STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2023

STOCK-BASED COMPENSATION

SHARE-BASED COMPENSATION, STOCK OPTIONS, AND RESTRICTED SECURITIES

10. STOCK-BASED COMPENSATION

In October 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’s 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 options, restricted common stock, restricted stock units (“RSUs”), and stock appreciation rights to employees, consultants, and non-employee directors of the Company.

As of March 31, 2023, the total number of shares available for issuance under the 2015 Plan was 792,797 shares.

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

Stock-based compensation

The following table summarizes stock-based compensation expense by financial statement line item in the Company’s condensed consolidated statements of operation for each of the three months ended March 31, 2023 and 2022:

	Three Months Ended March 31,
(In thousands)	2023		2022
Research and development	$	1	$	6
General and administrative		61		50
Total	$	62	$	56

The fair value of each option award is estimated on the date of grant using the Black‑Scholes option pricing model, which uses the following assumptions; (i) Risk-free interest rate, (ii) Expected dividend yield, (iii) Expected term and (iv) Expected volatility. 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 Company grants 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.

The Company granted 1,300 options during the three months ended March 31, 2023 all of which were forfeited in the first quarter of the current fiscal year.

Stock options

The following table summarizes the stock option activity for the three months ended March 31, 2023:

				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
		Exercise		Contractual	Intrinsic
Options	Shares	Price		Term in Years	Value
Outstanding at December 31, 2022	136,568	$	36.46	9.72		$	—
Granted	1,300	$	2.30
Cancelled/Forfeited	(5,400)	$	2.45
Outstanding as of March 31, 2023	132,468	$	37.51	9.46		$	—
Vested and Exercisable as of March 31, 2023	13,368	$	349.39	7.93		$	—
Vested and expected to vest as of March 31, 2023	132,468	$	37.51	9.46		$	—

The total fair value of options that vested in the three months ended March 31, 2023 and 2022 was $118 thousand and $239 thousand, respectively. During the three months ended March 31, 2023 and 2022, the Company recorded

stock-based compensation expense of $62 thousand and $48 thousand, respectively, related to stock options. As of March 31, 2023, total unrecognized compensation expense related to non-vested share-based option compensation arrangements amounted to $206 thousand and is estimated to be recognized over a period of 1.33 years.