Stock-Based Compensation |
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Stock-Based Compensation | Stock-Based Compensation During January 2017, the Company adopted the 2017 Equity Incentive Plan (“2017 Plan”), which provides for the granting of restricted stock, options to purchase shares of common stock and other awards to employees, directors and consultants. In March 2017, the Company amended the 2017 Plan to increase the number of available shares to 660,838. In September 2018, the Company adopted the 2018 Equity Incentive Plan (“2018 Plan”) which provides for the granting of restricted stock, options to purchase shares of common stock, and other awards to employees, directors and consultants, and reserved 1,741,770 shares for this purpose. The 2018 Plan was amended in July 2018 to increase the number of available shares to 1,809,143 shares. In February 2021, the Company adopted the 2021 Equity Incentive Plan (“2021 Plan”) and have reserved a total of 5,202,624 shares under the plan. No further shares will be issued under the 2017 and 2018 plans. There are 1,059,253 shares available for issuance under the 2021 plan as of August 1, 2023. The number of options to be granted under the 2021 Plan, the option exercise prices, and other terms of the options are determined by the Company's Board of Directors (the "Board") in accordance with the terms of the 2021 Plan. Generally, stock options are granted at fair value, become exercisable over a period of to four years, expire in ten years or less and are subject to the employee’s continued employment. On March 22, 2023, in order to retain and motivate employees and other key contributors of the Company, the Board approved a one-time stock option repricing (the “Option Repricing”). Pursuant to the Option Repricing, the exercise price of all of the below stock options to purchase shares of the Company’s common stock previously granted under our 2017 Plan, 2018 Plan and 2021 Plan (the “Repriced Options”) was amended as of April 4, 2023 (the “Effective Date”) to reduce the exercise prices of such options to a price equal to or greater than the closing price per share of the Company’s common stock on The Nasdaq Stock Market on the Effective Date, which was $0.41 per share (the “Nasdaq Market Price”), on the terms described below:
The Company treated the Option Repricing as a modification to the original stock option grant because the terms of the agreements were modified. The total number of options issued and outstanding were not impacted by the Option Repricing. The calculation of the incremental compensation expense is based on the excess of the fair value of the award measured immediately before and after the modification. The total incremental expense calculated to be recognized over the service period is $0.3 million. As a result, the Company recognized an incremental compensation expense for vested shares of $0.2 million associated with the modification arising from the Option Repricing for the three and six months ended June 30, 2023. Stock-based compensation expense was recorded in the following financial statement line items within the statement of operations for the periods ended June 30, 2023 and 2022:
The following is a summary of option activity under the Company’s Stock Option Plans:
The weighted average fair value of the options granted during the six months ended June 30, 2023 and 2022 was $0.31 and $2.45, respectively. The options were valued using the Black-Scholes option-pricing model for the six months ended June 30, 2023 and 2022 with the following assumptions:
No options were exercised in the six months ended June 30, 2023. The intrinsic value of stock options exercised for the six months ended June 30, 2022 was $0.2 million. As of June 30, 2023, there was $4.9 million of total unrecognized compensation expense related to unvested options that will be recognized over a weighted average period of 2.7 years. Restricted Stock Units A restricted stock unit (“RSU”) represents the right to receive one of the Company’s common stock upon vesting of the RSU. The fair value of each RSU is based on the closing price of the Company’s common stock on the date of grant. The following is a summary of RSU activity for the 2021 Plan for the six months ended June 30, 2023:
As of June 30, 2023, there was $0.4 million of unrecognized compensation expense related to unvested RSUs, which are expected to be recognized over a weighted average period of 0.9 years.
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