Stock Option Plan

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

In 2010, the Company adopted the 2010 Equity Incentive Plan (the “2010 Plan”), which provides for the grant of restricted stock awards, stock options, and other share-based awards to employees, consultants, and directors. In November 2020, the Company’s Board of Directors extended the term of the 2010 Plan to July 1, 2021. In 2021, the Company adopted the 2020 Equity Incentive Plan (the “2020 Plan”), which provides for the grant of restricted stock awards, incentive and non-statutory stock options, and other share-based awards to employees, consultants, and directors. In June 2023, the 2020 Plan was amended, as approved by shareholders, to increase the common shares reserved for issuance under the plan by 4,000,000 shares. As of June 30, 2023, there is an aggregate of 7,300,000 common shares reserved for issuance under the 2020 Plan. All options granted to date have a ten year contractual life and vesting terms of four years. In general, vested options expire if not exercised 90 days after termination of service. A total of 2,754,306 shares of common stock remained available for future issuance under the 2020 Plan as of August 3, 2023. Forfeitures are accounted for as it occurs.

Stock-based compensation expense recognized in selling, general, and administrative, and research and development are as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Options	$	667,923	$	548,652	$	1,350,871	$	1,370,758
Restricted stock	389,646		1,187,254		985,807		1,801,093
Stock options - modified options	11,618		25,459		24,250		45,158
Profit interest units	34,219		140,850		(291,701)		140,850
Total	$	1,103,406	$	1,902,215	$	2,069,227	$	3,357,859

The following is a summary of the stock option activity under the 2010 Plan for the six months ended June 30, 2023:


	Shares	Weighted- Average Exercise Price per Share($)	Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value($)
Outstanding - December 31, 2022	853,507	2.91	5.70	—
Granted	—	—	—	—
Exercised	—	—	—	—
Forfeited	(8,409)	4.66	—	—
Expired/Cancelled	(23,893)	6.54	—	—
Outstanding - June 30, 2023	821,205	2.58	5.44	—

Options Exercisable at June 30, 2023	798,366	2.60	3.67	—
Option Vested at June 30, 2023	798,366	2.60	3.67	—

The weighted-average grant-date fair value of options granted during the six months ended June 30, 2023 was zero.

The following is a summary of the stock option activity under the 2020 Plan for the six months ended June 30, 2023:


	Shares	Weighted- Average Exercise Price per Share ($)	Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value($)
Outstanding - December 31, 2022	1,711,112	11.71	8.46	—
Granted	115,800	0.57	—	—
Exercised	—	—	—	—
Forfeited	(24,638)	6.52	—	—
Expired/Cancelled	(7,887)	10.43	—	—
Outstanding - June 30, 2023	1,794,387	11.07	8.06	8,928

Options Exercisable at June 30, 2023	794,849	13.25	7.66	—
Option Vested at June 30, 2023	794,849	13.25	7.66	—

The weighted-average grant-date fair value of options granted during the six months ended June 30, 2023 was $0.26.

During the year ended December 31, 2021, 1,640,000 options were modified to lower the exercise price by $0.60 per share, which resulted in $246,000 of incremental compensation cost to be recognized over the remaining vesting period. The amount of additional compensation expense for the three and six months ended June 30, 2023, was $11,618 and $24,250, respectively. The amount of additional compensation expense for the three and six months ended June 30, 2022, was $25,459 and $45,158, respectively.

Other Information:


	Six Months Ended June 30,
	2023		2022
Amount received from option exercised	$	—	$	173,575

	June 30, 2023				Weighted average remaining recognition period
Total unrecognized options compensation costs	$	4,763,476			2.34

No amounts relating to the Plan have been capitalized. Compensation cost is recognized over the requisite service period based on the fair value of the options.

A summary of the status of the Company’s nonvested restricted stock units as of December 31, 2022, and changes during the six months ended June 30, 2023, is presented below:


	Shares	Weighted- Average Grant Date Fair Value($)
Nonvested at December 31, 2022	436,259	6.43
Granted (1)	1,432,446	0.52
Vested/Release	(1,078,720)	1.22
Cancelled/Forfeited	(57,832)	4.61
Nonvested and Outstanding at June 30, 2023	732,153	2.68

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(1) Includes 832,322 shares awarded for the 2022 employee annual bonus with fair value of $391,191 issued during the second quarter ended June 30, 2023.

As of June 30, 2023, there was $960,879 of total unrecognized compensation cost related to nonvested restricted stock. The Company expects to recognize this compensation cost over a remaining weighted-average period of approximately 0.75 years.