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Stock-Based Compensation

6 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement [Abstract]

NOTE 9 – Stock-Based Compensation

During the three and six month periods ended March 31, 2021 and 2020, stock-based expense related to stock-based awards was included in general and administrative and research and development costs as follows in the accompanying condensed statements of operations.

	Three Months Ended				Six Months Ended
	March 31,				March 31,
	2021		2020		2021		2020
General and administrative	$	253,586	$	495,690	$	435,379	$	1,059,458
Research and development		72,773		36,091		136,809		60,000
Total share-based compensation	$	326,359	$	531,781	$	572,188	$	1,119,458

Stock Options

During the three month periods ended March 31, 2021 and 2020, under the 2017 Equity Incentive Plan (the “2017 Plan”), the Company granted 580,002 and 6,667 stock options, respectively, to its employees, consultants and scientific advisory board members. During the six month periods ended March 31, 2021 and 2020, the Company granted 621,671 and 273,336, 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, 2021 and 2020 was $3.02 and $3.45 per share, respectively. The grant date fair value of the grants issued during the six month periods ended March 31, 2021 and 2020 was $2.92 and $3.18 per share, respectively.

The total expense for the three months ended March 31, 2021 and 2020 related to stock options was $217,466 and $88,806, respectively. The total expense for the six months ended March 31, 2021 and 2020 related to stock options was $317,612 and $526,888, respectively. The total number of stock options outstanding as of March 31, 2021 and September 30, 2020 was 1,103,609 and 492,842, 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 period ended March 31, 2021 and 2020:

	Three Months Ended						Six Months Ended
	March 31,						March 31,
	2021			2020			2021			2020
Expected stock price volatility		56.0	%		54.3	%		55.9	%		52.8	%
Expected life of options (years)		6.1			5.4			6.0			5.7
Expected dividend yield		0	%		0	%		0	%		0	%
Risk free interest rate		0.6	%		1.4	%		0.6			1.7	%

During the three month periods ended March 31, 2021 and 2020, 34,752 and 15,622 stock options vested, respectively and 10,146 and 86,771 stock options were forfeited during these periods, respectively. During the six month periods ended March 31, 2021 and 2020, 106,527 and 140,898 stock options vested, respectively and 10,146 and 89,270 stock options were forfeited during these periods, respectively.

Restricted Stock Units

During the three and six months ended March 31, 2020, 55,952 restricted stock units (“RSUs”) were granted. No RSUs were granted during the three and six month period ended March 31, 2021. During the three months ended March 31, 2021 and 2020, 7,992 and 40,925 RSUs vested, respectively, and no RSUs were forfeited during these periods. During the six months ended March 31, 2021 and 2020, 16,376 and 44,427 RSUs vested, respectively, and zero and 2,335 RSUs were forfeited during these periods. The total expense for the three months ended March 31, 2021 and 2020 related to these RSUs was $40,493 and $289,394, respectively. The total expense for the six months ended March 31, 2021 and 2020 related to these RSUs was $83,576 and $314,395, respectively.

Other Stock-Based Awards

In August 2020, an additional consulting agreement was executed whereby 40,000 shares of common stock were issued, subject to Company repurchase. The stock award under the agreement vests over a six-month period. As of March 31, 2020, 40,000 shares were vested under this agreement of which 13,334 and 33,334 shares vested during the three and six months ended March 31, 2021, respectively. Compensation expense related to the stock award granted under this consulting agreement amounted to $68,400 and $171,000 for the three and six months ended March 31, 2021, respectively, and was included in the total stock-based expense.

In October 2019, two consulting agreements were executed whereby up to 38,334 shares of common stock were issuable of which 30,000 shares of common stock were issued and vested as of March 31, 2020 under these agreements. In addition, an additional consulting agreement was executed in February 2020 whereby up to 30,000 shares of common stock were issuable of which 12,000 shares of common stock were issued and vested as of March 31, 2020. Vesting for these awards was based on a time-based vesting condition that ranged 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 $153,581 and $278,175 during the three and six months ended March 31, 2020, respectively, and was included in the total stock-based expense. The expense was based on the fair value of the underlying common stock at the point of vesting which ranged from $6.00 to $7.95 per share.

General

2017 Plan Evergreen Provision

Under the 2017 Plan, the shares reserved automatically increase on January 1st of each year, for a period of not more than ten years from the date the 2017 Plan is approved by the stockholders of the Company, commencing on January 1, 2019 and ending on (and including) January 1, 2027, to an amount equal to 13% of the fully-diluted shares outstanding as of December 31st of the preceding calendar year. Notwithstanding the foregoing, the Board may act prior to January 1st of a given year to provide that there will be no January 1st increase in the share reserve for such year or that the increase in the share reserve for such year will be a lesser number of shares of common stock than would otherwise occur pursuant to the preceding sentence. “Fully Diluted Shares” as of a date means an amount equal to the number of shares of common stock (i) outstanding and (ii) issuable upon exercise, conversion or settlement of outstanding awards under the 2017 Plan and any other outstanding options, warrants or other securities of the Company that are (directly or indirectly) convertible or exchangeable into or exercisable for shares of common stock, in each case as of the close of business of the Company on December 31 of the preceding calendar year. On January 1, 2021, 484,623 shares were added to the 2017 Plan as a result of the evergreen provision.

As of March 31, 2021, 486,214 shares were available for future issuance on a combined basis under the 2016 Equity Incentive Plan and 2017 Plan. Unrecognized stock-based compensation was $2,049,822 as of March 31, 2021. The unrecognized share-based expense is expected to be recognized over a weighted average period of 0.7 years.