Stock Based Compensation

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

Stock Based Compensation

Note 10 – Stock Based Compensation

Incentive Plans and Options

The Company’s 2019 Equity and Incentive Plan, as amended in 2021 (the “2019 Plan”) enabled the Company to grant incentive stock options or nonqualified stock options and other equity awards to employees, directors and consultants of the Company up to a total of 3,000,000 shares of common stock. All 3,000,000 shares available for issue under the 2019 Plan have been issued.

On July 5, 2022, the Board of Directors adopted the Company’s 2022. Equity and Incentive Plan (the “2022 Plan”) which provides for the issuance of up to 16,000,000 shares of the Company’s common stock. The 2022 Plan was approved by a majority of the shareholders in September 2022. As of December 31, 2022, a total of 5,318,267 shares were issued under the 2022 Plan.

The following table presents the assumptions used in the Black-Scholes option-pricing model to determine the grant-date fair value of stock options granted:

	Twelve Months Ended
	December 31,
	2022		2021
Exercise price	$	1.67 – 2.56	$	5.20 – 12.72
Risk-free interest rate		0.58 – 3.98%		0.04 – 0.08%
Expected volatility		336 – 369%		390 – 415%
Expected dividend yield		0%		0%
Expected life of options (in years)		5.0		5.0

The following table summarizes the Company’s option activity since December 31, 2021:

	Weighted			Weighted
	Average			Average
	Number			Exercise		Contractual
	of Shares			Price		Term
						(in years)
Outstanding as of December 31, 2021		5,196,640		$	7.68		2.5
Granted		6,868,267			2.38
Exercised		-			-
Forfeited		(2,463,670	)		3.26
Outstanding as of December 31, 2022		9,601,237		$	4.02		2.6
Vested as of December 31, 2022		6,684,833		$	4.22		3.1

The following table summarizes the exercise price range as of December 31, 2022:

Exercise Price		Outstanding Options		Exercisable Options
$	1.00		408,970		329,320
$	1.45		225,000		225,000
$	1.67		50,000		-
$	1.95		280,000		263,335
$	2.37		5,153,267		4,050,000
$	2.40		1,062,500		418,318
$	2.56		287,500		-
$	2.61		150,000		72,224
$	3.58		65,000		43,335
$	3.98		66,000		44,002
$	5.69		12,500		12,500
$	5.70		25,000		8,332
$	6.11		25,000		8,332
$	6.49		52,500		17,496
$	6.60		50,000		16,665
$	6.70		200,000		66,660
$	6.85		650,000		383,320
$	7.00		18,000		5,999
$	7.55		7,500		7,500
$	8.85		100,000		33,330
$	10.00		650,000		650,000
$	11.51		50,000		16,665
$	11.65		12,500		12,500
			9,601,237		6,684,833

The weighted average grant-date fair value of stock options granted during the years ended December 31, 2022 and 2021 was $2.38 per share and $7.30 per share, respectively. 

Stock-based compensation

The Company recorded stock-based compensation expense related to common stock options and restricted common stock in the following expense categories of its consolidated statements of operations and comprehensive loss:

	Twelve Months Ended
	December 31,
	2022		2021
Research and development		2,758,465		6,781,898
General and administrative		15,003,002		2,619,447
Total stock-based compensation	$	17,761,467	$	9,401,345

As of December 31, 2022, total unrecognized compensation cost related to common stock options was $7.6 million, which is expected to be recognized over a period of 2.8 years.

Warrants

In connection with a restricted stock units offering in June 2020, the Company issued warrants in August 2020 to purchase 171,000 shares of the Company’s common stock, at an exercise price of $2.00. Those warrants are exercisable for five years from the date of issuance. In connection with an offering of Series A Convertible Preferred stock in November 2021, the Company issued warrants to purchase 1,545,459 shares of the Company’s common stock at an exercise price of $7.00. Those warrants are exercisable for two years from the date of issuance. In connection with the QPhoton merger on June 16, 2022, the Company issued warrants to purchase 6,325,503 shares of the Company’s common stock at an exercise price of $0.0001. Those warrants are exercisable when and if stock options and warrants issued and outstanding as of June 15, 2022, are exercised. The following table summarizes the warrants outstanding at December 31, 2022:

Issuance Date	Expiration Date	Exercise Price		Issued		Exercised			Forfeited / Canceled			Warrants Outstanding
August 18, 2020	August 18, 2025	$	2.00		171,000		(150,000	)		-			21,000
November 15, 2021	November 15, 2023	$	7.00		1,545,459		-			-			1,545,459
June 16, 2022	May 9, 2027	$	0.0001		6,325,503		-			(1,254,496	)		5,071,007