Quarterly report pursuant to Section 13 or 15(d)

Stockholders??? Equity

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Stockholders’ Equity
 3 Months Ended
Mar. 31, 2024
Equity [Abstract]  
Stockholders’ Equity Stockholders’ Equity
Our authorized capital stock consists of 50 million shares of common stock, $0.0005 par value, and one million shares of preferred stock, $0.0005 par value.
Preferred Stock
The preferred stock authorized under our certificate of incorporation may be issued from time to time in one or more series. As of March 31, 2024 and December 31, 2023, no shares of preferred stock had been issued.
Common Stock Dividends
No dividends were declared during the three months ended March 31, 2024 or 2023.
Common Stock
Stock Repurchase Program
On March 15, 2023, the Company announced that its board of directors had approved a new stock repurchase program. Under the stock repurchase program, the Company was authorized to repurchase up to $6.0 million of its outstanding shares of common stock from time to time, over six-month period. This repurchase program expired on September 15, 2023. During the three months ended March 31, 2024, the Company did not make any common shares repurchase under this stock repurchase program. There were 63,616 shares repurchased under this new program at an aggregate purchase price of $0.5 million during the three months ended March 31, 2023.
The 2022 Directors’ Equity Compensation Plan
On May 19, 2022, the stockholders of the Company approved the 2022 Directors’ Equity Compensation Plan (the “2022 Directors’ Plan”) at the 2022 Annual Meeting of Stockholders of the Company (the “2022 Annual Meeting”). The 2022 Directors’ Plan amended and restated the Company’s Amended and Restated 2010 Directors’ Equity Compensation Plan and provided for an increase in the number of shares reserved for issuance under the plan by 300,000 shares and for the adjustment of the per share exercise price of stock options granted under the 2022 Plan in the event of any change in the outstanding shares of common stock of the Company as a result of, among other things, any distribution or special dividend to stockholders of shares, cash or other property (other than regular cash dividends).
During the three months ended March 31, 2024, there were 210,000 stock options issued under the 2022 Directors Plan. No shares were issued under the 2022 Directors' Plan during the three months ended March 31, 2023.
As of March 31, 2024, there were no shares of common stock available to be issued under the 2022 Directors’ Plan.
The 2010 Directors’ Equity Compensation Plan
On May 20, 2021, the stockholders of the Company approved the Amended and Restated 2010 Directors’ Equity Compensation Plan (the “Amended 2010 Directors’ Plan”) at the 2021 Annual Meeting of Stockholders of the Company (the “2021 Annual Meeting”). The Amended 2010 Directors’ Plan authorized the issuance of up to 775,000 shares of common stock. This plan was amended and restated on April 11, 2022 (to become the 2022 Directors' Plan), subject to stockholder approval, which was obtained at the 2022 Annual Meeting.
The 2022 Equity Compensation Plan
On May 9, 2022, the stockholders of the Company approved the 2022 Equity Compensation Plan (the “2022 Plan”) at the 2022 Annual Meeting. The 2022 Plan amended and restated the Company’s Amended and Restated 2010
Equity Compensation Plan and provided for an increase in the number of shares reserved for issuance under the plan by 1,000,000 shares and for the adjustment of the per share exercise price of stock options granted under the 2022 Plan in the event of any change in the outstanding shares of common stock of the Company as a result of, among other things, any distribution or special dividend to stockholders of shares, cash or other property (other than regular cash dividends).
During the three months ended March 31, 2024 and 2023, there were 1,080,000 and 205,000 stock options issued under the 2022 Plan, respectively.
As of March 31, 2024, there were 302,035 shares of common stock available to be issued under the 2022 Plan.
The 2010 Equity Compensation Plan
On May 20, 2021, the stockholders of the Company approved the Amended and Restated 2010 Equity Compensation Plan (the “Amended 2010 Plan”) at the 2021 Annual Meeting. The Amended 2010 Plan authorized the issuance of up to 4,900,000 shares of common stock. This plan was amended and restated on April 11, 2022 (to become the 2022 Plan), subject to stockholder approval, which was obtained at the 2022 Annual Meeting.
The 2018 Stock Incentive Plan
On April 12, 2018, the Company's stockholders approved the 2018 Stock Incentive Plan (the “2018 Stock Plan”). The 2018 Stock Plan provides for the grant of incentive stock options to eligible employees of the Company, and for the grant of non-statutory stock options to eligible employees, directors and consultants. The 2018 Stock Plan provides that the total number of shares that may be issued pursuant to the 2018 Stock Plan is 2,300,000 shares. At April 12, 2018, all 2,300,000 shares had been granted in the form of stock options to Ted Karkus (the “CEO Option”), our Chief Executive Officer ("CEO").
The 2018 Stock Plan required certain proportionate adjustments to be made to the stock options granted under the 2018 Stock Plan upon the occurrence of certain events, including a special distribution (whether in the form of cash, shares, other securities, or other property) in order to maintain parity. Accordingly, the Compensation Committee of the board of directors, as required by the terms of the 2018 Stock Plan, adjusted the exercise price of the CEO Option in connection with each special cash dividend paid by the Company proportionately to the amount of the dividend paid. The final exercise price of the CEO Option was $0.60 per share after the latest special cash dividend paid on June 3, 2022.
During the three months ended March 31, 2024 and 2023, 0 and 1,100,000 and options were exercised, respectively, under the 2018 Stock Plan.
Inducement Option Awards
On January 1, 2024, the Company issued a non-qualified stock option to Jed A. Latkin, the Company's Chief Operational Officer (the “COO”), as an inducement to his employment with the Company, effective January 1, 2024 (the “COO Award”). The COO Award entitles the COO to purchase up to 500,000 shares of the Company’s common stock at an exercise price of $6.00 per share. The COO Award vested 25% on the date of grant and the remaining portion will vest 25% per year for the next three years on each of the first three anniversaries of the commencement date of Mr. Latkin’s employment, subject to his continued service on each vesting date. The COO Award expires on the seventh anniversary of the grant date. The COO Award provides for certain proportionate adjustments to be made in the event of any change in the outstanding shares of common stock of the Company as a result of, among other things, any distribution or special dividend to stockholders of shares, cash or other property (other than regular cash dividends) in order to maintain parity. The grant date fair value of the COO Award was approximately $1.3 million.

