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Stock-Based Compensation

6 Months Ended

Mar. 31, 2020

Share-based Payment Arrangement [Abstract]

NOTE 9 – Stock-Based Compensation

Stock-based compensation expense was included in general and administrative and research and development expenses as follows in the accompanying condensed statements of operations:

	Three Months Ended				Six Months Ended
	March 31,				March 31,
	2020		2019		2020		2019
General and administrative	$	495,690	$	26,105	$	1,059,458	$	141,105
Research and development		36,091		44,112		60,000		48,092
Total share-based compensation	$	531,781	$	70,217	$	1,119,458	$	189,197

Stock Options

During the three month period ended March 31, 2020 and 2019, under the 2017 Equity Incentive Plan (the “2017 Plan”), the Company granted 20,000 and 150,548 stock options, respectively, to its employees, consultants and scientific advisory board members. During the six month periods ended March 31, 2020 and 2019, under the 2017 Plan, the Company granted 820,000 and 325,548 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 March 31, 2020 and 2019 was $1.15 and $1.11 per share, respectively. The grant date fair value of the grants issued during the six month periods ended March 31, 2020 and 2019 was $1.06 and $1.12 per share, respectively. The total expense for the three months ended March 31, 2020 and 2019 related to stock options was $88,806 and $46,654, respectively. The total expense for the six month periods ended March 31, 2020 and 2019 related to stock options was $526,888 and $46,654, respectively. The total number of stock options outstanding as of March 31, 2020 and September 30, 2019 was 1,355,512 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 and six month periods ended March 31, 2020 and 2019:

	Three Months Ended						Six Months Ended
	March 31,						March 31,
	2020			2019			2020			2019

Expected stock price volatility		54.3	%		50.7	%		52.8	%		50.2	%
Expected life of options (years)		5.4			6.0			5.7			5.9
Expected dividend yield		0	%		0	%		0	%		0	%
Risk free interest rate		1.4	%		2.6	%		1.7	%		2.7	%

During the three and six month periods ended March 31, 2020, 46,865 and 422,694 stock options vested, respectively, and 39,675 stock options vested during the three and six months ended March 31, 2019. During the three and six month periods ended March 31, 2020, 260,306 and 267,803 stock options were forfeited, respectively, and no options were forfeited during the three and six month periods ended March 31, 2019.

Restricted Stock Units

During the three and six month periods ended March 31, 2020, 167,851 restricted stock units (“RSUs”) were granted. During the three and six month periods ended March 31, 2019, no RSUs were granted. During the three and six month periods ended March 31, 2020, 122,767 and 133,272 RSUs vested, respectively. No RSUs vested during the three and six month periods ended March 31, 2019. The total expense for the three and six month period ended March 31, 2020 related to the RSU’s was $289,394 and $314,395, respectively. No expense was recognized related to the RSUs during the three and six month periods ended March 31, 2019. The number of RSUs forfeited during the three and six month periods ended March 31, 2020 was zero and 7,003, respectively. No RSUs were forfeited during the three and six month periods ended March 31, 2019.

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 vested as of March 31, 2020 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. In February 2020, an additional consulting agreement was executed whereby up to 90,000 shares of common stock were issuable of which 36,000 shares of common stock were issued and vested as of March 31, 2020 under this agreement. Compensation expense related to the stock awards granted under these consulting agreements amounted to $153,581 and $278,175 and was included in the total stock-based expense referenced above for the three and six month periods ended March 31, 2020, respectively. 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, zero and 50,000 shares of common stock were awarded during the three and six month period ended March 31, 2019, respectively, 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 zero and $115,000 for the three and six month periods ended March 31, 2019, respectively. 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 March 31, 2019, the Company had formal obligation to issue future common stock options relating to several consulting agreements. The corresponding stock-based compensation expense related to the stock-based award liabilities amounted to $23,563 and $27,543 during the three and six month periods ended March 31, 2019, respectively, and was included in general and administrative expense in the accompanying condensed statements of operations.

General

As of March 31, 2020, 2,063,506 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 March 31, 2020. The unrecognized share-based expense is expected to be recognized over a weighted average period of 2.9 years.