NOTE 9 – SHARE-BASED COMPENSATION

Global Stock Incentive Plan

On May 31, 2022, the shareholders of the Company approved the Company’s Board of Directors proposal to increase the Company’s Global Incentive Plan (the “Plan”) by 6,300,000 shares, thus bringing the total number of stock options and restricted stock units (“RSUs”) that may be issued pursuant to the Plan to 7,803,421. On June 14, 2022, the Board of Directors of the Company approved the issuance of 2,370,576 stock options and 1,427,404 RSUs. Following the June 14, 2022 issuances, the remaining number of underlying shares available for future issuances under the Plan is 2,558,649.

Under the term of the Plan, on the grant date, the Board of Directors determines the vesting schedule of each stock option and RSUs on an individual basis. All stock options expire the earlier of (1) ten years from the date of the grant, (2) May 31, 2031 or (3) 90 days after the termination of employment of the grantee.

Stock Options

The additional 2,370,576 stock options granted on June 14, 2022, will vest over various periods ranging from immediate to four years. Both incentive stock options and non-qualified stock options expire on the sooner of ten years from the date of the grant or May 31, 2031.

The fair value of options and share awards granted under the stock option plan during the six months ended June 30, 2022 was estimated at the date of grant using the Black-Scholes option pricing model and the following assumptions for grants:

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NOTE 9 – SHARE-BASED COMPENSATION (CONTINUED)

The following table summarizes the stock option activity:

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The following table summarizes the Company’s non-vested stock options:

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For the six months ended June 30, 2022 and 2021, the Company recognized $483,211 and $158,695 of stock compensation expense relating to stock options, respectively. For the three months ended June 30, 2022 and 2021, the Company recognized $378,809 and $77,520 of stock compensation expense relating to stock options, respectively. As of June 30, 2022, there was $1,647,208 of unrecognized stock compensation expense related to non-vested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of approximately four years.

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Restricted Stock Awards

In July 2019, the Board of Directors of the Company authorized grants of restricted stock awards (“RSAs”) through a restricted stock award purchase agreement to certain founders, consultants, and advisors of the Company. Certain grants to the Company’s founders were fully vested at the date of incorporation, other grants vest over a four-year period on each anniversary of the grant date, based on continued employment, and other grants vested based on various milestones. The shares of common stock underlying the RSAs are issued upon grant.

The following table summarizes the restricted stock awards activity:

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For the six months ended June 30, 2022 and 2021, the Company recognized $628,318 and $547,311 of stock compensation expense relating to RSAs, respectively. For the three months ended June 30, 2022 and 2021, the Company recognized $483,733 and $398,008 of stock compensation expense relating to RSAs, respectively. As of June 30, 2022, there was $554,413 of unrecognized compensation expense related to unvested restricted share awards that is expected to be recognized over a weighted-average period of approximately two years.

Restricted Stock Units

As described above on June 14, 2022, the Board of Directors of the Company authorized the grant of 1,427,404 RSUs, of which 1,346,154 were granted to an officer of the Company who joined the Company in February 2022. Of the RSUs granted to the officer, 192,308 vested immediately and the balance of 1,153,846 will vest in equal quarterly installments through February 28, 2023. Under the terms of the officer’s employment agreement, the Company also agreed to guarantee the minimum value of the RSUs on their vesting dates. The Company accrued an amount of $42,692 in accrued expenses in the condensed consolidated balance sheet, reflecting this minimum value obligation as of June 30, 2022.

In addition, the Company agreed to issue to the officer a one-time grant of fully vested shares of the Company’s common stock with a fair market value of $250,000 as a signing bonus to be provided following the twelve-month anniversary of the officer’s start date with the Company. Included in accrued expenses as of June 30, 2022 in the condensed consolidated balance sheets is an amount of $250,000 representing the full value of the signing bonus.

The following table summarizes the restricted stock units activity:

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For the six months ended June 30, 2022 and 2021, the Company recognized $381,829 and $0 of stock compensation expense relating to RSUs, respectively. For the three months ended June 30, 2022 and 2021, the Company recognized $381,829 and $0 of stock compensation expense relating to RSUs, respectively. As of June 30, 2022, there was $1,169,711 of unrecognized compensation expense related to unvested restricted share units that is expected to be recognized over a period of 9 months or 4 years.