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’s stockholders approved the 780,000 share increase at the Company’s 2025 Annual Meeting of Stockholders held on June 17, 2025. 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 September 30, 2025:

 Schedule of Information about Incentive Plan

Incentive stock options

On January 2, 2025, the Company granted options to purchase up to 250,000 shares of the Company’s common stock at a per share exercise price of $3.83, all of which vest over a period of four years beginning December 31, 2025.

New Board Member

The Board granted a new board member an option to purchase up to 30,000 shares of the Company’s common stock at a per share exercise price of $2.25 for their services as Board members until the Company’s 2026 Annual Meeting of Stockholders. The options vest in equal 2,500 share amounts over the continuous twelve months beginning on July 31, 2025.

Non-incentive stock options

On June 25, 2025, the Company granted to each of its four non-employee Board members options to purchase up to 30,000 shares of the Company’s common stock at a per share exercise price of $2.32 for their services as Board members until the Company’s 2026 Annual Meeting of Stockholders. The options vest in equal 2,500 share amounts over the continuous twelve months beginning on July 31, 2025.

The following table summarizes the Company’s incentive stock option activity and related information for the period ended September 30, 2025:

 Schedule of Incentive Stock Option Activity

As of September 30, 2025, vested outstanding stock options had $224 thousand intrinsic value. As of September 30, 2025, there was approximately $383 thousand of total unrecognized share-based compensation related to unvested stock options, which the Company expects to recognize over the next 29 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 nine months ended September 30, 2025:

 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.

Restricted stock awards

On June 25, 2025, the Company granted restricted stock awards of 10,000 shares of the Company’s common stock to two Board members for the services as Chairperson of the Board and Chairperson of the Audit Committee, respectively, until the Company’s 2026 Annual Meeting of Stockholders. The restricted stock awards vest ratably over the continuous twelve months beginning on July 31, 2025.

On January 1, 2025 and January 2, 2025, the Company granted 35,198 restricted stock awards to certain executives and Board members.

 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. As of September 30, 2025, there was $51 thousand unrecognized share-based compensation related to unvested RSUs, which the Company expects to recognize through June 2026.

Share-based compensation of $498 thousand and $271 thousand has been recorded for the nine months ended September 30, 2025 and 2024, respectively.

Warrants

The following table shows a summary of common stock warrants through September 30, 2025:

 Schedule of Common Stock Warrants

As of September 30, 2025 and 2024, 5,027,597 vested outstanding warrants had no intrinsic value as the exercise price was greater than the estimated fair value of the underlying common stock.