Equity Incentive Plan

3 Months Ended

Mar. 31, 2023

Equity Incentive Plan

Equity Incentive Plan

Note 11 – Equity Incentive Plan

The Company’s Board and stockholders adopted and approved the Amended and Restated 2014 Omnibus Equity Incentive Plan (the “2014 Plan”), which took effect on May 12, 2014. The Company’s Board and stockholders adopted and approved the 2020 Omnibus Equity Incentive Plan (the “2020 Plan”), which took effect on September 11, 2020. From the adoption and approval of the 2020 Plan, no new awards have been or will be made under the 2014 Plan.

The 2020 Plan allows for the issuance of securities, including stock options to employees, Board members and consultants. The initial number of shares of Common Stock available for issuance under the 2020 Plan was 4,761 shares, which will, on January 1 of each calendar year, unless the Board decides otherwise, automatically increase to equal ten percent (10)% of the total number of shares of Common Stock outstanding on December 31 of the immediately preceding calendar year, calculated on an As Converted Basis. As Converted Shares include all outstanding shares of Common Stock and all shares of Common Stock issuable upon the conversion of outstanding preferred stock, warrants and other convertible securities, but will not include any shares of Common Stock issuable upon the exercise of options and other convertible securities issued pursuant to either the 2014 Plan or the 2020 Plan. The number of shares permitted to be issued as “incentive stock options” (“ISOs”) is 7,142 under the 2020 Plan.

As of January 1, 2023, the number of shares of Common Stock available for issuance under the 2020 Plan automatically increased to 317,480 under the 2020 Plan's evergreen provision.

As of March 31, 2023, there were an aggregate of 1,477 total shares available (but un-issuable) under the 2014 Plan, of which 834 are issued and outstanding, and 292 shares are reserved subject to issuance of restricted stock and RSUs.

As of March 31, 2023, 317,480 total shares were authorized under the 2020 Plan, of which 168,470 were issued and outstanding and 149,010 shares were available for potential issuances.

During the three months ended March 31, 2023 and 2022, stock option activity under the 2014 Plan and 2020 Plan was as follows:

		Average		Remaining
	Number	Exercise		Contract	Intrinsic
	of Shares	Price		Life (Years)	Value
Outstanding at January 1, 2023	4,076	$	958.14	8.22	$	—
Granted	5,000		3.73	9.91		—
Forfeited	(11)		573.68	—		—
Outstanding at March 31, 2023	9,065	$	445.02	9.07	$	—
Exercisable at March 31, 2023	4,007	$	854.57	8.40	$	—
Outstanding at January 1, 2022	1,941	$	2,470.99	7.28	$	—
Granted	3,219		291.90	9.11		—
Canceled	(12)		2,032.80	—		—
Forfeited	(353)		833.70	—		—
Outstanding at March 31, 2022	4,795	$	1,152.90	8.67	$	—
Exercisable at March 31, 2022	1,812	$	2,226.00	7.15	$	—

During the three months ended March 31, 2023 and 2022, the Board approved the grant of options to purchase 5,000 and 3,219 shares of Common Stock, respectively. All option grants were pursuant to the 2020 Plan. In general, options granted under the 2020 Plan vest monthly over a 36-month period.

During the three months ended March 31, 2023 and 2022, stock options to purchase 11 and 353 shares of Common Stock, respectively, were forfeited. During the three months ended March 31, 2022, stock options to purchase 12 shares of Common Stock under the 2020 Plan were cancelled.

For the three months ended March 31, 2023 and 2022, the fair value of each option grant has been estimated on the date of grant using the Black-Scholes Option Pricing Model with the following weighted-average assumptions:

	2023		2022
Contractual term (in years)	6.5		10
Expected Volatility	98.80	%	90.92	%
Risk-free interest rate	4.08	%	1.11	%
Expected Dividend yield	0	%	0	%

Using the Black-Scholes Option Pricing Model, the estimated weighted average fair value of an option to purchase one share of common stock granted during the three months ended March 31, 2023 and 2022 was $3.05 and $224.01, respectively.

Restricted Stock and Restricted Stock Units

Restricted stock refers to shares of Common Stock subject to vesting based on certain service, performance, and market conditions. Restricted stock units ("RSUs") refer to an award which constitutes a promise to grant shares of Common Stock at the end of a specified restriction period.

As of March 31, 2023 and 2022, under the 2014 Plan, the Company had 130 shares of restricted stock outstanding and an aggregate unrecognized restricted Common Stock expense of approximately $388,000, which will be recognized when vesting of certain milestones become probable.

During the three months ended March 31, 2023, RSU activity under the 2020 Plan was as follows:

		Weighted-Average		Weighted-Average
	Number	Grant Date		Remaining Recognition
	of Shares	Fair Value		Period (Years)
Non-vested Outstanding at January 1, 2023	—	$	—	—
Awarded	160,239		6.20
Vested	(40,064)		6.20
Non-vested Outstanding at March 31, 2023	120,175	$	6.20	0.75

During the three months ended March 31, 2023, the Board approved the grant of 160,239 RSUs. All grants of RSUs were pursuant to the 2020 Plan and vest quarterly over a one-year period.

The total stock-based compensation expense for employees and non-employees is included in the accompanying condensed consolidated statements of operations and as follows:

	Three Months Ended March 31,
	2023		2022
Research and development	$	38,080	$	46,407
General and administrative		320,236		171,822
Total stock-based compensation expense	$	358,316	$	218,229

As of March 31, 2023, the Company had unrecognized stock-based compensation expense related to stock options and RSUs of approximately $1.1 million. Approximately $0.9 million of this unrecognized expense will be recognized over the average remaining vesting term of the stock awards of 0.94 years. Approximately $0.2 million of this unrecognized expense will vest upon achieving certain clinical and/or corporate milestones. The Company will recognize the expense related to these milestones when the milestones become probable.

As of March 31, 2022, the Company had unrecognized stock-based compensation expense related to stock options of approximately $1.9 million. Approximately $1.2 million of this unrecognized expense will be recognized over the average remaining vesting term of 9.57 years. Approximately $730,000 of this unrecognized expense will vest upon achieving certain clinical and/or corporate milestones. The Company will recognize the expense related to these milestones when the milestones become probable.