Equity Incentive Plans StockBased Compensation Exercise of Options and Warrants Outstanding

6 Months Ended

Dec. 31, 2021

Equity Incentive Plans StockBased Compensation Exercise of Options and Warrants Outstanding

13. Equity Incentive Plans, Stock-Based Compensation, Exercise of Options and Warrants Outstanding

13. Equity Incentive Plans, Stock-Based Compensation, Exercise of Options and Warrants Outstanding

Stock-based Compensation – Stock Options

2016 Equity Incentive Plan (the “2016 Plan”)

On June 30, 2016, the Board of Directors adopted the Company’s 2016 Plan. The 2016 Plan became effective upon adoption by the Board of Directors on June 30, 2016. 

On February 23, 2020, the Board of Directors approved an amendment to Section 4.1 of the 2016 Plan to increase the annual limit on the number of awards under such Plan to outside directors from 250,000 to 1,500,000. On October 10, 2021, the Board of Directors approved amendments to the 2016 Plan to increase the number of shares of common stock available for issuance thereunder to 225,000,000 shares and to increase the annual limit on the number of awards under such Plan to outside directors from 1,500,000 to 5,000,000, among other changes. 

Up to 225,000,000 shares of the Company’s Class A common stock may be issued under the 2016 Plan (subject to adjustment as described in the 2016 Plan).

Amendments to the 2016 Equity Incentive Plan

The Compensation Committee approved, and the Board of Directors ratified on October 10, 2021, amendments to the Plan to increase the number of shares of common stock available for issuance thereunder to 225 million shares, among other amendments.

Stock Options

The fair value of options granted for the six months ended December 31, 2021 and 2020 was estimated on the date of grant using the Black-Scholes-Merton Model that uses assumptions noted in the following table.

	Six months ended December 31,
	2021			2020
Expected term (in years)		5-10			10
Expected stock price volatility		80.84 to 89.51	%		93.95 to 95.47	%
Risk-free interest rate		0.69% to 1.61	%		0.59 to 0.68	%
Expected dividend yield		0			0

The components of stock-based compensation expense included in the Company’s Condensed Statement of Operations for the three months and six months ended December 31, 2021 and 2020 are as follows (rounded to nearest thousand):

	Three months ended December 31				Six months ended December 31
	2021		2020		2021		2020
Research and development expenses	$	111,000	$	-	$	111,000	$	-
General and administrative expenses		41,000		31,000		81,000		93,000
Total stock-based compensation expense	$	152,000	$	31,000	$	192,000	$	93,000

During the six months ended December 31, 2021 and 2020

On October 10, 2021, the Compensation Committee approved to issue 2 million stock options to purchase shares of the Company’s common stock to the Company’s two independent directors in total and 500,000 stock options to purchase shares of Company’s common stock to Mr. Ehrlich, which are exercisable for 10 years at $0.24 per share of common stock. These stock options with 1 year vesting period were valued at approximately $488,000, based on the closing bid price as quoted on the OTC on October 10, 2021 at $0.24 per share. During the six months ended December 31, 2021, the Company recorded approximately $111,000 of stock-based compensation costs and charged to additional paid-in capital as of December 31, 2021. The assumptions we used in the Black Scholes option-pricing model were disclosed above.

On October 10, 2021, the Company also issued to Ms. Jane Harness, the Senior Vice President, Clinical Sciences and Portfolio Management of the Company, 500,000 options to purchase common stock, which are exercisable for 10 years at $0.24 per share of common stock. These stock options with 1 year vesting period were valued at approximately $98,000, based on the closing bid price as quoted on the OTC on October 10, 2021 at $0.24 per share. During the six months ended December 31, 2021, the Company recorded approximately $22,000 of related stock-based compensation. The assumptions we used in the Black Scholes option-pricing model were disclosed above.

On July 30, 2020, the Company agreed to issue 100,000 stock options to purchase shares of the Company’s common stock to one consultant for his one-year contract. These options were issued with an exercise price of $0.27 per share and vest 33 1/3% on July 30, 2021, 33 1/3% on January 30, 2022, and 33 1/3% on July 30, 2022. The value of these options was approximately $19,000. During the six months ended December 31, 2021, the Company recorded approximately $11,000 of related stock-based compensation. The assumptions we used in the Black Scholes option-pricing model were disclosed above.

On July 1, 2021, the Company agreed to issue 225,000 stock options to purchase shares of the Company’s common stock to one consultant for his one-year contract. These options were issued with an exercise price of $0.21 per share and vest 33 1/3% on July 1, 2021, 33 1/3% on January 1, 2022, and 33 1/3% on July 1, 2022. The value of these options was approximately $33,000. During the six months ended December 31, 2021, the Company recorded approximately $22,000 of related stock-based compensation. The assumptions we used in the Black Scholes option-pricing model were disclosed above.

On February 10, 2021, the Company agreed to issue 75,000 stock options to purchase shares of the Company’s common stock to one consultant for his one-year contract. These options were issued with an exercise price of $0.38 per share and vest 33 1/3% on February 10, 2021, 33 1/3% on July 1, 2021, and 33 1/3% on January 1, 2022. The value of these options was approximately $20,000. During the six months ended December 31, 2021 and 2020, the Company recorded approximately $7,000 and $0 of related stock-based compensation, respectively. The assumptions we used in the Black Scholes option-pricing model were disclosed above.

