Stock-Based Compensation

12 Months Ended

Dec. 31, 2023

13. 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, 2023, there were 1,329,375 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 (for all awards and modifications, if any) in the accompanying consolidated statements of operations as follows (in thousands):

	Year Ended December 31,
	2023		2022
Selling and marketing	$	79	$	203
General and administrative		1,224		1,263
	$	1,303	$	1,466

On April 3, 2023 and March 30, 2022, the Company granted 150,000 and 160,000 stock-based options, respectively, to its former Chief Executive Officer. The vesting of these awards was 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. The market condition was not met for the 2022 awards and 60,000 of the stock-based options were forfeited during 2022. The 150,000 stock-based options awarded in 2023 were forfeited by December 31, 2023 due to the Chief Executive Officer’s separation and failure to achieve the vesting conditions.

Also in connection with the separation of the Company’s Chief Executive Officer in October 2023, the vesting of 272,098 unvested options to purchase shares of common stock was accelerated. As this acceleration of vesting occurred in accordance with the terms of the original option agreement, it is not considered a modification for accounting purposes. The Company recognized $0.3 million of share-based compensation expense in connection with the accelerated vesting.

Stock Options

The following table summarizes stock option activity for the years ended December 31, 2023 and 2022:

	Number of Shares Under Option Plan			Weighted- Average Exercise Price per Option		Weighted- Average Remaining Contractual Term (in years)
Outstanding at January 1, 2022		3,938,613		$	1.90
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
Granted		4,545,069			0.63
Forfeited and expired		(1,291,062	)		1.56
Outstanding at December 31, 2023		7,728,721			1.11		6.70
Exercisable at December 31, 2023		1,256,062		$	1.75		2.09

The weighted‑average grant date fair value of options granted was $0.44 and $1.06 per share during the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, the total unrecognized compensation expense related to unvested stock option awards was $2.1 million, which the Company expects to recognize over a weighted‑average period of approximately 3.1 years. The aggregate intrinsic value of options outstanding at December 31, 2023 was $0.1 million. There was no aggregate intrinsic value of options exercisable at December 31, 2023 and no options were exercised during the year ended December 31, 2023. 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 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, 2023 and 2022 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 shares of common stock.

For the years ended December 31, 2023 and 2022, 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,
	2023			2022
Expected term (in years)		7.49			6.10
Expected volatility		74.58	%		89.57	%
Risk-free rate		4.38	%		2.51	%
Dividend rate		0.00	%		0.00	%

Restricted Stock Units

Restricted stock units have been issued to certain board members. Activity in restricted stock units is summarized in the following table:

	Number of Units			Weighted- Average Grant Date Fair Value
Unvested at January 1, 2022		90,540		$	1.45
Granted		187,464			0.96
Vested		(158,407	)		1.26
Unvested at December 31, 2022		119,597		$	0.93
Granted		179,613			1.03
Vested		(179,467	)		0.96
Forfeited and expired		(97,089	)		1.03
Unvested at December 31, 2023		22,654		$	1.03

As of December 31, 2023, the total unrecognized compensation expense related to unvested restricted stock units was $18 thousand, which the Company expects to recognize over a weighted‑average period of approximately 0.5 years.