Equity

9 Months Ended

Sep. 30, 2022

Equity

Equity

Note 9 - Equity

Options

In December 2019, the Company’s Board of Directors and stockholders approved the adoption of the 2019 Plan, under which shares were reserved for future issuance of equity related awards classified as option awards, restricted stock awards (“RSAs”) and other equity related awards. The 2019 Plan permits grants of equity awards to employees, directors and consultants. The stockholders originally approved a total of 10.0 million shares to be reserved for issuance under the 2019 Plan, which was reduced to 666,667 shares as a result of the 15-to-1 reverse stock split effective November 9, 2022. The Company’s previous 2010 Stock and Incentive Plan (the “2010 Plan”) was cancelled concurrently with the adoption of the 2019 Plan.

The following table summarizes the activity since inception of the 2019 Plan and the shares available for future equity awards as of September 30, 2022:

	2019 Plan
Total shares reserved for equity awards		666,667
Options granted during previous fiscal years		(262,232)
Options granted during Q1 2022		(106,555)
Restricted stock awards, net of settlement granted during fiscal 2021		(119,000)
Forfeited, expired and/or cancelled equity awards, prior year		367
Forfeited, expired and/or cancelled equity awards, during Q1 2022		1,767
Shares forfeited to settle exercise price and tax obligation during fiscal 2021		8,687
Shares forfeited to settle exercise price and tax obligation during Q1 2022		9,234
Remaining shares available for future equity awards as of March 31, 2022		198,935
Forfeited, expired and/or cancelled equity awards, during Q2 2022		57,584
RSAs forfeited during Q2 2022		60,000
Remaining shares available for future equity awards as of June 30, 2022		316,519
Forfeited, expired and/or cancelled equity awards, during Q3 2022		70,483
Remaining shares available for future equity awards as of September 30, 2022		387,002

The following table summarizes the Company’s restricted stock awards activity during the three and nine months ended September 30, 2022:

		Weighted
		Average Grant-Date			Aggregate
	Awards	Fair Value			Intrinsic Value
Nonvested as of December 31, 2021	97,867	$	24.60
Granted	—
Forfeited	—
Vested	(24,467)	$	24.60	$	—
Nonvested as of March 31, 2022	73,400	$	24.60
Granted	—
Forfeited	(60,000)
Vested	—
Nonvested as of June 30, 2022	13,400	$	24.60
Granted	—
Forfeited	—
Vested	—
Nonvested as of September 30, 2022	13,400	$	24.60

Of the vested restricted stock awards reported above, the Company withheld 9,234 common shares which represented the fair value of the tax settlement for statutory employer and employee income taxes.

The following table summarizes the Company’s stock option activity:

		Weighted		Weighted Average
	Number of	Average		Remaining		Aggregate
	Options	Exercise Price		Contractual Life		Intrinsic Value
Outstanding as of December 31, 2021	500,466	$	16.81	7.36	$	—
Granted	106,555	$	7.14
Exercised	—	$	—
Forfeited, expired and/or cancelled	(6,334)	$	13.33
Outstanding as of March 31, 2022	600,687		15.13	7.50	$	—
Granted	—
Exercised	—
Forfeited, expired and/or cancelled	(164,080)	$	17.52
Outstanding as of June 30, 2022	436,607	$	14.23	6.64	$	—
Granted	—	$	—
Exercised	—	$	—
Forfeited, expired and/or cancelled	(72,482)	$	15.89
Outstanding as of September 30, 2022	364,125	$	13.90	7.69	$	—
Exercisable as of September 30, 2022	238,384	$	15.47	5.40	$	—

The following table summarizes the outstanding options that were issued in accordance with the 2010 Plan and the 2019 Plan:

Outstanding Options by Plan	September 30, 2022
2010 Plan		128,938
2019 Plan		235,187
Outstanding as of September 30, 2022		364,125

Stock options outstanding as of September 30, 2022 are summarized in the table below:

	Number of	Weighted		Weighted Average
	Options	Average		Remaining
Range of Exercise Prices	Outstanding	Exercise Price		Contractual Lives
Up to $7.50	108,655	$	6.73	8.75
$7.51 - $15.00	155,660	$	10.38	6.47
$15.01 - $22.50	55,267	$	17.25	9.04
$22.51 and above	44,543	$	39.54	7.63
Total	364,125	$	14.25	7.50

The Company computes the fair value for all options granted or modified using the Black-Scholes option pricing model. To calculate the fair value of the options, certain assumptions are made regarding components of the model, including the fair value of the underlying common stock, risk-free interest rate, volatility, expected dividend yield and expected option life. Changes to the assumptions could cause significant adjustments to the valuation. The Company calculates its volatility assumption using the actual changes in the market value of its stock. Forfeitures are recognized as they occur. The Company’s historical option exercises do not provide a reasonable basis to estimate an expected term due to the lack of sufficient data. Therefore, the Company estimates the expected term by using the simplified method. The simplified method calculates the expected term as the average of the vesting term plus the contractual life of the options. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of the grant for treasury securities of similar

maturity. The Company computed the fair value of options granted/modified during the period ended September 30, 2022, using the following assumptions:

	Nine Months Ended September 30,
	2022		2021
Expected volatility	116.83% - 119.43	%	127.17	%
Risk free interest rate	1.26% - 1.94	%	0.78	%
Expected term (years)	5.45 - 6.51		5.00

Share-based compensation expense related to the fair value of stock options is included in the statements of operations as research and development expenses or general and administrative expenses as set forth in the table below. The following table summarizes share-based compensation expense (stock options, restricted stock awards and common stock issued for services) for the three and nine months ended September 30, 2022 and 2021:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Research and development expenses
Share-based compensation	$	(23,000)	$	—	$	118,000	$	46,000
General and administrative expenses
Issuance of common stock for services (see Note 8)		—		—		—		80,000
Share-based compensation		186,000		47,000		675,000		234,000
Total share-based compensation	$	163,000	$	47,000	$	793,000	$	360,000
Unrecognized share-based compensation expense related to stock options as of September 30, 2022	$	316,000
Weighted average remaining years to vest for stock options		1.68
Unrecognized share-based compensation expense related to restricted stock awards as of September 30, 2022	$	159,000
Weighted average remaining years to vest for restricted stock awards		2.26