On September 11, 2020, the Company also issued to Ms. Jane Harness, the Senior Vice President, Clinical Sciences and Portfolio Management of the Company, 58,394 shares of the Company’s common stock. The Company also issued 172,987 options to purchase common stock. These stock options with 3 years vesting period were valued at approximately $33,000 and these 58,394 shares of the Company’s common stock were valued at approximately $13,000, based on the closing bid price as quoted on the OTC on September 11, 2020 at $0.22 per share. During the six months ended December 31, 2021, the Company recorded approximately $8,000 of stock-based compensation expense in connection with the foregoing equity awards, including approximately $6,000 of stock option expense and $2,000 of stock awards. During the six months ended December 31, 2020, the Company recorded approximately $5,000 of stock-based compensation expense in connection with the foregoing equity awards, including approximately $4,000 of stock option expense and $1,000 of stock awards.

On July 23, 2020, the Company agreed to issue 100,000 stock options to purchase shares of the Company’s common stock to one consultant for his one-year contract. These options were issued with an exercise price of $0.32 per share and vest 33 1/3% on July 23, 2020, 33 1/3% on January 23, 2021, and 33 1/3% on July 23, 2021. The value of these options was approximately $28,000. During the six months ended December 31, 2021 and 2020, the Company recorded approximately $1,000 and $17,000 of related stock-based compensation, respectively. The assumptions we used in the Black Scholes option-pricing model were disclosed above.

On May 18, 2020, the Company agreed to issue 500,000 stock options to purchase shares of the Company’s common stock each to two consultants for their one-year contracts. These options were issued with an exercise price of $0.14 per share and vest 33 1/3% on July 1, 2020, 33 1/3% on January 1, 2021, and 33 1/3% on July 1, 2021. The value of these options was approximately $78,000. During the six months ended December 31, 2021 and 2020, the Company recorded approximately $0 and $26,000 of related stock-based compensation, respectively. The assumptions we used in the Black Scholes option-pricing model were disclosed above.

On September 1, 2019, the Company also issued to Ms. Jane Harness, the Senior Vice President, Clinical Sciences and Portfolio Management of the Company, 58,394 shares of the Company’s common stock. The Company also issued 172,987 options to purchase common stock. These stock options with 3 years vesting period were valued at approximately $20,000, based on the closing bid price as quoted on the OTC on August 30, 2019 at $0.132 per share. During the six months ended December 31, 2021, the Company recorded approximately $5,000 of stock-based compensation expense in connection with the foregoing equity awards, including approximately $4,000 of stock option expense and $1,000 of stock awards. During the six months ended December 31, 2020, the Company recorded approximately $3,000 of stock-based compensation expense in connection with the foregoing equity awards, including approximately $2,000 of stock option expense and $1,000 of stock awards.

On September 1, 2018, the Company also issued to Ms. Jane Harness 58,394 shares of the Company’s common stock. The Company also issued 172,987 options to purchase common stock. These stock options are valued at approximately $63,000, based on the closing bid price as quoted on the OTCQB on August 31, 2018 at $0.40 per share. During the six months ended December 31, 2021, the Company recorded approximately $5,000 of stock-based compensation expense in connection with the foregoing equity awards, including approximately $4,000 of stock option expense and $1,000 of stock awards. During the six months ended December 31, 2020, the Company recorded approximately $14,000 of stock-based compensation expense in connection with the foregoing equity awards, including approximately $10,000 of stock option expense and $4,000 of stock awards.

Exercise of options

During the quarter ended December 31, 2021, the Company received approximately $23,000 of net proceeds from the exercise of 166,666 stock options at $0.14 per share. The details of exercises of options to purchase Class B common stock during the six months ended December 31, 2020 are disclosed in Note 14. Equity Transactions.

Forfeiture of options

There was forfeiture of 60,000 options and 294,330 options to purchase Class A common stock during the six months ended December 31, 2021 and the year ended June 30, 2021 relating to the expiry of options of 12 consultants.

Stock Options Issued and Outstanding

The following table summarizes all stock option activity under the Company’s equity incentive plans:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding at June 30, 2020		22,803,098		$	0.18		1.83	$	5,857,312
Granted		452,987		$	0.27		6.96		-
Exercised		(16,181,820	)	$	0.11		-		-
Forfeited/expired		(294,330	)	$	0.55		-		-
Outstanding at June 30, 2021		6,779,935		$	0.35		4.45	$	345,923
Granted		3,325,000		$	0.24		9.26		-
Exercised		(166,666	)	$	0.14		-		-
Forfeited/expired		(60,000	)	$	0.51		-		-
Outstanding at December 31, 2021		9,878,269		$	0.32		5.74	$	-
Exercisable at December 31, 2021		6,463,616		$	0.36		3.84	$	-
Unvested stock options at December 31, 2021		3,414,653		$	0.24		9.33	$	-

Restricted Stock Awards Outstanding

The following summarizes our restricted stock activity:

				Weighted
				Average
	Number of			Grant Date
	Shares			Fair Value
Total unvested shares outstanding at June 30, 2020		116,787		$	0.32
Total shares granted		58,394		$	0.22
Total shares vested		(58,395	)	$	0.41
Total shares forfeited		-		$	-
Total unvested shares outstanding at June 30, 2021		116,786		$	0.22
Total shares granted		-		$	-
Total shares vested		(58,394	)	$	0.25
Total shares forfeited		-		$	-
Total unvested shares outstanding at December 31, 2021		58,392		$	0.19

Scheduled vesting for outstanding restricted stock awards at December 31, 2021 is as follows:

	Year Ending June 30,
	2023		2024		Total
Scheduled vesting		38,928		19,464		58,392

As of December 31, 2021, there was approximately $9,000 of net unrecognized compensation cost related to unvested restricted stock-based compensation arrangements. This compensation is recognized on a straight-line basis resulting in approximately $6,000 of compensation expected to be expensed over the next twelve months, and the total unrecognized stock-based compensation expense having a weighted average recognition period of 1.50 years.