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Equity Incentive Plans and Share-Based Payments
 9 Months Ended
Sep. 30, 2025
Share-Based Payment Arrangement [Abstract]  
Equity Incentive Plans and Share-Based Payments

13. Equity Incentive Plans and Share-Based Payments 

 

2021 Omnibus Incentive Plan

 

In 2021, the Board adopted, and our stockholders 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 September 30, 2025, there were 1,096,532 shares available for future awards under the amended 2021 Plan.

 

Non-qualified stock options

 

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 either a binomial lattice pricing model (“Lattice”) or the BSM model for “plain vanilla’ options, each of 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 assumptions and key inputs used in the Lattice model for the stock options granted in the third quarter were: valuation date stock price of $0.90 to $0.92, exercise price of $1.00, risk-free rate of approx. 4.3%, volatility of 95%, a dividend yield of 0.0%, and an option exercise multiple of 2.50x.

 

Share-based compensation expense related to stock options of approximately $0.2 million and $0.5 million was recorded in selling, general and administrative expenses, with a negligible amount recorded as research and development on the accompanying consolidated statement of operations, for the three and nine months ended September 30, 2025, respectively. Share-based compensation expense related to stock options of $0.2 million and $0.3 million was recorded in selling, general and administrative expenses, with a negligible amount recorded as research and development, for the three and nine months ended September 30, 2024, respectively.

 

Options outstanding and exercisable under the employee share option plan as of September 30, 2025, and a summary of option activity during the nine months then ended is presented below.

 

   Shares  

Weighted

Average

Exercise

Price

  

Weighted

Average

Remaining

Contractual

Term

  

Aggregate

Intrinsic

Value (1)

 
Outstanding at December 31, 2024   1,358,718    3.88    9.36   $5 
Granted   754,192    1.00    -    - 
Exercised   -    -    -    - 
Canceled or forfeited   (122,622)   2.90    -    - 
Outstanding at September 30, 2025   1,990,288    2.85    7.61    - 
Exercisable at September 30, 2025   515,894    7.49    8.04    - 

 

(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 September 30, 2025 and December 31, 2024.

 

As of September 30, 2025, there was $0.9 million of unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of approximately 1.5 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 determined based on the closing market price of the Company’s Common Stock on the grant date.

 

Share-based compensation expense for the RSUs was $0.1 million and $0.2 million for the three and nine months ended September 30, 2025, respectively and was negligible and $0.1 million for the three and nine months ended September 30, 2024, respectively, and was recorded in selling, general and administrative expenses in the accompanying consolidated statements of operations.

 

As of September 30, 2025, there was $0.3 million of unrecognized compensation cost related to unvested RSUs, which is expected to be recognized over a period of approximately 1.25 years.

 

 

The following table summarizes the activity for RSUs during the nine months ended September 30, 2025:

 

   Shares   Weighted Average Remaining Contractual Term  

Weighted Average

Grant Date Fair

Value

 
Outstanding at December 31, 2024   450,000    -   $1.06 
Awarded   187,500    -   $0.90 
Vested   (225,000)   -   $1.06 
Canceled or forfeited   -    -   $- 
Outstanding at September 30, 2025   412,500    1.02   $0.99