Stock Based Compensation

9 Months Ended

Sep. 30, 2024

Stock Based Compensation [Abstract]

STOCK BASED COMPENSATION

NOTE 10 - 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. There are 131,379 shares of common stock reserved for issuance under the 2018 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 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. On June 4, 2024, the stockholders of the Company approved an amendment to the 2021 Plan to increase the number of shares of common stock reserved for issuance by 500,000. 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 668,000 shares of its common stock reserved under the 2021 Plan, as amended. 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 three and nine months ended September 30, 2024 and 2023:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Research and development	$	226,421	$	251,397	$	679,678	$	756,511
General and administrative		341,251		514,922		1,123,336		1,587,348
	$	567,672	$	766,319	$	1,803,014	$	2,343,859

As of September 30, 2024, there was approximately $2.1 million 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 1.5 years.

The Company records compensation expense for 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.

Stock Option Information 

The following table summarizes stock option activity during the nine months ended September 30, 2024:

	Number of Shares			Weighted- Average Exercise Prices		Weighted- Average Remaining Contractual Term (In Years)		Intrinsic Value
Outstanding at January 1, 2024		233,340		$	74.63		7.66	$	-
Granted		72,834			1.82		-		-
Cancelled		(6,898	)		9.46		-		-
Outstanding at September 30, 2024		298,919		$	58.25		7.56	$	11,654
Exercisable at September 30, 2024		144,188		$	98.34		7.56	$	-

The Company estimates the fair value of each option award using the Black-Scholes-Merton option pricing model. Forfeitures are recognized when realized. The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had strike prices lower than the fair value of the Company’s common stock.

The fair value of stock options issued was estimated using the following assumptions:

	For The Nine Months September 30, 2024
Weighted average exercise price	$	1.82
Weighted average grant date fair value	$	1.49
Assumptions
Expected volatility		101	%
Expected term (in years)		5.3 – 6.3
Risk-free interest rate		4.23	%
Expected dividend yield		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 the historical volatility of the Company’s common stock 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 mean of the high and low sales prices of the Company’s common stock on the date of grant as the fair value of the common stock.

Restricted Stock Units

In April 2024, the Company granted 123,356 restricted stock units (“RSUs”) under its 2018 and 2021 Plans. Each RSU entitles its holder to one share of common stock upon settlement of the RSU. The settlement of each RSU is subject to the Company’s receipt of additional capital greater than a specified threshold. In addition, 88,856 RSUs granted under the 2021 Plan were subject to stockholder approval of an increase in the shares of common stock reserved for issuance under the 2021 Plan, which took place on June 4, 2024. As the vesting of all of the RSUs is contingent on the Company’s receipt of additional capital, the Company will not recognize any compensation expense until it is determined the receipt of additional capital is probable of being achieved. The fair value of each RSU is determined based on the mean of the high and low sales prices on the date of grant and when all required approvals have been obtained.

The following table summarizes RSU activity during the nine months ended September 30, 2024:

	Number of Shares			Weighted- Average Grant Date Fair Value
Unvested balance at January 1, 2024		-		$	-
Granted		217,441			2.15
Vested		-			-
Forfeited		(3,556	)		2.08
Unvested balance at September 30, 2024		213,885		$	2.16