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STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2024

Note 12

STOCK-BASED COMPENSATION

Restricted Stock Awards and Restricted Stock Units

The table below includes issuances of restricted stock awards and units under the 2020 Plan and unvested equity interests of MOR which were converted into restricted common stock.

	Number of Restricted Shares and Units			Weighted Average Grant Date Fair Value Per Share
Unvested at January 1, 2023		551,258		$	3.28
Issued		570,000			3.79
Vested		(331,934	)		7.30
Canceled		(44,339	)		0.44
Unvested at December 31, 2023		744,985			2.05
Issued		350,000			2.68
Vested		(241,485	)		4.78
Canceled		(5,000	)		9.47
Unvested at September 30, 2024		848,500		$	4.01

The 848,500 of unvested awards at September 30, 2024 consisted of 848,500 restricted stock units and 0 shares of restricted stock.

Stock Options

As part of the business combination with Helix, the Company assumed the Helix TCS, Inc. Omnibus Stock Incentive Plan and the Bio-Tech Medical Software, Inc. 2014 Stock Incentive Plan, each as amended, pursuant to which options exercisable at prices between $2.00 and $51.80 per share for 455,089 shares of Company common stock were outstanding. As of September 30, 2024, options to purchase 210,493 shares of common stock remain outstanding.

The fair value of the stock options was estimated at Level 3 in the fair value hierarchy using the Black-Scholes option pricing model and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgement. The assumptions used to calculate the grant date fair value of the options granted during the nine months ended September 30, 2024 and 2023, are as follows:

	For the Nine Months Ended September 30,
	2024		2023
Exercise Price	$	2.60 to $3.69	$	2.60 to $3.79
Fair value of Company common stock	$	2.60 to $3.69	$	2.60 to $3.79
Dividend yield		0%		0%
Expected volatility	77% to 79%		79% to 117%
Risk Free interest rate	3.80% to 4.20%		3.40% to 4.19%
Expected life (years) remaining	6.10 to 6.25		6.08 to 6.25

The following summarizes option activity under the Company’s stock plan for the nine months ended September 30, 2024 and for the year ended December 31, 2023:

	Shares Underlying Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)
Outstanding at January 1, 2023		3,983,808		$	10.53		8.23
Granted		1,416,000		$	3.46		9.28
Exercised		(2,452	)	$	2.20		4.42
Forfeited and expired		(1,556,812	)	$	12.53		7.40
Outstanding at December 31, 2023		3,840,544		$	7.12		8.96
Granted		475,500		$	2.80		9.35
Exercised		(14,375	)	$	2.98		0.76
Forfeited and expired		(301,626	)	$	6.92		5.95
Outstanding at September 30, 2024		4,000,043		$	6.53		7.47
Vested options at September 30, 2024		2,123,188		$	8.69		6.64

The weighted average exercise price and remaining contractual life of exercisable options as of September 30, 2024 is $8.69 and 6.64 respectively. The total aggregate intrinsic value of the exercisable options as of September 30, 2024 was approximately $0.

Stock Compensation Expense

The weighted-average grant date fair value per share for the stock options granted was $2.00 and $3.24 for the nine months ended September 30, 2024 and 2023, respectively.

On February 10, 2023, the Company’s Chief Executive Officer, President and Class II member of the Board of Directors resigned. In connection with the resignation, the Company entered into a separation agreement providing for, among other things, accelerated vesting of 106,656 unvested restricted shares of the Company common stock. Stock based compensation expense for the nine months ended September 30, 2023 includes $349,832 related to the accelerated vesting of stock, which is included in “separation expenses” in the condensed consolidated statements of operations.

At September 30, 2024, the total unrecognized stock compensation expense related to unvested stock option awards and restricted stock awards and restricted stock units granted was $7,790,409, which the Company expects to recognize over a weighted-average period of approximately 3.75 years. Stock compensation expense for the three and nine months ended September 30, 2024 and 2023 was as follows:

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2024		2023		2024		2023
Services	$	38,254	$	51,611	$	114,424	$	123,809
Research and development		26,517		33,706		79,512		108,862
Sales and marketing		66,828		52,663		203,272		156,580
General and administrative		1,420,443		1,414,017		4,476,385		4,181,489
Separation expenses		—		—		—		349,832
Subtotal		1,552,042		1,551,997		4,873,593		4,920,572
Discontinued operations		—		—		—		(247,308	)
Total	$	1,552,042	$	1,551,997	$	4,873,593	$	4,673,264

Total intrinsic value of options exercised during the period ended September 30, 2024 was $8,375. The total fair value of restricted shares vested during the three and nine month periods ended September 30, 2024 was $38,381 and $765,045, respectively.