   $62.16    9.27   $         1 
Granted   49,730   $9.35           
Exercised   -   $-           
Canceled or forfeited   (37,195)  $52.55           
Outstanding at December 31, 2023   99,486   $39.36    8.79   $- 
Granted   1,289,954   $1.37           
Exercised   -   $-           
Canceled or forfeited   (30,722)  $11.77           
Outstanding at December 31, 2024   1,358,718   $3.88    9.36   $5 
Exercisable at December 31, 2024   83,382   $34.45    8.14   $- 

 

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair value of the Common Stock for the options that were in the money at December 31, 2024 and December 31, 2023.

 

As of December 31, 2024, there was $1.0 million of unrecognized compensation cost related to unvested stock options held by employees and directors, which is expected to be recognized over a weighted-average period of approximately 2.4 years.

 

Share-Based Compensation (RSUs)

 

Restricted Stock Units (“RSUs”) will vest annually over two years, subject to the recipient’s continued service with the Company through the applicable vesting dates. The fair value of each RSU is estimated based on the closing market price of the Company’s Common Stock on the grant date.

 

Share-based compensation expense related to RSUs of $0.2 million and $0.3 million for the RSUs was recorded in selling, general and administrative expenses in the accompanying consolidated statement of operations for the years ended December 31, 2024 and 2023.

 

As of December 31, 2024, there was $0.4 million of unrecognized compensation cost related to unvested RSUs, which is expected to be recognized over a weighted-average period of approximately 1.5 years.

 

The following table summarizes the activity for RSUs during the year ended December 31, 2024 and December 31, 2023:

 

   Shares   Weighted Average Grant Date Fair Value 
Outstanding balance at December 31, 2022   17,176   $52.20 

Awarded

   -   $- 
Issued   (8,588)  $52.20 
Forfeited   (3,817)  $52.20 
Outstanding balance at December 31, 2023   4,771   $52.20 
Awarded   450,000   $1.06 
Issued   (4,771)  $52.20 
Forfeited   -   $- 
Outstanding balance at December 31, 2024   450,000   $1.06