Share-Based Compensation

9 Months Ended

Sep. 30, 2023

Share-Based Compensation

Share-Based Compensation

10. Share-based Compensation

As of September 30, 2023, the Company had 218,810 options with contractual lives of ten years and 393,229 options with contractual lives of six years offered under the Company’s 2007 Equity Incentive Plan (the “2007 Plan”), which was restated and approved by the shareholders on December 12, 2015. As of September 30, 2023, the 2007 Plan had 852,815 authorized unissued options.

The Company uses judgment in determining the fair value of the share-based payments on the date of grant using an option-pricing model with assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the risk-free interest rate of the awards, the expected life of the awards, the expected volatility over the term of the awards, and the expected dividends of the awards. The Company uses the Black-Scholes option pricing model to determine the fair value of share-based payments granted under the guidelines of ASC Topic 718. 

In applying the Black-Scholes methodology to 160,000 options granted in June 2023, the Company used the following assumptions: 

Risk free interest rate, average	3.91%
Expected option life, average	5 years
Expected price volatility, average	91.47%
Expected dividend yield	0%

A summary of the stock option activity under the Company’s plans for the nine months ended September 30, 2023, is as follows:

	Number of shares			Weighted average exercise price
Options outstanding at beginning of year		488,477		$	6.48
Granted		160,000			1.01
Less:
Exercised		—			—
Forfeited prior to vesting		(5,210	)		2.50
Canceled or expired		(31,228	)		7.63
Options outstanding at September 30, 2023		612,039			5.03
Options exercisable at end of September 30, 2023		391,537		$	7.06

As of September 30, 2023, the total remaining unrecognized compensation cost related to non-vested stock options, net of forfeitures, was approximately $186, which will be recognized over a weighted average period of 2.42 years.

Share-based compensation expense has been recorded as follows: 

	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Cost of goods sold	$	2	$	2	$	5	$	6
Sales and marketing		2		2		6		9
Research and product development		17		10		37		34
General and administrative		12		10		32		40
	$	33	$	24	$	80	$	89