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Note 7 - Stock-based Compensation

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Text Block]

7. Stock-Based Compensation

2015 Equity Plan

The 2015 Equity Plan provides for increases to the number of shares reserved for issuance thereunder each January 1 equal to 4.0% of the total shares of the Company’s common stock outstanding as of the immediately preceding December 31, unless a lesser amount is stipulated by the Compensation Committee of the Company's board of directors. Accordingly, 4,076,571 shares were added to the reserve as of January 1, 2022. All such shares may be issued in connection with the grant of stock-based awards, including stock options, restricted stock, restricted stock units, stock appreciation rights and other types of awards as deemed appropriate, in each case, in accordance with the terms of the 2015 Equity Plan. As of December 31, 2021, there were 580,925 shares of common stock available for future issuance under the 2015 Equity Plan. Generally, the options have a ten (10) year contractual term and vest in equal monthly installments over three (3) years.

The Company recorded stock-based compensation expense in the following expense categories of its consolidated statements of operations for the periods indicated:

	Year ended December 31,
	2021		2020
Research and development	$	154,041	$	164,791
General and administrative		743,219		571,328
Total stock-based compensation expense	$	897,260	$	736,119

The following table summarizes the activity related to all stock options:

	Number of Options			Weighted average exercise price per share		Weighted average remaining contractual life (in years)		Aggregate Intrinsic Value
Balance at January 1, 2020		309,276		$	55.78
Granted		1,931,100			0.68
Expired		(172	)		142.50
Balance at December 31, 2020		2,240,204		$	8.28			$	289,067
Granted		1,815,767			0.89
Forfeited		(429,748	)		1.37
Outstanding at December 31, 2021		3,626,223			5.40		8.52		—
Exercisable at December 31, 2021		2,140,524		$	8.58		8.09		—
Vested and expected to vest at December 31, 2021		3,626,223		$	5.40		8.52		—

The weighted average grant date fair value of stock option awards granted was $0.89 and $0.64 during the years ended December 31, 2021 and 2020, respectively. The total fair value of options vested during the years ended December 31, 2021 and 2020 were $0.8 million and $0.7 million, respectively. No options were exercised during any of the periods presented. At December 31, 2021, there was $1.1 million of unrecognized compensation cost related to unvested options that will be recognized as expense over a weighted-average period of 1.7 years. During the year ended December 31, 2021, the Company granted 385,267 performance-based stock options with an exercise price of $1.11 per share, subject to vesting based on the satisfaction of specified performance criteria. Compensation expense for the performance-based awards is recorded over the estimated service period for each milestone when the performance conditions are deemed probable of achievement. The Company recorded stock-based compensation expense of approximately $0.1 million year ended December 31, 2021, for service-based awards with performance conditions deemed probable of achievement and/or achieved. For performance-based awards containing performance conditions which were not deemed probable of achievement at December 31, 2021, no stock compensation expense was recognized and any previously recognized expense related to those awards originally deemed probable was reversed.

The grant date fair value of employee stock options is determined using the Black-Scholes Model. The following assumptions were used during the years ended December 31, 2021 and 2020:

	2021			2020
Expected term (in years)		10		5.31	—	10
Risk-free interest rate	1.3%	—	1.7%	0.4%	—	1.7%
Expected volatility	122.6%	—	125.8%	113.4%	—	124.8%
Dividend yield		0%			0%

Restricted Stock Unit Awards

The Company issues restricted stock ("RSU") to newly elected, non-executive members of the board of directors that vest in six, tri-monthly installments beginning 18 months after the respective grant date. The fair value of a RSU is equal to the fair market value price of the Company’s common stock on the date of grant. RSU expense is recorded on a straight-line basis over the service period.

The following table summarizes activity related to RSU stock-based payment awards:

	Number of Units			Weighted average grant date fair value
Balance at January 1, 2021		153,000		$	0.65
Granted		138,800			0.72
Vested⁽¹⁾		(16,350	)		0.51
Outstanding at December 31, 2021		275,450		$	0.70

^{(1) The Company withheld 6,049 shares of common stock to cover the tax liability associated with the vesting of these units in 2021.}

The Company recognized approximately $54,000 and $18,000 in expense related to these units during the years ended December 31, 2021 and December 2020, respectively. At December 31, 2021, there was approximately $0.1 million of unrecognized compensation cost that will be recognized over a weighted average period of 2.12 years.