Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.23.3
Stock-Based Compensation
 9 Months Ended
Sep. 30, 2023
Share-Based Payment Arrangement [Abstract]  
Stock-Based Compensation Stock-Based Compensation
Stock Incentive Plan
On October 31, 2014, the Board of Directors approved the Company’s 2014 Omnibus Incentive Plan (the “2014 Plan”).
On June 14, 2022, in connection with the EHT Acquisition, the Board approved the 2014 Amended and Restated Omnibus Incentive Plan (the “2014 Amended and Restated Plan”) which replaced the 2014 Plan in its entirety. The 2014 Amended and Restated Plan, among other things, fixed the number of shares that can be issued under the plan to 364,879, provided that each January 1 beginning in 2023 and ending on (and including) January 1, 2032, the number of shares will increase by 5% of the outstanding shares of Common Stock as of the prior December 31, unless the Board of Directors of the Company decides to a lesser increase.
On September 30, 2022, the 2014 Amended and Restated Plan was approved by the shareholders. The 2014 Amended and Restated Plan authorizes the issuance of awards including stock options, stock appreciation rights, restricted stock, stock units and performance units to employees, directors, and consultants of the Company.
On September 29, 2023, the Board approved certain stock option and restricted stock unit grants contingent upon approval by the shareholders of the Company of an Amendment to the 2014 Amended and Restated Plan, which amendment was effective on November 6, 2023. Therefore, as of September 30, 2023, the Company had a deficit in the authorized share pool of 751,463 shares under the 2014 Amended and Restated Plan. Refer to Note 13 for further information.
Stock Options
The following is a summary of option activities under the Company’s 2014 Amended and Restated Plan for the nine months ended September 30, 2023:
Number of
Shares		 Weighted
Average
Exercise Price		 Weighted
Average
Remaining
Contractual
Term (Years)		 Aggregate Intrinsic Value*
Outstanding, December 31, 2022 171,980  $ 45.00  7.14 $ — 
Granted 322,479  3.59  — 
Exercised —  — 
Cancelled (37,404) 112.53 
Forfeited (14,252) 14.51 
Outstanding, September 30, 2023 442,803  $ 9.73  9.12 $ — 
Exercisable, September 30, 2023 100,389  $ 26.73  7.26 $ — 
*The aggregate intrinsic value is the sum of the amounts by which the quoted market price of the Company’s stock exceeded the exercise price of the stock options at September 30, 2023 for those stock options for which the quoted market price was in excess of the exercise price ("in-the-money options").
The weighted-average grant-date fair value of stock options granted during the nine months ended September 30, 2023, was $3.08.
The fair value of the Company's stock option grants were estimated on the date of grant using the Black-Scholes option-pricing model under the following assumptions:
Nine Months Ended
September 30, 2023
Dividend yield —%
Volatility factor
87.9 - 127.0%
Risk-free interest rate
3.86 - 4.61%
Expected term (years)
5.27 - 6.08
Restricted Stock Units
On December 14, 2021, the Company granted restricted stock units (“RSUs”) to its executive management team. The RSUs cliff vest 33% per year on the anniversary of the grant date over a three year period. As of September 30, 2023, 10,665 RSUs with a weighted-average grant-date fair value of $14.43 per share remain unvested.
On August 25, 2023, the Company granted RSUs to its executive management team and to certain members of the Board with market and performance based conditions. The RSUs are eligible to vest subject to the achievement and attainment of certain market capitalization target goals (market-based conditions) or the achievement of a successful exit (a performance-based condition); provided, however, that no RSUs shall vest until the Compensation Committee of the Board determines that shares can be sold into the market to cover withholding tax obligations associated with the vesting of the RSUs. As of September 30, 2023, 832,445 RSUs with a weighted average grant date fair value of $2.56 per share remain unvested.
The Company used the Monte Carlo Simulation model to evaluate the derived service period and fair value of awards with market and performance conditions, including assumptions of historical volatility and risk-free interest rate commensurate with the vesting term.

The fair value of the Company's performance-based RSUs were estimated on the date of grant under the following assumptions:
Nine Months Ended
September 30, 2023
Dividend yield $—
Volatility factor
87.4- 87.9%
Risk-free interest rate
4.21- 4.54%
Derived service periods (years)
1.20 - 3.67
Stock-Based Compensation Expense
The Company recognizes stock-based compensation expense using the straight-line method over the requisite service period or derived service period. The Company recognized stock-based compensation expense, including compensation expense for warrants with vesting provisions issued to a service provider (Note 5), and the RSUs discussed above, in its Unaudited Condensed Consolidated Statements of Operations as follows:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2023 2022 2023 2022
Research and development $ 33,724  $ 23,966  $ 90,725  $ 64,507 
General and administrative 126,483  120,158  303,932  361,339 
$ 160,207  $ 144,124  $ 394,657  $ 425,846 
The total amount of unrecognized compensation cost was $3,573,151 as of September 30, 2023. This amount will be recognized over a weighted average period of 4.08 years.