On March 31, 2017, the Company adopted, and the stockholders approved, the 2017 Stock Incentive Plan (the “Plan”) authorizing 2,000,000 shares of Company Common Stock for issuance as stock options and restricted stock units to employees, directors or consultants. In May 2019, the stockholders ratified an increase in the Plan authorizing an additional 2,100,000 shares of Common Stock and in June 2020 ratified a further authorization of 1,900,000 shares of Common Stock for a total of 6,000,000 shares subject to the Plan. In June 2021, the stockholders ratified an increase in the Plan authorizing an additional 1,500,000 shares of Common Stock to a total of 7,500,000 shares. At March 31, 2022, there were 1,528,306 shares of Common Stock available for grant under the Plan.

The Company generally recognizes share-based compensation expense on the grant date and over the period of vesting or period that services will be provided. In January 2022 the Company recognized severance acceleration of $242 of share-based compensation expense resulting from the resignation of the Company’s CEO as part of a management transition plan.

Stock Options

The following table summarizes stock option activity for the three months ended March 31, 2022:

				Weighted Average
	*Options on*					*Remaining*		*Aggregate*
	*Common*			*Exercise*		*Contractual*		*Intrinsic*
	*Shares*			*Price*		*Term*		*Value*
Outstanding January 1, 2022		3,935,883		$	5.24		4.79
Granted		104,000		$	3.55
Exercised		(50,000	)	$	1.50
Forfeited, cancelled, expired		(388,912	)	$	5.01
Outstanding March 31, 2022		3,600,971		$	5.27		3.58	$	774
Exercisable March 31, 2022		2,549,388		$	2.86		2.03	$	761

All outstanding options at March 31, 2022, are service-based options.

The Company uses the Black-Scholes option pricing model to determine the fair value of the options granted. The following table summarizes the assumptions used to compute the fair value of options granted to employees and non-employees:

	For the Three Months
	Ended March 31,
	2022			2021
Expected stock price volatility		49	%		50	%
Risk-free interest rate		1.57	%		0.89	%
Forfeiture rate		0	%		0	%
Expected dividend yield		0	%		0	%
Expected life of options - years		1.39			5.70
Weighted-average fair value of options granted	$	1.72		$	2.42

Estimated volatility is a measure of the amount by which the Company’s stock price is expected to fluctuate each year during the expected life of awards. The Company’s estimated volatility was based on an average of the historical volatility of peer entities whose stock prices were publicly available. The Company’s calculation of estimated volatility is based on historical stock prices of these peer entities over a period equal to the expected life of the awards. The Company uses the historical volatility of peer entities due to the lack of sufficient historical data of its stock price.

The risk-free interest rate assumption is based upon observed interest rates on zero coupon U.S. Treasury bonds whose maturity period is appropriate for the term of the options. The dividend yield of zero is based on the fact that the Company has never paid cash dividends and has no present intention to pay cash dividends. The Company calculates the expected life of the options using the Simplified Method for the employee stock options as the Company does not have sufficient historical data.

Restricted Stock Units

The Plan provides for the grant of restricted stock units (“RSUs”). RSUs are settled in shares of the Company’s Common Stock as the RSUs become vested. The following table summarizes RSU activity under the Plan for the three months ended March 31, 2022:

				Weighted Average		Weighted Average
	*Service-Based*			*Grant Date*		*Vesting*
	*RSU's*			*Fair Value*		*Period (Years)*
Unvested at January 1, 2022		269,303		$	6.47
Granted - service based		160,779		$	2.41
Vested		(49,252	)	$	4.72
Forfeited and cancelled		(23,357	)	$	4.19
Unvested at March 31, 2022		357,473		$	5.03	2.05

Share-Based Compensation Expense

The Company recorded share-based compensation for options and RSUs in its statements of operations for the relevant periods as follows:

	Three Months Ended March 31,
	2022		2021
Selling, general and administrative	$	894	$	602
Research and development		135		257
Total share-based expense	$	1,029	$	859

As of March 31, 2022, total estimated compensation expense of stock options granted and outstanding but not yet vested was $1,826 which is expected to be recognized over the weighted average period of 2.2 years. As of March 31, 2022, total estimated compensation cost of RSUs granted and outstanding but not yet vested was $1,422 which is expected to be recognized over the weighted average period of 2.05 years.

Subsequent Equity Awards

On April 19, 2022, the Company granted the following equity awards to the Company’s newly appointed CEO under the Plan, subject to the terms of the Plan and a related employment agreement:

●

An RSU award on 17,301 shares of Common Stock vesting in one year.

●

An RSU award on 233,564 shares of Common Stock vesting in annual installments over three years.

●

A non-qualified stock option with a ten-year term on 475,662 shares of Common Stock at an exercise price of $2.89 per share vesting in annual installments over three years.

●

A non-qualified performance-based stock option with a ten-year term on 921,832 shares of Common Stock at an exercise price of $2.89 per share vesting on achievement of market capitalization targets.

On April 19, 2022, the Company also granted the following equity awards to the Company’s newly appointed President as inducement grants outside the Plan and subject to the terms of a related employment agreement:

●

An RSU award on 175,173 shares of Common Stock vesting in annual installments over three years.

●

A non-qualified stock option with a ten-year term on 356,747 shares of Common Stock at an exercise price of $2.89 per share vesting in annual installments over three years.

●

A non-qualified performance-based stock option with a ten-year term on 692,398 shares of Common Stock at an exercise price of $2.89 per share vesting on achievement of market capitalization targets.