Equity-Based Compensation

9 Months Ended

Sep. 30, 2022

Share-Based Payment Arrangement [Abstract]

Equity-Based Compensation

Note 3: Equity-Based Compensation

The fair value of each option and equity warrant award is estimated on the date of grant using a Black-Scholes-Merton option pricing valuation model. Expected volatility is based on the historical volatility of the price of the Company’s stock. The risk-free interest rate is based on U.S. Treasury issues with a term equal to the expected life of the option and equity warrant. The Company uses historical data to estimate expected dividend yield, expected life and forfeiture rates. There were 300,000 options granted in the nine months ended September 30, 2022, and no options granted in the nine months ended September 30, 2021.

Stock option for employees’ activity during the nine months ended September 30, 2022, is as follows:

Stock option activity for employees:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding January 1, 2021		1,498,798		$	4.22		9.11	$	—
Granted		150,000			0.70		9.17		—
Forfeited		(1,684	)		117.6		—		—
Expired		—			—		—		—
Outstanding September 30, 2022		1,647,114		$	3.78		8.43	$	—
Vested and expected to vest September 30, 2022		1,647,114		$	3.78		8.43	$	—
Exercisable September 30, 2022		1,542,949		$	2.43		6.66	$	—

Unvested stock option activity for employees:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Unvested January 1, 2022		412,500		$	4.15		5.85	$	—
Granted		150,000			0.70		9.17		—
Expired		(1,684	)		117.6		—		—
Vested		(456,651	)		1.43		—		—
Unvested September 30, 2022		104,165		$	6.52		3.14	$	—

Stock option activity for non-employees:

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding January 1, 2022		279,723	$	6.12		7.93	$	—
Granted		150,000		0.70		9.42		—
Forfeited		—		—		—		—
Expired		—		—		—		—
Outstanding September 30, 2022		429,723	$	4.10		7.96	$	—
Vested and expected to vest September 30, 2022		429,723	$	4.10		7.96	$	—
Exercisable September 30, 2022		354,526	$	4.21		8.32	$	—

Unvested stock option activity for non-employees:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Unvested January 1, 2022		97,831		$	3.89		7.82	$	—
Granted		150,000			0.70		9.42		—
Expired		—			—		—		—
Vested		(172,634	)		1.16		—		—
Unvested September 30, 2022		75,197		$	3.79		8.24	$	—

Stock-based compensation expense was approximately $792,000 and $1,320,000 for the nine months ended September 30, 2022, and 2021, resulting in an increase in general and administrative expenses, respectively.

As of September 30, 2022, and 2021, respectively, there was approximately $179,000 and $279,000 of unrecognized equity-based compensation cost related to options granted under the Equity Incentive Plan.