Note 11 – Stock- based compensation

Issuance of Common Stock

Non-employee members of the Board of Directors were granted an aggregate of 103,404 shares of Common Stock as compensation, in lieu $111 of cash compensation, for service as directors during the year ended December 31, 2020. The Company recorded $56 in accrued expenses as of December 30, 2020, in relation to the service as directors for the three months ended December 31, 2020. On January 13, 2021, the non-employee members of the Board of Directors were granted an aggregate of 52,317 shares of Common Stock as compensation, in lieu of cash compensation, for service as directors during the fourth quarter of 2020, pursuant to the Company's non-employee director compensation policy. The number of shares granted to the Company's directors, in lieu of cash compensation, is determined by the dollar amount of quarterly fees due under the non-employee director compensation policy divided by the fair market value of a share of Common Stock as of the grant date.

On September 1, 2020 the Company entered into a securities purchase agreement (the "Securities Purchase Agreement") under which it sold and issued to an institutional investor (the "Holder"), in a registered direct offering, an aggregate of 3,200,000 shares of the Company's common stock par value $0.0001 per share (the "Common Stock"), and pre-funded warrants to purchase an aggregate of 5,533,625 shares of Common Stock (the "Pre-Funded Warrants"). The offering price was $1.145 for each share of Common Stock and $1.144 for each Pre-Funded Warrant. The Pre-Funded Warrants were immediately exercisable at a price of $0.001 per share of Common Stock. The shares of common stock into which the Pre-Funded Warrants may be exercised are considered outstanding for the purposes of computing earnings per share because the shares may be issued for little or no consideration, are fully vested, and are exercisable after the original issuance date. Pursuant to the Securities Purchase Agreement, in a concurrent private placement, the Company has also agreed to issue to the purchaser warrants to purchase up to 8,733,625 shares of Common Stock (the "Private Placement Warrants"). These warrants were immediately exercisable at an exercise price of $1.30 per share and expire on the fifth anniversary of the date of issuance. In connection with the closing of the offering, the Company received gross proceeds of $9,994 before deducting placement agent fees and other offering expenses of $849, from the issuance of the Common Stock, the Pre-Funded Warrants and the Private Placement Warrants.

Issuance of Warrants to Purchase Common Stock

On January 1, 2019, the Company entered into an amended and restated consultant agreement to restate and replace the existing consultant agreement dated October 1, 2018 with a service provider which shall continue until September 30, 2019, unless and until sooner terminated by the Company or service provider by providing at least thirty days prior written notice. Pursuant to the agreement, the Company issued a fully-vested and nonforfeitable warrant on February 13, 2019 to purchase 50,000 shares of the Company's common stock, with an exercise price of $5.00 per share, and expires March 20, 2022. The Company recorded $90 as general and administrative expense in the accompanying consolidated statement of comprehensive loss for the year ended December 31, 2019.

On February 13, 2019, the Company issued to an existing service provider for past services rendered a fully-vested and nonforfeitable warrant to purchase 30,000 shares of the Company's common stock, with an exercise price of $5.00 per share, and expires March 20, 2022. The Company recorded $55 as general and administrative expense in the accompanying consolidated statement of comprehensive loss for the year ended December 31, 2019.

On February 6, 2020, the Company entered into a services agreement whereby it agreed to issue warrants to purchase 120,000 shares of common stock of the Company. The warrants will vest over a one-year period on a monthly basis and expire three years from the date of issuance. 60,000 of the granted warrants are exercisable at a price equal to $2.16 per share of common stock and 60,000 of the remaining warrants granted are exercisable at a price equal to $3.50 per share of common stock. The fair value of the warrants were valued on the date of grant at $112 using the Black-Scholes option-pricing model with the following parameters: (1) risk-free interest rate of 1.43%; (2) expected life in years of 3.0; (3) expected stock volatility of 74.82%; and (4) expected dividend yield of 0%. The Company recorded $102 as general and administrative expense in the accompanying consolidated statement of comprehensive loss in relation to the consulting agreement for the year ended December 31, 2020.

