Note 12. Stock-Based Compensation

The Company has two pre-Merger legacy equity incentive plans: the Cancer Genetics Inc. 2011 Equity Incentive Plan (the “2011 Plan”), and the StemoniX Inc. 2015 Stock Option Plan (the “2015 Plan”, and collectively, the “Frozen Stock Option Plans”). The Frozen Stock Option Plans as well as the 2021 Plan (as defined below) are meant to provide additional incentive to officers, employees and consultants to remain in the Company’s employment. Options granted are generally exercisable for up to 10 years. Effective with the Merger, the Company is no longer able to issue options from the Frozen Stock Option Plans. Effective with the Merger, the Vyant Bio 2021 Equity Incentive Plan (the “2021 Plan”) came into effect, pursuant to which the Company’s Board of Directors may grant up to 900,000 of equity-based instruments to officers, key employees, and non-employee consultants.

As StemoniX was the acquirer for accounting purposes, the pre-Merger vested stock options granted by CGI under the 2008 and 2011 Plans are deemed to have been exchanged for equity awards of the Company. The exchange of StemoniX stock options for options to purchase Company common stock was accounted for as a modification of the StemoniX stock options; however, the modification did not result in any incremental compensation expense as the modification did not increase the fair value of the stock options.

For StemoniX stock options issued prior to the Merger, the expected volatility was estimated based on the average historical volatility of similar entities with publicly traded shares as StemoniX’s shares historically were not publicly traded and its shares rarely traded privately. After the Merger, the Company used Vyant’s historical volatility to determine the expected volatility of post-Merger option grants. The risk-free rate for the expected term of the option is based on the U.S. Treasury yield curve at the date of grant.

The Company uses a simplified method to determine the expected term for the valuation of employee options. This method effectively assumes that exercise occurs over the period from vesting until expiration, and therefore the expected term is the midpoint between the service period and the contractual term of the award. The simplified method is applicable to options with service conditions. For options granted to nonemployees, the contractual term is used for the valuation of the options.

On March 30, 2021, the Company granted 230,300 stock options to officers and other employees, 15,618 stock options to independent Board members and a restricted stock unit (“RSU”) of 1,735 shares to the Company’s Board chair. The options granted to officers and employees vest 25% one year from the grant date and thereafter equally over the next 36 months. The options granted to Board members vested upon grant. The Board chair RSU vested one year from the grant date.

During the nine months ended September 30, 2022, the Company granted 27,516 stock options to officers and other employees and 81,929 restricted stock units (“RSUs”) to the Company’s Board of Directors. The options granted to officers and employees vest over various terms based on the underlying agreement, as 121,344 contain performance vesting criteria. The RSUs granted to Board members vest one year from the grant date. As of September 30, 2022 68,899 of the RSU’s remain outstanding.

As of September 30, 2022, there were 492,288 additional shares available for the Company to grant under the 2021 Plan. The grant-date fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option-pricing model. The assumptions for stock option grants during the nine months ended September 30, 2022 and 2021 are provided in the following table.

 Schedule of Assumptions for Stock Option Grants

Stock option activity during the nine months ended September 30, 2022 and 2021 is as follows:

 Schedule of Stock Option Activity

The weighted average grant-date fair value of options granted during the nine months ended September 30, 2022 and 2021 was $2.51 and $19.45, respectively.

The aggregate intrinsic value of options outstanding as of September 30, 2022 was $1 thousand. The intrinsic value of options exercisable as of September 30, 2022 was $1 thousand. The total intrinsic value of options exercised was $5 thousand and $0 thousand for the nine months ended September 30, 2022 and 2021, respectively.

The Company recognized stock-based compensation related to different instruments for the three and nine months ended September 30 as follows:

 Schedule of Share Based Compensation Activity

As of September 30, 2022, there was $2.5 million of total unrecognized compensation cost related to unvested stock options granted under the Plan. That cost is expected to be recognized over a weighted average period of 2.5 years.