(9) Stock-Based Compensation

On July 26, 2023, our stockholders approved and adopted the Xtant Medical Holdings, Inc. 2023 Equity Incentive Plan (the “2023 Plan”), which replaced the Xtant Medical Holdings, Inc. 2018 Equity Incentive Plan (as amended and restated, the “2018 Plan”) with respect to future grants of equity awards, although the 2018 Plan continues to govern equity awards granted under the 2018 Plan. The 2023 Plan permits the Board of Directors, or a committee thereof, to grant to eligible employees, non-employee directors, and consultants of the Company non-statutory and incentive stock options, stock appreciation rights, restricted stock awards, restricted stock units, deferred stock units, performance awards, non-employee director awards, and other stock-based awards. The Board of Directors may select 2023 Plan participants and determine the nature and amount of awards to be granted. The maximum number of shares of our common stock available for issuance under the 2023 Plan, subject to adjustment pursuant to the terms of the 2023 Plan, is (i) 5,500,000 shares of common stock; (ii) 7,695,812 shares of common stock remaining available for issuance under the 2018 Plan but not subject to outstanding awards under the 2018 Plan as of July 26, 2023; and (iii) up to 6,686,090 shares of common stock subject to awards outstanding under the 2018 Plan as of July 26, 2023 but only to the extent such awards are subsequently forfeited, cancelled, expire, or otherwise terminate without the issuance of such shares of common stock after such date.

Total stock-based compensation expense recognized for employees and directors was $0.8 million and $0.9 million for the three months ended March 31, 2025 and 2024, respectively, and was recognized as general and administrative expense.

Stock Options

Stock option activity, including options granted under the 2023 Plan and 2018 Plan, was as follows for the three months ended March 31, 2025 and 2024:

 Schedule of Stock Options Activity 

As of March 31, 2025, there was approximately $0.8 million of total unrecognized compensation expense related to unvested stock options, which expense is expected to be recognized over a weighted-average period of 2.2 years.

Restricted Stock Units and Deferred Sock Units

Restricted stock unit and deferred stock unit activity for awards granted under the 2023 Plan and 2018 Plan was as follows for the three months ended March 31, 2025 and 2024:

 Schedule of Restricted Stock Activity 

Total compensation expense related to unvested restricted stock units and deferred stock units not yet recognized was $2.7 million as of March 31, 2025, which expense is expected to be allocated to expenses over a weighted-average period of 2.5 years.

Performance Stock Units

During 2024, the Company began awarding performance stock units, or PSUs, under the 2023 Plan to certain executive officers and key employees. The Company has awarded an aggregate of 1,894,985 PSUs, assuming target performance, and each PSU award can be earned and vested at the end of a three-year performance period based on the total stockholder return, or TSR, of the Company’s common stock price relative to a group of peer companies and subject to continued service to the Company. The number of shares of the Company’s common stock to be issued upon vesting and settlement of the PSUs range from 0% to 200% of the target number of shares underlying the award, depending on the Company’s TSR performance against the group of peer companies. The fair value of the PSUs was estimated using the Monte Carlo simulation model and the following assumptions: the volatility of the peer companies was unique to each company used in simulation, Company volatility of 93.34%, risk-free interest rate of 4.53%, correlation with index of 0.06, and dividend yield of 0%.

There was no change in shares outstanding for PSU awards granted under the 2023 Plan during the three months ended March 31, 2025.

The total compensation cost related to unvested PSUs was $1.6 million as of March 31, 2025, which is expected to be allocated to expenses over a weighted-average period of 1.9 years.