Share-Based Compensation

3 Months Ended

Mar. 31, 2024

Share-Based Compensation

Share-Based Compensation

9. Share-based Compensation

As of March 31, 2024, the Company had 217,810 options with contractual lives of ten years and 370,000 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 March 31, 2024, the 2007 Plan had 857,044 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 three months ended March 31, 2024, is as follows:

	Number of shares			Weighted average exercise price
Options outstanding at beginning of year		607,810		$	5.03
Granted		—			—
Less:
Exercised		—			—
Forfeited prior to vesting		(20,000	)		—
Canceled or expired		—			—
Options outstanding at March 31, 2024		587,810			5.16
Options exercisable at end of March 31, 2024		416,898		$	6.76

As of March 31, 2024, the total remaining unrecognized compensation cost related to non-vested stock options, net of forfeitures, was approximately $120, which will be recognized over a weighted average period of 2.24 years.

Share-based compensation expense has been recorded as follows: 

	Three months ended March 31,
	2024		2023
Cost of goods sold	$	2	$	—
Sales and marketing		2		—
Research and product development		12		—
General and administrative		10		—
	$	26	$	—