No shares of common stock were issued by the Company upon the exercise of outstanding inducement option awards during the three months ended March 31, 2024 and 2023.
All inducement awards have been granted outside of the Company’s equity compensation plans.

Summary of all option grants
The following table summarizes stock option activity during the three months ended March 31, 2024, (in thousands, except per share data).
Number of Shares Weighted Average Exercise Price  Weighted Average Remaining Contractual Life
(in years)		 Total Intrinsic Value
Outstanding as of January 1, 2024 2,951 $ 7.30  4.8 $ 693 
Granted 1,790 6.00  7.0 — 
Forfeited (289) 8.81  —  — 
Outstanding as of March 31, 2024 4,452 $ 6.68  5.6 3,012 
Options vested and exercisable 2,235 $ 6.43  4.7 2,290 
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the closing stock price of $6.47 for the Company’s common stock on March 31, 2024.
During the three months ended March 31, 2024, the Company granted options to purchase 1,790,000 shares of the Company’s common stock to various employees and consultants. The options grant date fair value was valued at $5.3 million during the three months ended March 31, 2024, using the Black-Scholes option pricing model to calculate the grant-date fair value of the options. The fair value of stock options for employees are expensed over the vesting term in accordance with the terms of the related stock option agreements and are expensed over the terms of the consulting agreement for consultants.
The following table summarizes weighted average assumptions used in determining the fair value of the stock options at the date of grant during the three months ended March 31, 2024 and 2023:
For the three months ended
March 31, 2024 March 31, 2023
Exercise price $ 6.00  $ 6.84 
Expected term (years) 4.5 4.3
Expected stock price volatility 79.6  % 80.9  %
Risk-free rate of interest 4.2  % 3.8  %
Expected dividend yield (per share) 0  % 0  %
The expected stock price volatility is based on the Company’s historical common stock trading prices and the expected term is based on the period that the Company’s stock-based awards are expected to be outstanding based on the simplified method.
Stock Warrants
During the three months ended March 31, 2024, there were no warrants issued.
The following table summarizes warrant activity during the three months ended March 31, 2024 (in thousands, except per share data):
Number of Shares Weighted Average Exercise
Price		 Weighted Average
Remaining Contractual Life
 (in years)
Outstanding as of January 1, 2024 831 $ 11.16  1.9
Forfeited (455) 12.83
Outstanding as of March 31, 2024 376 $ 9.13  3.9
Warrants vested and exercisable 376 $ 9.13  3.9
The Company recognized $1.6 million and $0.9 million of share-based compensation expense during the three months ended March 31, 2024 and 2023, respectively. The Company will recognize an aggregate of approximately $8.1 million of remaining share-based compensation expense related to outstanding stock options over a weighted average period of 4.0 years.