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Stock-Based Compensation

12 Months Ended

Dec. 31, 2022

14. Stock-Based Compensation

The Company’s 2016 Omnibus Incentive Stock Plan (“2016 Plan”), as amended, has reserved up to 7,832,651 shares of common stock for future issuance. As of December 31, 2022, there were 3,193,706 shares of common stock remaining available for issuance for awards under the 2016 Plan.

The Company measures share‑based awards at their grant‑date fair value and records compensation expense on a straight‑line basis over the requisite service period of the awards. The Company recorded share‑based compensation expense of $1.3 million and $1.6 million (for all awards and modifications, if any) for the years ended December 31, 2022 and 2021, respectively, within general and administrative expenses in the accompanying consolidated statements of operations. During the year ended December 31, 2022, the Company also recorded share-based compensation expense of $0.2 million within selling and marketing expenses in the accompanying consolidated statement of operations.

On March 30, 2022, the Company granted 160,000 stock-based options to the Chief Executive Officer. The vesting of these awards is contingent upon meeting one or more financial goals (a performance condition) or a common stock share price (a market condition). The fair value of stock-based awards is determined at the date of grant. Stock-based compensation expense is recorded ratably for market condition awards during the requisite service period and is not reversed, except for forfeitures, at the vesting date regardless of whether the market condition is met. Stock-based compensation expense for performance condition awards is re-evaluated at each reporting period based on the probability of the achievement of the goal. As of December 31, 2022, the market condition was not met and 60,000 of the stock-based options were forfeited.

In connection with the separation of the Company’s Chief Executive Officer in February 2021, the Company accelerated the vesting of all unvested options to purchase shares of common stock and extended the period to exercise to August 22, 2021. This acceleration and the extension of the period to vest met the modification criteria for accounting purposes. For these modifications, the Company calculated and recorded additional compensation expense of $0.2 million.

Stock Options

The following table summarizes stock option activity for the years ended December 31, 2022 and 2021:

	Number of Shares under Option Plan			Weighted- Average Exercise Price per Option		Weighted- Average Remaining Contractual Life (in years)
Outstanding at January 1, 2021		5,292,888		$	1.87
Granted		2,463,714			1.70
Exercised		(1,557,628	)		1.12
Forfeited and expired		(2,260,361	)		2.10
Outstanding at December 31, 2021		3,938,613		$	1.90		7.91
Granted		1,000,000			1.41
Exercised		(15,000	)		1.29
Forfeited and expired		(448,899	)		2.63
Outstanding at December 31, 2022		4,474,714		$	1.72		8.02
Exercisable at December 31, 2022		2,202,792		$	1.88		7.28

The weighted‑average grant date fair value of options granted was $1.06 and $1.27 per share during the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, the total unrecognized compensation expense related to unvested stock option awards was $2.3 million, which the Company expects to recognize over a weighted‑average period of approximately 2.2 years. There was no aggregate intrinsic value of options outstanding and options exercisable at December 31, 2022 or of options that were exercised during the year ended December 31, 2022. The aggregate intrinsic value of options outstanding and options exercisable at December 31, 2021 was $26 thousand and $4 thousand, respectively, and the aggregate intrinsic value of options that were exercised during the year ended December 31, 2021 was $0.5 million.

During the year ended December 31, 2021, there were 1,557,628 options that were exercised on a cashless basis at $1.12 per share resulting in the net issuance of 329,076 shares of common stock.

The fair value of options is estimated using the Black Scholes option pricing model which takes into account inputs such as the exercise price, the value of the underlying common stock at the grant date, expected term, expected volatility, risk free interest rate and dividend yield. The fair value of each grant of options during the year ended December 31, 2022 and 2021 was determined using the methods and assumptions discussed below.

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The expected term of employee options is based on the observed and expected time to full-vesting, forfeiture and exercise. Groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. Options expire up to a maximum of ten years from the date of grant.

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The expected volatility is based on historical volatility of the Company’s common stock.

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The risk-free interest rate is based on the interest rate payable on U.S. Treasury securities in effect at the time of grant for a period that is commensurate with the assumed expected term.

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The expected dividend yield is none because the Company has not historically paid and does not expect for the foreseeable future to pay a dividend on its ordinary shares.

For the years ended December 31, 2022 and 2021, the grant date fair value of all option grants was estimated at the time of grant using the Black-Scholes option-pricing model using the following weighted average assumptions:

	Year Ended December 31,
	2022			2021
Expected term (in years)		6.10			5.96
Expected volatility		89.57	%		90.03	%
Risk-free rate		2.51	%		1.08	%
Dividend rate		0.00	%		0.00	%

Restricted Stock Units

Restricted stock units have been issued to certain board members. Restricted stock units unvested are summarized in the following table:

	Number of Units			Weighted- Average Grant Date Fair Value
Outstanding at January 1, 2021		—		$	—
Granted		290,861			1.44
Vested		(146,364	)		1.42
Forfeited and expired		(53,957	)		1.45
Unvested at December 31, 2021		90,540		$	1.45
Granted		187,464			0.96
Vested		(158,407	)		1.26
Forfeited and expired		—			—
Unvested at December 31, 2022		119,597		$	0.93

As of December 31, 2022, the total unrecognized compensation expense related to unvested restricted stock units was less than $0.1 million, which the Company expects to recognize over a weighted‑average period of approximately 0.5 years. During the first quarter of 2023, the Company issued 158,407 shares of common stock related to the restricted stock units that vested during 2022.