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Stock Based Compensation

12 Months Ended

Dec. 31, 2021

Share-Based Payment Arrangement [Abstract]

NOTE 8 – STOCK BASED COMPENSATION

In January 2018, the Company’s board of directors approved its 2018 Stock Incentive Plan (“2018 Plan”). The 2018 Plan provides for the grant of non-qualified stock options and incentive stock options to purchase shares of the Company’s common stock, the grant of restricted and unrestricted share awards and grant of restricted stock units. The Company initially reserved 1,630,000 shares of its common stock under the 2018 Plan; however, upon completion of the Company’s IPO the number of shares reserved for issuance under the 2018 Plan increased to 3,284,480, representing 15% of the Company’s outstanding shares of common stock calculated on a fully diluted basis upon the close of the IPO. All of the Company’s employees and any subsidiary employees (including officers and directors who are also employees), as well as all of the Company’s nonemployee directors and other consultants, advisors and other persons who provide services to the Company will be eligible to receive incentive awards under the 2018 Plan.

In September 2021, the Company’s board of directors approved its 2021 Stock Incentive Plan (“2021 Plan”), which was also approved by the stockholders of the Company at the Company’s annual meeting of stockholders held on November 4, 2021. The 2021 Plan provides for the grant of non-qualified stock options and incentive stock options to purchase shares of the Company’s common stock, the grant of restricted and unrestricted share awards and grant of restricted stock units. The Company has 4,200,000 shares of its common stock reserved under the 2021 Plan. All of the Company’s employees and any subsidiary employees (including officers and directors who are also employees), as well as all of the Company’s nonemployee directors and other consultants, advisors and other persons who provide services to the Company will be eligible to receive incentive awards under the 2021 Plan.

The following table summarizes the stock-based compensation expense recorded in the Company’s results of operations during the years ended December 31, 2021 and 2020 for stock options and warrants:

	Year Ended December 31, 2021		Year Ended December 31, 2020
Research and development	$	459,492	$	140,278
General and administrative		3,088,876		2,046,871
	$	3,548,368	$	2,187,149

As of December 31, 2021, there was approximately $9,474,000 of total unrecognized compensation expense related to non-vested share-based compensation arrangements that are expected to vest. This cost is expected to be recognized over a weighted-average period of 2.5 years.

The Company records compensation expense for employee and nonemployee awards with graded vesting using the straight-line method. The Company recognizes compensation expense over the requisite service period applicable to each individual award, which generally equals the vesting term. The Company estimates the fair value of each option award using the Black-Scholes-Merton option pricing model. Forfeitures are recognized when realized.

The Company estimated the fair value of employee and nonemployee stock options using the Black-Scholes option pricing model. The fair value of stock options issued was estimated using the following assumptions:

	Ended December 31, 2021			Year Ended December 31, 2020
Weighted average exercise price	$	8.86		$	10.42
Weighted average grant date fair value	$	6.83		$	9.25
Assumptions
Expected volatility		89-97	%		87-91	%
Expected term (in years)		6.0-10.0			6.3-10
Risk-free interest rate		0.81-1.55	%		0.36-1.47	%
Expected dividend yield		0.00	%		0.00	%

The risk-free interest rate was obtained from U.S. Treasury rates for the applicable periods. The Company’s expected volatility was based upon the historical volatility for industry peers and used an average of those volatilities. The expected life of the Company’s options was determined using the simplified method as a result of limited historical data regarding the Company’s activity for employee awards and the contractual term for nonemployee awards. The dividend yield considers that the Company has not historically paid dividends, and does not expect to pay dividends in the foreseeable future. The Company uses the closing stock price on the date of grant as the fair value of the common stock.

The following table summarizes stock option activity during the years ended December 31, 2021 and 2020:

	Number of Shares			Weighted-Average Exercise Prices		Weighted-Average Remaining Contractual Term (In Years)		Intrinsic Value
Outstanding at January 1, 2020		2,139,078		$	3.46		9.17	$	4,052,512
Granted		782,045			10.42		—		—
Exercised		(285,003	)		2.74		—		—
Cancelled		(25,625	)		4.86		—		—
Outstanding at December 31, 2020		2,610,495		$	5.63		8.60	$	22,789,233
Granted		535,500			8.86		—		—
Exercised		(252,156	)		2.74		—		—
Outstanding at December 31, 2021		2,893,839		$	6.48		8.05	$	9,932,413
Exercisable at December 31, 2021		1,219,841		$	4.91		7.46	$	5,730,660