Equity

9 Months Ended

Sep. 30, 2021

Equity Method Investments and Joint Ventures [Abstract]

Equity

Note 3. Equity

2013 Long-Term Incentive Plan

On June 20, 2013, the Company’s Board of Directors (the “Board”) adopted the 2013 Long-Term Incentive Plan (the “2013 Plan”) and on November 15, 2013, a stockholder owning a majority of the Company’s issued and outstanding stock approved adoption to the 2013 Plan. Pursuant to the terms of the 2013 Plan, an aggregate of 20,000,000 shares of the Company’s common stock have been reserved for issuance to the Company’s officers, directors, employees and consultants in order to attract and hire key technical personnel and management. Options granted to employees under the 2013 Plan, including directors and officers who are employees, may be incentive stock options or non-qualified stock options; options granted to others under the 2013 Plan are limited to non-qualified stock options. As of September 30, 2021, there were 16,618,266 shares available for future grants.

The 2013 Plan is administered by the Board or a committee designated by the Board. Subject to the provisions of the 2013 Plan, the Board has the authority to determine the officers, employees and consultants to whom options will be granted, the number of shares covered by each option, vesting rights and the terms and conditions of each option that is granted to them; however, no person may be granted options to purchase more than 2,000,000 shares in any one fiscal year under the 2013 Plan, and the aggregate fair market value (determined at the time the option is granted) of the shares with respect to which incentive stock options are exercisable for the first time by an optionee during any calendar year cannot exceed $100,000. Options granted pursuant to the 2013 Plan are exercisable no later than ten years after the date of grant.

The exercise price per share of common stock for options granted under the 2013 Plan is the fair market value of the Company's common stock on the date of grant, using the closing price of the Company's common stock on the last trading day prior to the date of grant, except for incentive stock options granted to a holder of ten percent or more of the Company's common stock, for whom the exercise price per share will not be less than 110% of the fair market value. No option can be granted under the 2013 Plan after June 20, 2023.

Common Stock

At September 30, 2021, the Company had 500,000,000 authorized shares of common stock with a par value of $0.00001 per share and 87,352,364 shares of common stock outstanding.

During the three and nine months ended September 30, 2021 and 2020, the Company did not have any common stock transactions.

Warrants

The Company has issued warrants to purchase common stock at various exercise prices in connection with loan agreements and private placements. The following table summarizes information about warrants outstanding at September 30, 2021 and December 31, 2020:

	Shares of Common Stock Issuable from Warrants Outstanding as of			Weighted
	September 30,	December 31,		Average
Description	2021	2020		Exercise Price	Expiration
Series E	-	584,416	$	1.54	September 9, 2021
Series F	7,246	7,246	$	3.45	February 23, 2022 & March 9, 2022
Series G	460,250	460,250	$	2.68	July 21, 2022
Series H	910,000	910,000	$	2.75	October 16, 2022
Series I	10,335,000	10,335,000	$	2.00	November 26, 2025
Total	11,712,496	12,296,912

During the three months ended September 30, 2021, all the Series E Warrants expired unexercised.

Stock Options

The following table summarizes stock option activity for the six months ended September 30, 2021:

	Number of Options			Weighted Average Exercise Price ($)		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value ($)
Outstanding at December 31, 2020		5,895,570			2.45		5.14		1,650
Granted		50,000			1.72		9.82		-
Forfeited		(2,805,571	)		2.74
Outstanding at September 30, 2021		3,139,999			2.17		4.79		1,650
Vested and exercisable at September 30, 2021		2,564,999			1.95		4.73		1,650

The valuation methodology used to determine the fair value of stock options is the Black-Scholes Model. The Black-Scholes Model requires the use of a number of assumptions including volatility of the stock price, the risk-free interest rate, and the expected term of the stock options. The ranges of assumptions used in the Black-Scholes Model during the nine months ended September 30, 2021 and 2020 is set forth in the table below:

	Nine Months Ended September 30,
	2021			2020
Risk-free interest rate		0.73	%		0.021%	–	1.67%
Expected term in years		5.38			3.25	–	6.00
Weighted Avg. Expected Volatility		102.07			103.56%	–	110.71%
Expected dividend yield		0	%			0%

The risk-free interest rate assumption is based upon observed interest rates on zero coupon U.S. Treasury bonds whose maturity period is appropriate for the expected term. Estimated volatility is a measure of the amount by which the stock price is expected to fluctuate each year during the term of an award. Our calculation of estimated volatility is based on historical stock prices over a period equal to the term of the awards. The average expected life is based on the contractual terms of the stock option using the simplified method. We utilize a dividend yield of zero based on the fact that we have never paid cash dividends and have no current intention to pay cash dividends. Future stock-based compensation may significantly differ based on changes in the fair value of our Common Stock and our estimates of expected volatility and the other relevant assumptions.

The following table sets forth the share-based compensation cost resulting from stock option grants, including those previously granted and vesting over time, that were recorded in the Company’s Statements of Operations for the three and nine months ended September 30, 2021 and 2020:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021			2020
Research and development	$	224,000	$	455,271	$	731,438		$	1,087,147
General and administrative		44,000		664,544		(1,138,601	)		2,084,953
Total	$	268,000	$	1,119,815	$	(407,163	)	$	3,172,100

Nine Months Ended September 30, 2021

On July 26, 2021, in connection with an Executive Services Consulting Agreement of the same date, the Company granted Justin Frere, the Company’s Chief Financial Officer, an option to purchase up to 50,000 shares of the Company’s common stock at an exercise price of $1.72 and with a term of 10 years.

During the first half of 2021, certain individuals resigned from the Company resulting in the forfeiture and cancellation of 2,805,571 options. Compensation expense was recorded on some of these options prior to their full vesting. As a result, during the nine months ended September 30, 2021, the Company recognized $1,314,705 of reversals of the prior recognized compensation expense related to the cancelled options. During the three and nine months ended September 30, 2021, the expense recognized on options still in their vesting period totaled $268,000 and $907,541, respectively.