Equity Incentive Plans

9 Months Ended

Sep. 30, 2021

(12)	Equity Incentive Plans

Stock Option Plans

In June 2021, in connection with the IPO, our 2021 Equity Incentive Plan (“2021 Plan”) became effective, which was adopted by our Board of Directors in February 2021 and our stockholders approved the 2021 Plan in March 2021. The 2021 Plan is administered by our compensation committee. Upon the effectiveness of the 2021 Plan, no new grants will be awarded under our 2015 Stock-Based Incentive Compensation Plan.

Under the 2021 Plan, the Company may grant awards in respect of our shares of common stock to our employees, consultants, and our non-employee directors pursuant to option awards, stock appreciation right, or SAR, awards, restricted stock awards, restricted stock unit, or RSU, awards, performance stock awards, performance stock unit, or PSU, awards, and other stock-based awards.

The total number of shares of common stock available for awards under the 2021 Plan is 1,111,111, provided that such number shall be automatically increased on each January 1, beginning on January 1, 2022, by 4% of the outstanding number of shares of our common stock on the immediately preceding December 31 or such lesser number of shares as determined by our Board of Directors. The aggregate number of shares of our common stock that will be available for issuance under awards granted pursuant to the 2021 Plan shall also be increased by the number of shares underlying the portion of an award granted under our 2015 Plan that is cancelled, terminated or forfeited or lapses after the effective date of the 2021 Plan. No more than 1,111,111 shares of common stock issued under the 2021 Plan may be issued pursuant to the exercise of incentive stock options (ISO), provided that such number shall be automatically increased on each January 1, beginning on January 1, 2022, by the lesser of 4% of the outstanding number of shares of our common stock on the immediately preceding December 31 or 555,555 shares of common stock. Shares of common stock issued by us in connection with the assumption or substitution of outstanding grants or under certain stockholder approved plans from an acquired company shall not reduce the number of shares of common stock available for awards under the 2021 Plan. Shares of common stock underlying the portion of an award that is forfeited or otherwise terminated for any reason whatsoever, in any case, without the issuance of shares of common stock, will be added back to the number of shares of common stock available for grant under the 2021 Plan. No non-employee director may be granted awards under the 2021 Plan in any one calendar year covering a number of shares of common stock that have a fair market value on the grant date in excess of $350,000 in the first calendar year of such non-employee director’s initial service as a non-employee director and $200,000 in any other calendar year of such non-employee director’s service as a non-employee director.

Options granted under the 2021 Plan may be either ISOs, or nonqualified stock options. The price at which shares of common stock may be purchased upon exercise shall be determined by the compensation committee but shall not be less than the fair market value of one share of common stock on the date of grant, or, in the case of an ISO granted to a ten-percent stockholder, less than 110% of the fair market value of a share of common stock on the date of grant. The compensation committee may grant options that have a term of up to 10 years, or, in the case of an ISO granted to a ten-percent stockholder, five years. The award agreement shall specify the exercise price, term, vesting requirements, including any performance goals, and any other terms and conditions applicable to the granted option. Unless otherwise provided in an award agreement or an effective employment, consulting, severance or similar agreement with us or a subsidiary, upon a participant’s termination of service for any reason, the unvested portion of each award of options granted generally will be forfeited with no compensation due the participant.

Activity under the stock option plans was as follows:

	Number of Options			Weighted Average Exercise Price
Balances at December 31, 2020		743,627		$	3.60
Granted		—			—
Exercised		(40,253	)		2.79
Cancelled		(7,211	)		7.07
Balances at September 30, 2021		696,163		$	3.58

The intrinsic value of options exercised during the nine months ended September 30, 2021 was $145,053. The intrinsic values represent the dollar value of the exercised stock options whereby the fair market value of the underlying common stock exceeded the exercise price of the stock option as of the exercise date.

The options outstanding and vested and currently exercisable by exercise prices as of September 30, 2021 were as follows:

	Option outstanding					Options vested and exercisable
	Exercise price	Outstanding (in shares)		Weighted average remaining life years		Number of options vested		Exercise price		Weighted average remaining life years
$	1.71		227,780		4.46		116,669	$	1.71		4.46
	3.24		284,282		5.75		284,282		3.24		5.75
	3.96		67,422		6.46		54,645		3.96		6.45
	4.50		1,667		7.12		834		4.50		7.12
	4.95		44,445		7.49		22,223		4.95		7.49
	6.12		58,342		8.20		17,091		6.12		8.20
	27.00		12,225		0.82		12,225		27.00		0.82
			696,163		5.63		507,969				5.57

For the three months ended September 30, 2021 and 2020, stock-based compensation expense was $33,388 and $80,771, respectively. For the nine months ended September 30, 2021 and 2020, stock-based compensation expense was $163,924 and $239,075, respectively.

As of September 30, 2021, the remaining stock-based compensation expense that is expected to be recognized in future periods for employees and nonemployees is $320,193, which includes $155,222 of compensation expense to be recognized upon achieving a certain performance condition. For service based awards, the $164,971 of unrecognized expense is expected to be recognized over a weighted average period of 1.7 years.

Employee Stock Purchase Plan (“ESPP”)

In June 2021, in connection with the IPO, our ESPP became effective which was adopted by our Board of Directors in February 2021 and our stockholders approved the 2021 ESPP Plan in March 2021. The ESPP is administered by our compensation committee.

The total number of shares of our common stock available for purchase under the ESPP is 166,666, provided that such number is automatically increased on January 1 of each calendar year, from January 1, 2022 through January 1, 2031 by the least of (i) 1.0% of the total number of shares of our common stock outstanding on December 31 of the immediately preceding calendar year, (ii) 222,222 shares of our common stock or (iii) a number determined by our board of directors that is less than the foregoing clauses (i) and (ii).

Under the ESPP, the Company may specify offerings with durations of not more than 27 months and may specify shorter purchase periods within each offering. Each offering will have one or more purchase dates on which shares of our common stock will be purchased for employees participating in the offering. An offering may be terminated under certain circumstances. No employee may purchase more than 12,254 shares of our common stock under the ESPP during any offering period. Unless otherwise determined by our board of directors, shares of common stock will be purchased for accounts of employees participating in the ESPP at a price per share equal to the lower of (i) 85% of the fair market value of a share of our common stock on the last date of an offering period or (ii) 85% of the fair market value of a share of our common stock on the first day of such offering period.

As September 30, 2021, no shares of our common stock have been purchased under the ESPP.