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Stock-Based Compensation

6 Months Ended

Mar. 31, 2022

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

NOTE 9 – Stock-Based Compensation

During the three and six month periods ended March 31, 2022 and 2021, stock-based compensation 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,
		2022				2021				2022				2021
General and administrative		$	194,874			$	253,586			$	357,875			$	435,379
Research and development			37,842				72,773				77,913				136,809
Total stock-based compensation expense		$	232,716			$	326,359			$	435,788			$	572,188

Stock Options

During the three month periods ended March 31, 2022 and 2021, under the 2017 Equity Incentive Plan (the “2017 Plan”), the Company granted 60,000 and 580,002 stock options, respectively, to its officers and employees. During the six month periods ended March 31, 2022 and 2021, the Company granted 62,000 and 621,671, respectively, to its officers, employees and consultants. 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 a certain milestone is met. The grant date fair value of the grants issued during the three month periods ended March 31, 2022 and 2021 was $1.00 and $3.02 per share, respectively. The grant date fair value of the grants issued during the six month periods ended March 31, 2022 and 2021 was $1.03 and $2.92 per share, respectively.

The total expense for the three months ended March 31, 2022 and 2021 related to stock options was $145,421 and $217,466, respectively. The total expense for the six months ended March 31, 2022 and 2021 related to stock options was $307,782 and $317,612, respectively. The total number of stock options outstanding as of March 31, 2022 and September 30, 2021 was 1,162,059 and 1,122,560, 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, 2022 and 2021:

		Three Months Ended								Six Months Ended
		March 31,								March 31,
		2022				2021				2022				2021
Expected stock price volatility		53.5		%		56.0		%		53.5		%		55.9		%
Expected life of options (years)			6.1				6.1				6.1				6.0
Expected dividend yield			0	%			0	%			0	%			0	%
Risk free interest rate			1.6	%			0.6	%			1.6	%			0.6	%

During the three month periods ended March 31, 2022 and 2021, 182,217 and 34,752 stock options vested, respectively, and 9,167 and 10,146 stock options were forfeited during these periods, respectively. During the six month periods ended March 31, 2022 and 2021, 201,060 and 106,527 stock options vested, respectively and 22,501 and 10,146 stock options were forfeited during these periods, respectively. During the three and six months ended March 31, 2021, 758 stock options were exercised with an intrinsic value of $955. No options were exercised during the three and six months ended March 31, 2022.

Restricted Stock Units

During the three and six months ended March 31, 2022, the Company granted an aggregate of 355,950 restricted stock units (“RSUs”) to certain officers and employees under the 2017 Plan. The weighted average grant date fair value of the RSU granted during the three and six months ended March 31, 2022 was $2.10 per unit. The RSUs vest over a three year period with 50 percent vesting on the first anniversary of the grant date and the remaining RSUs vesting in equal monthly installments on the last day of each month over 24 months, subject to the recipient’s continued service on such dates. No RSUs were granted during the three and six month periods ended March 31, 2021.

During the three months ended March 31, 2022 and 2021, 3,444 and 7,992 RSUs vested, respectively, and no RSUs were forfeited during these periods. During the six months ended March 31, 2022 and 2021, 9,088 and 16,376 RSUs vested, respectively, and no RSUs were forfeited during these periods. The total expense for the three months ended March 31, 2022 and 2021 related to these RSUs was $87,295 and $40,493, respectively. The total expense for the six months ended March 31, 2022 and 2021 related to these RSUs was $128,006 and $83,576, 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 vested over a six-month period. As of March 31, 2021, 40,000 shares were vested under this agreement of which 13,334 and 33,334 shares vested during the three and six month periods 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 compensation expense.

No other stock-based awards were issued during the three and six month periods ended March 31, 2022 and no expense associated with stock awards was recorded during the three and six months ended March 31, 2022.

Inducement Plan

On October 4, 2021, the Company adopted the NeuroOne Medical Technologies Corporation 2021 Inducement Plan (the “Inducement Plan”), pursuant to which the Company reserved 420,350 shares of its common stock to be used exclusively for grants of awards to individuals who were not previously employees or directors of the Company, as an inducement material to the individual’s entry into employment with the Company within the meaning of Rule 5635(c)(4) of the Nasdaq Listing Rules. The Inducement Plan was approved by the Company’s Board of Directors without stockholder approval in accordance with such rule.

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. Effective January 1, 2022, 1,614,538 shares were added to the 2017 Plan as a result of the evergreen provision.

General

As of March 31, 2022, 1,880,777 shares were available in the aggregate for future issuance under the 2017 Plan and Inducement Plan. No shares were available for future issuance under the 2016 Equity Incentive Plan. Unrecognized stock-based compensation was $2,035,046 as of March 31, 2022. The unrecognized share-based expense is expected to be recognized over a weighted average period of 2.6 years.