On June 11, 2020, the Company entered into a services agreement whereby it agreed to issue warrants to purchase 50,000 shares of common stock of the Company which vested immediately. The warrants are exercisable at $1.17 per share and expire three years from the date of issuance. The fair value of the warrants were valued on the date of grant at $28 using the Black-Scholes option-pricing model with the following parameters: (1) risk-free interest rate of 0.22%; (2) expected life in years of 3.0; (3) expected stock volatility of 73.06%; and (4) expected dividend yield of 0%. The Company recorded $28 as general and administrative expense in the accompanying consolidated statement of comprehensive loss in relation to the consulting agreement for the year ended December 31, 2020. On July 10, 2020 and August 3, 2020, the Company issued an aggregate of 50,000 shares of common stock upon exercise of the warrant which resulted in aggregate proceeds of approximately $59.

In connection with the Securities Purchase Agreement, as described above, the Company issued the Pre-Funded Warrants to purchase up to 5,533,625 shares of its common stock with the aggregate exercise price already being pre-funded to the Company on September 1, 2020 and, consequently, no additional consideration other than the nominal exercise price of $0.001 per warrant share shall be required to be paid to effect any exercise of the Pre-Funded Warrants. The Pre-Funded Warrants will be exercisable until it is exercised in full. Pursuant to the Securities Purchase Agreement, on September 1, 2020, the Company also issued the Private Placement Warrants to purchase 8,733,625 of its common stock at an exercise price of $1.30 per share that expires on September 1, 2025. The terms of both warrants include certain provisions related to fundamental transactions, a cashless exercise provision in the event registered shares are not available, and do not include any mandatory redemption provisions. Therefore, the warrants have been classified as equity upon issuance. As of February 16, 2021, the Pre-Funded Warrants for 5,533,625 shares of common stock and the Private Placement Warrants for 8,733,625 shares of common stock have been exercised.

Warrants

A summary of the Company's warrants to purchase common stock activity is as follows:

As of December 31, 2020 17,048,051 shares of the Company's common stock were issuable upon exercise of outstanding warrants.

Stock Options

2016 Equity Incentive Plan

In December 2016, the Company adopted the Motus GI Holdings, Inc. 2016 Equity Incentive Plan (the "2016 Plan"). Pursuant to the 2016 Plan, the Company's board of directors may grant options to purchase shares of the Company's common stock, stock appreciation rights, restricted stock, stock units, performance shares, performance units, incentive bonus awards, other cash-based awards and other stock-based awards to employees, officers, directors, consultants and advisors. Pursuant to the terms of an annual evergreen provision in the 2016 Plan, the number of shares of common stock available for issuance under the 2016 Plan shall increase annually by six percent (6%) of the total number of shares of common stock outstanding on December 31st of the preceding calendar year; provided, however, that the board of directors may act prior to the first day of any calendar year to provide that there shall be no increase such calendar year, or that the increase shall be a lesser number of shares of our common stock than would otherwise occur. On January 1, 2021, pursuant to an annual evergreen provision, the number of shares of common stock reserved for future grants was increased by 1,936,339 shares. Under the 2016 Plan, effective as of January 1, 2021, the maximum number of shares of the Company's common stock authorized for issuance is 7,592,663. As of December 31, 2020, there were 387 shares of common stock available for future grant under the 2016 Plan.

A summary of the Company's stock option activity is as follows:

The options granted during the years ended December 31, 2020 and 2019 were valued using the Black-Scholes option pricing model using the following weighted average assumptions:

As of December 31, 2020, unamortized share based compensation for stock options was $2,131, with a weighted-average recognition period of 0.81 years.

As of December 31, 2020, outstanding options to purchase 2,537,941 shares of common stock were exercisable with a weighted-average exercise price per share of $4.18.

For the years ended December 31, 2020 and 2019, the Company recorded $2,299 and $2,393, respectively, for share based compensation expense related to stock options.

Restricted Stock Units

The Company recorded $476 and $280 as general and administrative expense in the accompanying consolidated statements of comprehensive loss for the years ended December 31, 2020 and 2019, respectively, in relation to the aggregate 501,265 restricted stock units issued to date to the executives and directors.

A summary of the Company's restricted stock unit awards activity is as follows:

At December 31, 2020, unamortized stock compensation for restricted stock units was $897, with a weighted-average recognition period of 1.08 years.

Stock- based Compensation

The following table sets forth total non-cash share based compensation for the issuance of common stock, options to purchase common stock, warrants to purchase common stock, and restricted stock unit awards by operating statement classification for the years ended December 31, 2020 and 2019: