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STOCK OPTION PLANS

12 Months Ended

Dec. 31, 2022

STOCK OPTION PLANS

STOCK OPTION PLANS

NOTE 12: STOCK OPTION PLANS

Options to Purchase Shares of Common Stock

On May 19, 2020, the Board adopted the 2020 Equity Incentive Plan ("2020 Plan") which replaced the 2014 Omnibus Stock Option Plan. The 2020 Plan was further amended effective May 2022 to increase the number of shares of common stock authorized for issuance under the plan by 850,000 shares. The 2020 Plan allows for grants of stock options, restricted shares, stock bonuses and other equity-based awards to employees and non-employee directors of the Company. Awards under the 2020 Plan may be at prices and for terms as determined by the Company’s board of directors and may have vesting requirements as determined by the Board, provided that the exercise price for any stock option must be at least equal to the fair market value (as defined in the 2020 Plan) of a share of the stock on the grant date. Once granted, the exercise price of an option may not be reduced without the approval of the Company’s stockholders, other than under certain limited circumstances such as a stock split or take any other action with respect to a stock option that would be treated as a repricing under the rules and regulations of the Nasdaq Stock Exchange.

Options granted under the 2020 Plan have a maximum term of ten years from the date of grant and generally vest over four years.

2022 Equity Incentive Awards

On February 17, 2022, pursuant to the Company’s 2020 Equity Incentive Plan, the compensation committee of the Company’s board of directors approved a total of 125,000 options to purchase the Company’s common stock as equity-based incentive awards to the Company’s executive officers. Each option award was granted with an exercise price of $4.60 per share, the closing price of the Company’s common stock on the Nasdaq Global Market on February 17, 2022, with the option award vesting in 48 equal monthly installments over a four-year period, subject to such executive officer’s continued service on the applicable vesting date. Additionally, on February 17, 2022, the compensation committee of the Company’s board of directors approved a total of 39,500 options to purchase the Company’s common stock to non-executive employees of the Company as equity-based incentive awards. Each option award was granted with an exercise price of $4.60 per share, the closing price of the Company’s common stock on the Nasdaq Global Market on February 17, 2022, with the option award vesting in 48 equal monthly installments over a four-year period, subject to such employee’s continued service on the applicable vesting date.

The above awards were in addition to 17,500 stock option awards issued during the three months ended March 31, 2022 to new employees upon their commencement of employment with the Company. Each option award was granted with an exercise price of $10.00 per share, the closing price of the Company’s common stock on the Nasdaq Global Market on January 3, 2022, with 25% of the option award vesting in one year and the remaining 75% vesting in 36 equal monthly installments thereafter over a three-year period, subject to such employee’s continued service on the applicable vesting date.

21,000 stock option awards were issued during the three months ended June 30, 2022 to new employees upon their commencement of employment with the Company. Each option award was granted with an exercise price of $4.30 per share, the closing price of the Company’s common stock on the Nasdaq Global Market on April 1, 2022, with 25% of the option award vesting in one year and the remaining 75% vesting in 36 equal monthly installments thereafter over a three-year period, subject to such employee’s continued service on the applicable vesting date.

10,000 stock option awards were issued during the three months ended September 30, 2022 to new employees upon their commencement of employment with the Company. Each option award was granted with an exercise price of $3.50 per share, the closing price of the Company’s common stock on the Nasdaq Global Market on July 1, 2022, with 25% of the option award vesting in one year and the remaining 75% vesting in 36 equal monthly installments thereafter over a three-year period, subject to such employee’s continued service on the applicable vesting date.

Additionally, 7,000 stock option awards were issued during the three months ended December 31, 2022 to new employees upon their commencement of employment with the Company. Each option award was granted with an exercise price of $3.73 per share, the closing price of the Company’s common stock on the Nasdaq Global Market on October 3, 2022, with 25% of the option award vesting in one year and the remaining 75% vesting in 36 equal monthly installments thereafter over a three-year period, subject to such employee’s continued service on the applicable vesting date.

Also, pursuant to the Company’s Non-Employee Director Compensation Policy, which had previously been approved by the Company’s board of directors, 40,000 stock option awards were issued during the year ended December 31, 2022 to independent members of the board of directors of the Company. Each option award was granted on May 24, 2022 with an exercise price of $3.377 per share, the closing price of the Company’s common stock on the Nasdaq Global Market on May 24, 2022. Each option award will vest in one year subject to the director’s continuance of service through May 24, 2023.

As of December 31, 2022, approximately 989,000 shares of common stock are available to be issued under the 2020 Plan.

Stock Options

A summary of the Company’s stock option activity is as follows for stock options:


										Weighted Average
										Remaining
				Weighted Average						Contractual
		Number of Shares		Exercise Price			Total Intrinsic Value			Life (in years)
Outstanding as of January 1, 2021		600,181		$	62.18		$	—		8.3
Granted		191,500			28.97			—		8.9
Exercised		(146)			21.20			—		—
Canceled/Expired		(22,912)			35.92			—		—
Outstanding as of December 31, 2021		768,623			54.69			—		7.7
Granted		260,000			4.68			—		7.8
Canceled/Expired		(142,450)			36.78			—		—
Outstanding as of December 31, 2022		886,173		$	42.90		$	—		7.3
Options vested and exercisable		560,929		$	59.39		$	—		6.6

The Black-Scholes option pricing model is used to estimate the fair value of stock options granted under the Company’s share-based compensation plans. The weighted average assumptions used in calculating the fair values of stock options that were granted during the years ended December 31, 2022 and 2021, respectively, were as follows:


		For the Years Ended
		December 31,
		2022			2021
Exercise price		$	4.70		$	29.00
Expected term (years)			5.9			6.0
Expected stock price volatility			85	%		94	%
Risk-free rate of interest			2	%		1	%
Expected dividend rate			0	%		0	%

The following table sets forth stock-based compensation expenses recorded during the respective periods:


		For the Years Ended
		December 31,
		2022			2021
Stock Compensation expenses:
Research and development		$	2,691,000		$	2,856,000
General and administrative			2,653,000			3,108,000
Total stock compensation expenses		$	5,344,000		$	5,964,000

At December 31, 2022, the total stock-based compensation cost related to unvested awards not yet recognized was $3.5 million. The expected weighted average period compensation costs to be recognized was 1.8 years. Future option grants will impact the compensation expense recognized.