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Stock-Based Compensation

3 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

NOTE 9 – Stock-Based Compensation

During the three month periods ended December 31, 2019 and 2018, stock-based expense related to stock-based awards amounted to $587,677 and $118,980, respectively, and was included in general and administrative and research and development costs as follows in the accompanying condensed statements of operations.

	2019		2018
General and administrative	$	563,768	$	118,980
Research and development		23,909		—
Total stock-based compensation expense	$	587,677	$	118,980

Stock Options

During the three month period ended December 31, 2019 and 2018, under the 2017 Equity Incentive Plan (the "2017 Plan"), the Company granted 800,000 and 175,000 stock options, respectively, to its employees, consultants and scientific advisory board members. Vesting generally occurs over an immediate to 48 month period based on a time of service condition although vesting acceleration is provided under one grant in the event that certain milestones are met. The grant date fair value of the grants issued during the three month periods ended December 31, 2019 and 2018 was $1.06 and $1.14 per share, respectively. The total expense for the three months ended December 31, 2019 and 2018 related to stock options was $438,083 and zero, respectively. The total number of stock options outstanding as of December 31, 2019 and September 30, 2019 was 1,595,818 and 845,840, respectively.

The weighted-average assumptions used in the Black-Scholes option-pricing model are as follows for the stock options granted during the three month period ended December 31, 2019 and 2018:

	2019			2018
Expected stock price volatility		52.8	%		49.8	%
Expected life of options (years)		5.7			5.8
Expected dividend yield		0	%		0	%
Risk free interest rate		1.7	%		2.8	%

During the three month periods ended December 31, 2019 and 2018, 375,830 and zero stock options vested, and 7,497 and zero stock options were forfeited during these periods, respectively.

Restricted Stock Units

There were no restricted stock units ("RSUs") granted during the three months ended December 31, 2019 and 2018, and 10,503 and zero RSUs vested during these periods, respectively The total expense for the three months ended December 31, 2019 and 2018 related to these RSU's was $25,001 and zero, respectively. The number of RSUs forfeited during the three month periods ended December 31, 2019 and 2018 was 7,003 and zero, respectively.

Other Stock-Based Awards

In October 2019, two consulting agreements were executed whereby up to 115,000 shares of common stock were issuable of which 90,000 shares of common stock were issued and 60,000 shares were vested as of December 31, 2019 under these agreements. Vesting is based on a time-based vesting condition ranging over a three to nine month period commencing upon the execution of the consulting agreements. Compensation expense related to the stock awards granted under these consulting agreements amounted to $124,593 and was included in the total stock-based expense referenced above for the three month period ended December 31, 2019. The expense was based on the fair value of the underlying common stock at the point of vesting which ranged from $2.00 to $2.65 per share.

In February 2018, 250,000 shares of common stock were reserved as a result of a consulting agreement for investor relations services executed in February 2018. Under the agreement, 50,000 shares of common stock were awarded during the three month period ended December 31, 2018 on a time-based vesting condition that was met in November 2018. The compensation expense related to the vested common shares was included in the total stock-based expense referenced above which totaled $115,000 for the three month period ended December 31, 2018. The expense was based on the fair value of the underlying common stock at the point of vesting which was $2.30 per share. The underlying stock price used in the analysis was on a non-marketable basis and was according to the market approach, considering both the traded price and forward multiples from guideline public companies, using allocation and marketability-discount methodologies. As of November 2018, all shares under the February 2018 share reserve were issued, but were not eligible for issuance under either of the 2016 or 2017 Plans as the consulting contract was not with an individual.

As of December 31, 2018, the Company had a formal obligation to issue future common stock options relating to a consulting agreement. The corresponding stock-based compensation expense related to the stock-based award liability amounted to $3,980 during the three months ended December 31, 2018 and was included in general and administrative expense in the accompanying condensed statements of operations.

General

As of December 31, 2019, 704,259 shares were available for future issuance on a combined basis under the 2016 Equity Incentive Plan and 2017 Plan. Unrecognized stock-based compensation was $0.8 million as of December 31, 2019. The unrecognized share-based expense is expected to be recognized over a weighted average period of 3.2 years.