Stock-based Compensation

6 Months Ended

Jun. 30, 2024

Share-Based Payment Arrangement [Abstract]

Stock-based Compensation

6. Stock-based Compensation

2015 Equity Incentive Plan

The Company has 629,489 shares of common stock authorized and reserved for issuance under its 2015 Equity Incentive Plan for option awards. This reserve may be increased by the Board each year by up to the number of shares of stock equal to 5% of the number of shares of stock issued and outstanding on the immediately preceding December 31. Shares subject to awards granted under the 2015 Equity Incentive Plan which expire, are repurchased or are cancelled or forfeited will again become available for issuance under the 2015 Equity Incentive Plan. The shares available will not be reduced by awards settled in cash. Shares withheld to satisfy tax withholding obligations will not again become available for grant. The gross number of shares issued upon the exercise of stock appreciation rights or options exercised by means of a net exercise or by tender of previously owned shares will be deducted from the shares available under the 2015 Equity Incentive Plan.

Awards may be granted under the 2015 Equity Incentive Plan to the Company’s employees, including officers, director or consultants, and its present or future affiliated entities. While the Company may grant incentive stock options only to employees, it may grant non-statutory stock options, stock appreciation rights, restricted stock purchase rights or bonuses, restricted stock units, performance shares, performance units and cash-based awards or other stock based awards to any eligible participant.

The 2015 Equity Incentive Plan is administered by the Company’s compensation committee. Subject to the provisions of the 2015 Equity Incentive Plan, the compensation committee determines, in its discretion, the persons to whom, and the times at which, awards are granted, as well as the size, terms and conditions of each award. All awards are evidenced by a written agreement between the Company and the holder of the award. The compensation committee has the authority to construe and interpret the terms of the 2015 Equity Incentive Plan and awards granted under the 2015 Equity Incentive Plan.

A summary of stock option activity for the six months ended June 30, 2024 is presented below:

Subject to Exercise	Number of Options			Weighted Average Exercise Price		Weighted Average Life (Years)		Aggregate Intrinsic Value
Outstanding as of December 31, 2023		34,310		$	236.70		8.62	$	-
Granted – 2024		45,515			3.72		3.41		-
Forfeited/Expired – 2024		(5,674	)		54.24		7.94		-
Exercised – 2024		-			-		-		-
Outstanding as of June 30, 2024		74,151		$	107.65		4.87	$	-
Options vested and exercisable at June 30, 2024		59,419		$	133.13		3.96	$	-

As of June 30, 2024, the Company had outstanding stock options as follows:

Date Issued	Exercise Price		Number of Options		Expiration date
August 2015	$	9,540.00		174	December 27, 2025
September 2015	$	9,540.00		36	December 27, 2025
November 2015	$	9,540.00		205	December 27, 2025
December 2015	$	9,540.00		12	December 27, 2025
January 2016	$	9,540.00		213	January 9, 2026
May 2016	$	12,300.00		45	May 26, 2026
September 2016	$	12,300.00		21	May 31, 2026
January 2017	$	12,300.00		10	January 1, 2027
January 2018	$	11,820.00		8	January 1, 2028
January 2019	$	564.00		92	January 1, 2029
October 2021	$	1,260.00		207	October 26, 2031
January 2022	$	844.80		111	January 1, 2032
August 2022	$	387.26		462	August 23, 2032
January 2023	$	57.60		237	January 25, 2025
September 2023	$	5.12		26,803	September 12, 2033
January 2024	$	4.68		8,015	January 8, 2034
January 2024	$	3.61		37,500	January 17, 2026
Total outstanding options at June 30, 2024				74,151

Based on a fair value of $1.22 per share on June 30, 2024. There were no exercisable but unexercised in-the-money common stock warrants on that date.

During the six months ended June 30, 2024, options exercisable into 8,015 shares of common stock were granted with a fair value of $34,039. Vesting of options differs based on the terms of each option. During the six months ended June 30, 2024 and 2023, the Company had stock-based compensation expense of $70,124 and $61,434, respectively, related to the vesting of stock options granted to the Company’s employees and directors included in our reported net loss. In addition, during the six months ended June 30, 2024, options exercisable into 37,500 shares of common stock were issued to employees in settlement of previously accrued bonuses of $77,400.

In January 2024, options exercisable into 5,674 shares of common stock were forfeited upon the resignation of a director. The Company’s policy is to account for forfeitures of the unvested portion of option grants when they occur; therefore, these forfeitures are recorded as a reversal to expense, which can result in a credit balance in the statement of operations.

The Company utilized the Black-Scholes option-pricing model. The assumptions used for the six months ended June 30, 2024 are as follows:

	June 30, 2024
Risk free interest rate		3.97	%
Expected Volatility		137.91	%
Expected life (in years)		5.58
Expected dividend yield		0	%

The expected volatility is a measure of the amount by which the Company stock price is expected to fluctuate during the expected term of options granted. The Company determines the expected volatility based upon the historical volatility of our common stock since listing on The Nasdaq Capital Market. The Company does not believe that the future volatility of its common stock over an option’s expected term is likely to differ significantly from the past. The risk-free interest rate used in the calculations is based on the implied yield available on U.S. Treasury issues with an equivalent term approximating the expected life of the options as calculated using the simplified method. The expected life of the options used was based on the contractual life of the option granted. Stock-based compensation is a non-cash expense because the Company settles these obligations by issuing shares of its common stock from its authorized shares instead of settling such obligations with cash payments.

As of June 30, 2024, total unrecognized compensation cost related to unvested stock options was $6,811. The cost is expected to be recognized over a weighted average period of 0.03 years.