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StockBased Compensation

3 Months Ended

Mar. 31, 2024

StockBased Compensation

Stock-Based Compensation

Note 15. Stock-Based Compensation

2018 Equity Incentive Plan

In September 2018, the Company’s board of directors adopted, and the Company’s stockholders approved, the 2018 Equity Incentive Plan (the “2018 Plan”) which provided for the grant of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock units, performance-based stock awards and other forms of equity compensation to the Company’s employees, directors and consultants. Stock options granted under the 2018 Plan generally vest one-fourth on the first anniversary of the vesting commencement date with the balance vesting monthly over the remaining three years. Restricted stock units granted under the 2018 Plan generally vest one third on the first anniversary of the vesting commencement date and one sixth every six months thereafter such that the award will be fully vested on the third anniversary of the vesting commencement date. In July 2023, the 2018 Plan was replaced by the 2023 Equity Incentive Plan (the "2023 Plan"), as described below. As of July 2023, no additional awards could be made under the 2018 Plan and no shares of common stock were reserved for future issuance.

2018 Employee Stock Purchase Plan

In September 2018, the Company adopted the 2018 Employee Stock Purchase Plan (the “ESPP”) which permitted eligible employees to purchase the Company’s common stock at a discount through payroll deductions during defined offering periods. Eligible employees could elect to withhold up to 15% of their base earnings to purchase shares of the Company’s common stock at a price equal to 85% of the fair market value on the first day of the offering period or the purchase date, whichever was lower. The number of shares of common stock reserved for issuance under the ESPP automatically increased on January 1 of each fiscal year by the lesser of (1) 237 shares, (2) 1.25% of the total number of shares outstanding on December 31 of the preceding fiscal year, or (3) such other amount as the Company’s board of directors may determine.

The Company paused the ESPP in May 2022 and in April 2024, the Company formally terminated the ESPP. For the three months ended March 31, 2024 and 2023, no cash was received from the exercise of purchase rights under the ESPP.

As of March 31, 2024, the Company had issued 950 shares of common stock since inception of the ESPP, and 26 shares were reserved for future issuance. Upon termination of the ESPP in April 2024, the reserved shares were released back to the authorized pool.

2020 Inducement Equity Incentive Plan

In March 2020, the Company adopted the 2020 Inducement Equity Incentive Plan (the “2020 Plan”) for the purpose of attracting, retaining and incentivizing employees in furtherance of the Company’s success. The 2020 Plan was adopted without stockholder approval pursuant to Rule 303A.08 of the New York Stock Exchange. The 2020 Plan is used to offer equity awards as material inducements for new employees to join the Company. Upon adoption of the 2020 Plan, 640 shares of common stock were reserved for the granting of inducement stock options, restricted stock awards, restricted stock units and other forms of equity awards. As of March 31, 2024 and December 31, 2023, 540 shares of common stock were reserved for future issuance under the 2020 Plan. In April 2024, the Company terminated the 2020 Plan at which time the reserved shares were released back to the authorized pool.

Stock Options Assumed in Merger (See Note 3, Business Combination)

At the closing of the Merger, each outstanding option to purchase Old Catheter common stock that had not previously been exercised prior to the closing of the Merger was assumed and converted into options to purchase 753,699 shares of the Company’s common stock (“Replacement Options”). Additionally, no Old Catheter options were amended in connection with the Merger. All the Replacement Options vested in accordance with the original terms of the grants in place at the time of the Merger. As a result, $3.4 million of purchase price consideration, which represented the estimated fair value of Old Catheter’s assumed stock options, and $1.1 million of stock-based compensation expense, which represents the excess of the estimated fair value of the Replacement Options over the assumed Old Catheter stock options, were recognized upon the closing of the Merger.

2023 Equity Incentive Plan

In July 2023, the Company’s stockholders approved, the 2023 Plan, as defined above, which provided for the grant of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock units, performance-based stock awards and other forms of equity compensation to the Company’s employees, directors and consultants. Stock options granted under the 2023 Plan to employees and consultants generally will vest annually over a five-year period or as determined by the Board’s Compensation Committee, while grants to non-employee directors generally vest quarterly over a three-year period. As of March 31, 2024 and December 31, 2023, 146,546 and 501,868 shares of common stock were reserved for future issuance pursuant to the 2023 Plan. The number of shares available for issuance under the 2023 Plan also includes a quarterly increase commencing on September 1, 2023 by an amount equal to the lesser of (i) 10% of the number equal to the number of shares of common stock outstanding on the applicable adjustment date less the number of shares of common stock outstanding at the beginning of the fiscal quarter immediately preceding the adjustment date, but if such number is a negative number, then the increase will be zero; or (ii) such lesser number of shares as may be determined by the Board.

On January 8, 2024, the Board approved the issuance of a total of 285,000 non-qualified stock options under the 2023 Plan. 75,000 of these non-qualified options were issued to non-employee directors that vest at 8 1/3% per quarter for 3 years with an exercise price of $0.40 and expiration date of January 8, 2034. The remaining 210,000 non-qualified options were issued to employees and consultants and vest at 20% per year for 5 years with an exercise price of $0.40 and expiration date of January 8, 2034.

On February 26, 2024, the Board approved the issuance of a total of 150,000 incentive stock options under the 2023 Plan. All options were issued to employees and vest at 20% per year for 5 years with an exercise price of $0.43 and expiration date of February 26, 2034.

The options issued during the quarter ended March 31, 2024 were valued at approximately $170 thousand using the Black-Scholes model based on the following assumptions on the date of issue:

		Non-Employee Director Options Issued January 8, 2024				Employee Options Issued January 8, 2024				Employee Options Issued February 26, 2024
Risk-free interest rate			4.01	%			4.01	%			4.28	%
Volatility			175.36	%			175.36	%			178.14	%
Expected dividend yield			0	%			0	%			0	%
Expected life (in years)			6.5				6.5				6.5

See Note 20, Subsequent Events, for additional options issued under the 2023 Plan in April 2024 and non-Plan options issued in May 2024.

The following is a summary of stock option activity for the three months ended March 31, 2024:

		Stock Options				Weighted Average Exercise Price				Weighted Average Remaining Life (in years)				Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2023			214,652			$	6.47				6.38
Options exercised			—			$	—				—				—
Options granted			435,000			$	0.41				—				—
Canceled/forfeited			(35,059	)		$	0.45				—				—
Outstanding at March 31, 2024			614,593			$	2.52				8.59			$	32,260
Vested and expected to vest at March 31, 2024			614,593			$	2.52				8.59			$	32,260
Exercisable at March 31, 2024			204,593			$	6.76				6.09			$	—

Restricted Stock Units

All restricted stock units have been forfeited or vested as of December 31, 2023.

Restricted Stock Awards

All restricted stock awards have been forfeited or vested as of December 31, 2023.

Stock-based compensation expense for the three months ended March 31, 2024 and 2023 was $6 thousand and $1,394 thousand, which was recorded in selling, general and administrative expense in the Company's condensed consolidated statements of operations.

Total unrecognized estimated stock-based compensation expense by award type and the remaining weighted average recognition period over which such expense is expected to be recognized at March 31, 2024 was as follows:

		Unrecognized Expense (in thousands)				Remaining Weighted Average Recognition Period (in years)
Stock options		$	154				4.5
Restricted stock awards		$	—				—
Restricted stock units		$	—				—