14. Share-based Compensation

The 2019 Plan provides for the granting of incentive stock options, nonqualified stock options, restricted stock, stock appreciation rights (“SARs”), restricted stock units, performance awards, dividend equivalent rights and other awards, which may be granted singly, in combination, or in tandem, and which may be paid in cash, shares of common stock of the Company or a combination of cash and shares of common stock of the Company. The Company initially reserved a total of 57,143 shares of the Company’s common stock for awards under the 2019 Plan. Effective as of May 26, 2020 and May 3, 2021, respectively, the Board approved an increase of the number of authorized shares of common stock reserved under the 2019 Plan from 57,143 shares of common stock to 485,715 and from 485,715 shares of common stock to 571,429 shares of common stock, all of which may be delivered pursuant to incentive stock options.

On December 31, 2024, the Board approved an additional 780,000 shares of common stock to be reserved under the 2019 Plan, such that total of number of shares underlying the Plan is 1,651,429 of which 975,907 shares have already been awarded or exercised. The Company intends to submit this 780,000 increase under the 2019 for stockholder approval as part of the 2025 Proxy Statement. Subject to adjustments pursuant to the 2019 Plan, the maximum number of shares of common stock with respect to which stock options or SARs may be granted to an executive officer during any calendar year is 14,286 shares of common stock.

The following table contains information about the 2019 Plan as of March 31, 2025:

 Schedule of Information about Incentive Plan 

Incentive stock options

On January 2, 2025, the Company granted options to purchase up to 150,000 shares of the Company’s common stock at a per share exercise price of $3.83 to Adam Levy for his service as our Chief Executive Officer pursuant to the terms of his Executive Employment Agreement dated December 31, 2024, all of which vests over a period of four years beginning December 31, 2025.

On January 2, 2025, the Company granted options to purchase up to 100,000 shares of the Company’s common stock at a per share exercise price of $3.83 to Joe McGuire for his service as our Chief Financial Officer pursuant to the terms of his Executive Employment Agreement dated December 31, 2024, which 25% vest beginning September 1, 2025 and the remainder over a period of three years.

The following table summarizes the Company’s incentive stock option activity and related information for the period ended March 31, 2025:

   Schedule of Incentive Stock Option Activity

As of March 31, 2025, vested outstanding stock options had $419 thousand intrinsic value as the exercise price is greater than the estimated fair value of the underlying common stock, respectively. As of March 31, 2025, there was approximately $715 thousand of total unrecognized share-based compensation related to unvested stock options, which the Company expects to recognize over the next 3 months excluding options fully contingent upon certain sales-based milestones being achieved within 18 to 36 months of commercial release.

The Company recognizes compensation expense for stock option awards on a straight-line basis over the applicable service period of the award. The service period is generally the vesting period.

The following assumptions were used to calculate share-based compensation expense for the three months ended March 31, 2025 and 2024:

   Schedule of Assumptions used in Share-based Compensation

The Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. Accordingly, the Company has elected to use the “simplified method” to estimate the expected term of its share-based awards. The simplified method computes the expected term as the sum of the award’s vesting term plus the original contractual term divided by two.

The company estimated the expected volatility input for the Black-Scholes model using the historical volatility of its own publicly traded common stock over a period commensurate with the expected term of the option.

Restrictive stock awards

Effective as of January 2, 2025, the Company granted an aggregated restricted stock award of 26,116 shares of the Company’s common stock to Adam Levy for his service as our Chief Executive Officer pursuant to the terms of his Executive Employment Agreement dated December 31, 2024. The shares vest monthly from January 2, 2025 through December 31, 2025. Under ASC 718, Compensation—Stock Compensation, the Company has measured the value of the 26,116 shares granted based on the closing price of the Company’s stock at the grant date of the RSU Grant ($3.83 per share).

Effective as of January 1, 2025, the Company granted fully vested restricted stock awards of 2,500 shares of the Company’s common stock to two board members. Under ASC 718, Compensation—Stock Compensation, the Company has measured the value of the aggregated 5,000 shares granted based on the closing price of the Company’s stock at the grant date of the RSU Grant ($3.83 per share).

Effective as of January 2, 2025, the Company granted an aggregated restricted stock award of 4,082 fully vested shares of the Company’s common stock to Joseph McGuire for reimbursed expenses in the prior year. Under ASC 718, Compensation—Stock Compensation, the Company has measured the value of the 4,082 shares granted based on the closing price of the Company’s stock at the grant date of the RSU Grant ($4.62 per share).

Effective as of January 1, 2024, the Company granted an aggregated restricted stock award of 22,222 shares of the Company’s common stock to Adam Levy for his service as our Chief Executive Officer pursuant to the terms of his Executive Employment Agreement dated December 31, 2023. The shares vest monthly from April 1, 2024 through December 31, 2024. Under ASC 718, Compensation—Stock Compensation, the Company has measured the value of the 22,222 shares granted based on the closing price of the Company’s stock at the grant date of the RSU Grant ($2.25 per share).

Schedule of Restricted Stock Units Granted 

Compensation expense will be recognized ratably over the total vesting schedule. The Company will periodically adjust the cumulative compensation expense for forfeited awards. The Company recognizes the reversal of any previously recognized compensation expense on forfeited awards in the period the awards are forfeited. Share-based compensation of $166 thousand and $54 thousand has been recorded for the three months ended March 31, 2025 and 2024, respectively. As of March 31, 2025, there was $75 thousand unrecognized share-based compensation related to unvested RSUs, which the Company expects to recognize through December 2025.

Warrants

The following table shows a summary of common stock warrants through March 31, 2025:

 Schedule of Common Stock Warrants 

As of March 31, 2025 and 2024, vested outstanding warrants had $2 thousand and $0 thousand, respectively, intrinsic value as the exercise price is greater than the estimated fair value of the underlying common stock.