SHARE-BASED COMPENSATION, STOCK OPTIONS, AND RESTRICTED SECURITIES

12 Months Ended

Dec. 31, 2022

SHARE-BASED COMPENSATION, STOCK OPTIONS, AND RESTRICTED SECURITIES

SHARE-BASED COMPENSATION, STOCK OPTIONS, AND RESTRICTED SECURITIES

8. SHARE-BASED COMPENSATION, STOCK OPTIONS, AND RESTRICTED SECURITIES

On October 26, 2010, the Company’s Board of Directors adopted, and the Company’s shareholders subsequently approved, the 2010 Equity Incentive Plan (as subsequently amended, the “2010 Plan”). The 2010 Plan provided for grants of incentive stock options to employees, and nonqualified stock options and restricted common stock to employees, consultants, and non-employee directors of the Company.

In April 2015, the Company’s Board of Directors adopted, and the Company’ shareholders subsequently approved, the 2015 Equity Incentive Plan (the “2015 Plan”). The 2015 Plan provides for grants of incentive stock options to employees, and nonqualified stock, restricted common stock, restricted stock units and stock appreciation rights to employees, consultants, and directors of the Company.

As of December 31, 2022, the total number of shares available to be issued under the 2015 Plan was 788,697.

Options issued under the 2010 Plan, and 2015 Plan (collectively, the “Plans”) are exercisable for up to 10 years from the date of issuance.

Share-based compensation

For the years ended December 31, 2022 and 2021, Stock-based compensation recognized was classified in the consolidated statements of operations as follows:

	Year Ended December 31,
(In thousands)	2022		2021
Research and development	$	(8)	$	22
General and administrative		167		293
Total	$	159	$	315

The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model, which uses the assumptions noted in the following table. The Company uses historical data, as well as subsequent events occurring prior to the issuance of the financial statements, to estimate option exercises within the valuation model. The expected term of options granted under the Plans, all of which qualify as “plain vanilla,” is based on the average of the contractual term (10 years) and the vesting period (generally, 48 months). For non-employee options, the expected term is the contractual term. The risk-free rate is based on the yield of a U.S. Treasury security with a term consistent with the option. The impact of forfeitures on compensation expense is recorded as they occur.

The assumptions used principally in determining the fair value of options granted during the years ended December 31, 2022 and 2021, were as follows:

	December 31,	December 31,
	2022	2021
Risk-free interest rate	3.87%	1.03%
Expected dividend yield	0%	0%
Expected term (employee grants)	5.71	5.70
Expected volatility	126.66%	117.34%

The Company grants restricted stock units (“RSUs”), and restricted stock awards (“RSAs”), collectively referred to as restricted securities under the 2015 Equity Incentive Plan. These restricted securities generally vest over a three-year period, contingent on the recipient’s continued employment. Prior to vesting, all RSAs have the right to vote and receive dividends under the 2015 Equity Incentive Plan; however, the Company’s form of Restricted Stock Agreement provides that the payment of dividends on unvested RSAs shall be deferred until such time as the shares vest. The grant date fair value of these awards is based on the fair market value of our common stock on the date of grant.

Stock Options

A summary of option activity as of December 31, 2022 and changes for the year then ended are presented below:

				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
		Exercise		Contractual	Intrinsic
Options	Shares	Price		Term in Years	Value
Outstanding as of December 31, 2021	14,582	$	437.78	9.18	$	—
Granted	126,600	$	2.50
Cancelled/Forfeited	(4,613)	$	345.06
Expired	(1)	$	129,750.00
Outstanding as of December 31, 2022	136,568	$	36.46	9.72	$	—
Vested and Exercisable as of December 31, 2022	8,268	$	547.95	8.15	$	—
Vested and expected to vest as of December 31, 2022	136,568	$	36.46	9.72	$	—

During the years ended December 31, 2022 and 2021, the Company granted 126,000 and 14,400 stock options respectively. The weighted average grant-date fair value of options granted during the years ended December 31, 2022 and 2021 was $2.21 per share and $23.19 per share, respectively. The total fair value of options that vested in years ended December 31, 2022 and 2021, was $239 thousand and $67 thousand, respectively. For the years ended December 31, 2022 and 2021, the Company recorded stock-based compensation expense of $157 thousand and $219 thousand, respectively, related to stock options. As of December 31, 2022, there was $277 thousand of total unrecognized compensation expense related to non-vested share-based option compensation arrangements. The unrecognized compensation expense is estimated to be recognized over a remaining weighted-average period of 1.42 years at December 31, 2022.

Restricted Securities

A summary of restricted securities activity as of December 31, 2022 and changes for the year then ended are presented below:

		Weighted-Average
Restricted Securities	Number of Grants	Grant Date Fair Value
Unvested balance as of December 31, 2021	254	$	387.05
Vested	(200)	$	387.50
Cancelled/Forfeited	(54)	$	385.38
Unvested balance as of December 31, 2022	—	$	—

For years ended December 31, 2022 and 2021, the Company recorded stock-based compensation expense of $3 thousand and $96 thousand, respectively, related to the time-based restricted securities.