Equity-Based Compensation

3 Months Ended

Mar. 31, 2024

Share-Based Payment Arrangement [Abstract]

Equity-Based Compensation

Note 13: Equity-Based Compensation

The 2018 Equity Incentive Plan, effective September 12, 2018, as amended and restated on August 19, 2019 (the “2018 Equity Incentive Plan”) authorizes the grant of (i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) Stock Appreciation Rights, (iv) Restricted Stock Awards, (v) Restricted Stock Unit Awards, (vi) Performance Stock Awards, (vii) Performance Cash Awards, and (viii) Other Stock Awards. Initially, a maximum of 7,000,000 shares of Common Stock were reserved for potential issuance pursuant to awards under the 2018 Equity Incentive Plan. When the plan was amended and restated, an additional 250,000 shares were reserved for potential issuance pursuant to awards under the 2018 Equity Incentive Plan. The number of shares of the Company’s common stock available for grant and issuance under the 2018 Equity Incentive Plan is subject to an annual increase on July 1 of each calendar year, by an amount equal to two percent (2%) of the then outstanding shares of the Company’s common stock (the “2018 Plan Evergreen Provision”). On August 3, 2020 and July 1, 2021, 2022 and 2023, the number of shares of the Company’s common stock available for grant and issuance under the 2018 Equity Incentive Plan increased by 979,311shares , 956,660 shares, 960,976 shares and 968,389 shares, respectively. As a result of the 2018 Plan Evergreen Provisions, a maximum of 10,865,336 shares of Common Stock is reserved for potential issuance pursuant to awards under the 2018 Equity Incentive Plan as of January 1, 2024. Unless sooner terminated, the 2018 Equity Incentive Plan will continue in effect for a period of 10 years from its effective date. During the fiscal year ending December 31, 2018 the Board of Directors (the “Board”) issued 1,189,284 options to each employee, the officers and directors at the exercise price of $9.68 expiring in 10 years. During the fiscal year ending December 31, 2019, 1,727,756 options were issued to each of these officers with an exercise price of $9.68 for a period of ten years with a vesting period of one year. During the fiscal year ending December 31, 2020, 1,025,000 options were issued to each of these officers and directors with an exercise price range of $2.77 to $3.07 for a period of ten years with a vesting period of one year During the fiscal year ending December 31, 2021, 613,512 options were issued to officers, directors and consultants with an exercise price range of $1.11 to $1.71 for a period of ten years with a vesting period of one year. During the fiscal year ending December 31, 2022, 850,000 options were issued to officers, directors and consultants with an exercise price range of $0.31 to $0.71 for a period of ten years with a vesting period of one year. During the fiscal year ending December 31, 2023, 400,000 options were issued to officers with an exercise price range of $0.47 for a period of ten years with a vesting period of one year. During the three months ended March 31, 2024 there were no options issued.

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. During the three months ended March 31, 2023 and 2024, there were no options granted.

Stock options activity during the three months ended March 31, 2024, was 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, 2024		2,408,438	$	2.50		8.70	$	—
Granted		—		—		—		—
Forfeited		—		—		—		—
Expired		—		—		—		—
Outstanding March 31, 2024		2,408,438	$	2.50		8.70	$	—
Vested and expected to vest March 31, 2024		2,141,772	$	1.83		6.89	$	—
Exercisable March 31, 2024		2,141,772	$	1.83		6.89	$	—

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, 2024		366,666		$	2.13		12.44	$	—
Granted		—			—		—		—
Expired		—			—		—		—
Vested		(100,000	)		0.47		6.89		—
Unvested March 31, 2024		266,666		$	2.75		14.52	$	—

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, 2024		885,055	$	2.02		9.23	$	—
Granted		—		—		—		—
Forfeited		—		—		—		—
Expired		—		—		—		—
Outstanding March 31, 2024		885,055	$	2.02		9.23	$	—
Vested and expected to vest March 31, 2024		640,055	$	2.27		10.04	$	—
Exercisable March 31, 2024		640,055	$	2.27		10.04	$	—

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, 2024		335,001		$	1.83		10.70	$	—
Granted		—			—		—		—
Expired		—			—		—		—
Vested		(90,000	)		0.46		9.47		—
Unvested March 31, 2024		245,001		$	2.33		11.15	$	—

Stock-based compensation expense was approximately $80,000 and $82,000 for the three months ended March 31, 2024 and 2023, resulting in a decrease in general and administrative expenses, respectively.

As of March 31, 2024, and 2023, respectively, there was approximately $214,000 and $134,000 of unrecognized equity-based compensation cost related to options granted under the Equity Incentive Plan.