SHARE-BASED COMPENSATION

6 Months Ended

Jun. 30, 2024

Share-Based Payment Arrangement [Abstract]

SHARE-BASED COMPENSATION

8. SHARE-BASED COMPENSATION

In August 2021, AccuStem adopted the 2021 Omnibus Equity Incentive Plan (the “Incentive Plan”). The Incentive Plan provides that the Company may grant Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, and Other Share-Based Awards to selected employees, directors, and independent contractors of the Company.

Each Award shall be exercisable at such time or times and subject to such terms and conditions set forth in the Incentive Plan, as shall be determined by the administrator in the applicable award agreement. Total shares authorized by the Incentive Plan was 2,500,000. Awards under the Incentive Plan are exercisable for up to 10 years from the date of issuance. There are 1,130,452 remaining available shares to be issued under the Incentive Plan at June 30, 2024. The number of shares of Common Stock that are reserved and available for issuance under the Incentive Plan shall be subject to an annual increase on the first day of each calendar year beginning with the first January 1 following the effective date and ending with the last January 1 during the initial ten-year term of the Plan as defined in Section 4(a) of the Incentive Plan.

Options

There were no options granted or modified for the three months ended June 30, 2024, and for the three months ended June 30, 2023.

The Company issued 201,000 options during the first quarter of 2024 for employees, directors and non-employees under the Incentive Plan. The options granted had an exercise price of $0.49 and expire on the ten-year anniversary of the grant date.

For the six months ended June 30, 2023, stock option activity for time-based options of the Company are as follows:

	Number of Time-Based Share Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value
Outstanding at January 1, 2023		416,115		$	1.86		9.13	$	57,207
Issued		—			—		—		—
Exercised		—			—		—		—
Expired/Forfeited		(39,600	)		2.13		—		—
Outstanding at June 30, 2023		376,515		$	1.83		8.65	$	61,534
Vested and exercisable June 30, 2023		130,840		$	1.35		8.49	$	57,198

For the six months ended June 30, 2023, stock option activity for performance-based options of the Company are as follows:

	Number of Performance- Based Share Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value
Outstanding at January 1, 2023		944,000		$	1.45		9.11	$	174,000
Issued		—			—		—		—
Exercised		—			—		—		—
Expired/Forfeited		(49,500	)		—		—		—
Outstanding at June 30, 2023		894,500		$	1.41		8.86	$	—
Vested and exercisable June 30, 2023		—			—		—		—

For the six months ended June 30, 2024, stock option activity for time-based options of the Company are as follows:

	Number of Time-Based Share Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value
Outstanding at January 1, 2024		366,615		$	1.82		8.14	$	15,686
Issued		201,000			0.49		9.70		—
Exercised		—			—		—		—
Expired/Forfeited		(12,129	)		0.95		7.76		—
Outstanding at June 30, 2024		555,486		$	1.36		8.37	$	—
Vested and exercisable June 30, 2024		290,861		$	1.73		7.67	$	—

For the six months ended June 30, 2024, stock option activity for performance-based options of the Company are as follows:

	Number of Performance- Based Share Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value
Outstanding at January 1, 2024		894,500	$	1.41		8.11	$	—
Issued		—		—		—		—
Exercised		—		—		—		—
Expired/Forfeited		—		—		—		—
Outstanding at June 30, 2024		894,500	$	1.41		7.61	$	—
Vested and exercisable June 30, 2024		—		—		—		—

The aggregate intrinsic value is calculated as the difference between the estimated fair value of the underlying common stock as of June 30, 2024 and the option exercise price.

Total share-based compensation was approximately $13,933 and $12,626, respectively, for the three months ended June 30, 2024 and 2023, respectively. For the six months ended June 30, 2024 and 2023, respectively, share-based compensation was approximately $32,101 and $38,835, respectively.

Total share-based compensation expense is included in General and Administrative expenses on the Condensed Consolidated Statement of Operations.

The Company uses the Black-Scholes option pricing model to estimate the fair value of the option awards. The table below summarizes the resulting weighted average inputs used to calculate the estimated fair value of options awarded for the six months ended June 30, 2024.

	Six Months Ended June 30, 2024			Six Months Ended June 30, 2023
Risk-free interest rate		1.80	%		1.54-2.34	%
Expected dividend yield		—			—	%
Expected term		5 years			5 – 8.5 years
Expected volatility		53.43	%		57.2 – 65.7	%

 

The risk-free interest rate assumption is determined using the yield currently available on U.S. Treasury zero- coupon issues with a remaining term commensurate with the expected term of the award. The Company has historically been a private company and lacks company-specific historical and implied volatility information. Management has estimated expected volatility based on similar public companies. Expected life of the option represents the period of time options are expected to be outstanding. The estimate for dividend yield is 0% because the Company has not historically paid, and does not intend to pay, a dividend on common stock in the foreseeable future.

As of June 30, 2024, there was $790,198 unrecognized compensation expense related to options. $96,860 of this cost is subject to time-based conditions, and is to be recognized over a period of approximately 2.8 years. The remaining $693,338 of unrecognized compensation expense relates to performance-based conditions for unvested options. These costs are expected to be recognized over the required service period once the performance condition has occurred or becomes probable. Compensation costs related to the performance stock options are evaluated at each reporting period and subsequently adjusted for changes in the expected outcomes of the performance conditions.

Warrants

In March 2022, the Company issued 350,000 common stock warrants to a non-employee under the Incentive Plan. The common stock warrants are subject to vesting and, grantees become fully vested and exercisable when certain performance requirements are met.

The common stock warrants granted have an exercise price of $1.06. The common stock warrants expire on the ten-year anniversary of the grant date. There were no warrants issued during the three months ended June 30, 2024 and 2023.

For the six months ended June 30, 2023, warrant activity of the Company are as follows:

	Number of shares		Weighted Average Exercise Price		Weighted average remaining contractual life (in years)		Aggregate Intrinsic Value
Outstanding at January 1, 2023		350,000	$	1.06		9.07	$	—
Issued		—		—		—		—
Exercised		—		—		—		—
Expired/Forfeited		—		—		—		—
Outstanding at June 30, 2023		350,000	$	1.06		8.57	$	122,500
Vested and exercisable June 30, 2023		—		—		—		—

For the six months ended June 30, 2024, warrant activity of the Company are as follows:

	Number of shares		Weighted Average Exercise Price		Weighted average remaining contractual life (in years)		Aggregate Intrinsic Value
Outstanding at January 1, 2024		350,000	$	1.06		8.07	$	—
Issued		—		—		—		—
Exercised		—		—		—		—
Expired/Forfeited		—		—		—		—
Outstanding at June 30, 2024		350,000	$	1.06		7.57	$	122,500
Vested and exercisable June 30, 2024		—		—		—		—

The grant date fair value for these warrants of $0.66 per warrant for a total fair value of $232,490.

There was no share-based compensation expense recognized during the three and six months ended June 30, 2024 and 2023 for warrants.

As of June 30, 2024, there was $232,490 of total performance-based unrecognized compensation costs related to unvested common stock warrants. These costs are expected to be recognized once the performance condition has occurred or becomes probable.