Equity-Based Compensation

3 Months Ended

Mar. 31, 2023

Equity [Abstract]

Equity-Based Compensation

Note 12 – Equity-Based Compensation

Equity Incentive Plans

In October 2019, the Company adopted the 2019 Plan. Under the 2019 Plan, the Company’s board of directors is authorized to grant stock options to purchase Common Stock, restricted stock units, and restricted shares of Common Stock to its employees, directors, and consultants. The 2019 Plan initially provided for the issuance of 500,000 shares. A provision in the 2019 Plan provides for an automatic annual increase equal to 6% of the total number of shares of Common Stock outstanding on December 31 of the preceding calendar year. In January 2023, the number of available shares increased by 729,957 shares bringing the total shares available under the 2019 Plan to 2,500,000.

Options granted under the 2019 Plan generally have a life of 3 to 10 years and exercise prices equal to or greater than the fair market value of the Common Stock as determined by the Company’s board of directors. Vesting for employees typically occurs over a three-year period.

The following table sets forth the activity of the options to purchase Common Stock under the 2019 Plan.

	Number of Shares		Weighted Average Exercise Price		Aggregate Intrinsic Value
Outstanding as of December 31, 2022		1,297,006	$	3.40	$	-
Granted		144,606		0.62		3,904
Exercised		5,938		0.40		1,419
Canceled		23,133		3.95		-
Balance as of March 31, 2023		1,412,541		3.14		18,038
Exercisable as of March 31, 2023		1,068,911		3.84		18,038

The fair value of each option granted is estimated as of the grant date using the Black-Scholes option pricing model with the following assumptions:

	Three months ended March 31,
	2023			2022
Risk-free interest rate range		3.6-3.63	%		1.6 to 1.9	%
Expected life of option-years		5			5.25 to 5.75
Expected stock price volatility		114.5-114.9	%		110.4 to 113.2	%
Expected dividend yield		-	%		-	%

The risk-free interest rate is based on U.S. Treasury interest rates, the terms of which are consistent with the expected life of the stock options. Expected volatility is based upon the average historical volatility of the Common Stock over the period commensurate with the expected term of the related instrument. The expected life and estimated post-employment termination behavior is based upon historical experience of homogeneous groups, executives and non-executives, within the Company. The Company does not currently pay dividends on its Common Stock, nor does it expect to do so in the foreseeable future.

	Total Intrinsic Value of Options Exercised		Total Fair Value of Options Vested
Year ended December 31, 2022	$	-	$	1,616,401
Three months ended March 31, 2023	$	1,419	$	594,966

For the three months ended March 31, 2023, the weighted average grant date fair value of options granted was $0.52 per share. The Company estimates the fair value of options at the grant date using the Black-Scholes model. For all stock options granted through March 31, 2023, the weighted average remaining service period is 1 year.

Restricted Stock and Restricted Stock Units

In the three months ended March 31, 2023, the Company granted 124,131 restricted stock units and shares of restricted stock to certain employees, directors, and consultants under the 2019 Plan. Restricted stock issued to employees, directors, and consultants generally vest either at grant or vest over a period of one year from the date of grant.

The following table summarizes the Company’s restricted stock awards activity under the 2019 Plan during the three months ended March 31, 2023:

	Number of Unvested Shares		Weighted Average Grant Date Fair Value		Aggregate Value of Shares
Balance as of December 31, 2022		70,667	$	0.42	$	29,949
Granted		124,131		0.53		65,367
Vested		179,798		1.35		242,185
Forfeitures		-		-		-
Balance as of March 31, 2023		15,000		1.18		17,764