Stock Compensation Plan

6 Months Ended

Jun. 30, 2024

Stock Compensation Plan

Stock Compensation Plan

13. Stock Compensation Plan

Equity Incentive Plan

In October 2021, the Company adopted the 2021 Stock Incentive Plan (“2021 Plan”) that provided for the issuance of common stock to employees, nonemployee directors, and consultants. Recipients of incentive stock options are eligible to purchase shares of common stock at an exercise price equal to no less than the estimated fair market value of such stock on the date of grant. The 2021 Plan provided for the grant of incentive stock options, non-statutory stock options, restricted stock, restricted stock units, stock awards and stock appreciation rights. The maximum contractual term of options granted under the 2021 Plan is ten years. The maximum number of shares initially available for issuance under the 2021 Plan was 6,000,000. No further options are available to be issued under the 2021 Plan.

In November 2022, the Company adopted the 2022 Equity Incentive Plan (“2022 Plan”) that provides for the issuance of common stock to employees, nonemployee directors, and consultants. Recipients of incentive stock options are eligible to purchase shares of common stock at an exercise price equal to no less than the estimated fair market value of such stock on the date of grant. The 2022 Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stock, restricted stock units, stock awards and stock appreciation rights. The maximum contractual term of options granted under the 2022 Plan is ten years. The number of shares of the Company’s common stock initially reserved for issuance under the 2022 Plan is equal to 5,000,000, subject to an annual increase, to be added on the first day of each fiscal year, beginning with the fiscal year ending December 31, 2023 and continuing until, and including, the fiscal year ending December 31, 2033, equal to the lesser of 5% of the number of shares of the Company’s common stock outstanding on such date or an amount determined by the Company’s board of directors. On January 1, 2024, the Company added 2,446,164 shares to the 2022 Plan. As of June 30, 2024, 2,309,770 shares remain available for future grant under the 2022 Plan.

In June 2024, the Company adopted the 2024 Inducement Equity Incentive Plan (“2024 Plan”).  The 2024 Plan will be used exclusively for the grant of equity awards to individuals who were not previously employees or directors of the Company, or following a bona fide period of non-employment, as an inducement material to such individuals entering into employment with the Company, pursuant to Nasdaq Listing Rule 5635(c)(4). Recipients of stock options are eligible to purchase shares of common stock at an exercise price equal to no less than the estimated fair market value of such stock on the date of grant. The 2024 Plan provides for the grant of non-statutory stock options, restricted stock, restricted stock units, stock awards and stock appreciation rights. The maximum contractual term of options granted under the 2024 Plan is ten years. The number of shares of the Company’s common stock initially reserved for issuance under the 2024 plan is equal to 2,500,000. As of June 30, 2024, 2,500,000 shares remain available for future grant under the 2024 Plan.

Stock Options

The following table sets forth the activity for the Company’s stock options during the periods presented:

	Number of Options			Weighted- Average Exercise Price per Share		Weighted Average Remaining Contractual Term (in Years)		Aggregate Intrinsic Value
Outstanding as of December 31, 2023		2,766,000		$	1.91		8.4	$	231,000
Granted		-		$	-
Forfeited		(35,000	)	$	2.00
Outstanding as of June 30, 2024		2,731,000		$	1.90		7.9	$	3,157,360
Exercisable as of June 30, 2024		1,996,623		$	1.88		7.9	$	2,356,120
Vested or expected to vest as of June 30, 2024		2,731,000		$	1.90		7.9	$	3,157,360

For the six months ended June 30, 2024, no options were granted.

The Company recorded stock compensation from options of $194,845 and $209,774 for the three months ended June 30, 2024 and 2023, respectively. The Company recorded stock compensation from options of $391,032 and $565,985 for the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024, there was $858,347 of unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plan, which is expected to be recognized over a weighted average period of approximately 0.9 years.

Stock Awards

In October 2021, the Company issued 1,500,000 shares of restricted common stock to its Chief Executive Officer. The number of shares that vest is dependent on achieving certain performance conditions and dependent market conditions upon the third anniversary from the date of grant. The Company determined that the fair value of this award was $0.25 per share for a total value of $375,000. The Company determined the performance condition probable during the three months ended June 30, 2024 and recognized stock compensation expense of $375,000.

In October 2021, the Company issued 600,000 shares of restricted common stock to a consultant who is also a member the board of directors, that vest annually over three years. The Company determined that the fair value of this award was $0.25 per share for a total value of $150,000.

In July 2022, the Company issued 600,000 shares of restricted common stock to a consultant who is also a member the board of directors, that vest quarterly over one year. The Company determined that the fair value of this award was $2.00 per share for a total value of $1,200,000.

In July 2022, the Company issued 100,000 shares of restricted common stock to a consultant, that vests on the one-year anniversary of the grant. The Company determined that the fair value of this award was $2.00 per share for a total value of $200,000.

In November 2022, the Company issued 3,000,000 shares of restricted common stock to certain employees and directors, that vest two to four years from the date of the grant. The Company determined that the fair value of these awards was $2.63 per share for a total value of $7,890,000. In January 2024, one director that had received shares in November 2022 resigned and 100,000 unvested shares were forfeited and cancelled.

In December 2022, the Company issued an aggregate of 1,550,000 shares of restricted common stock to its Chief Executive Officer and Chairman, then Interim Chief Financial Officer and a director that vest quarterly over one year from the date of the grant. The Company determined that the fair value of these awards was $1.58 per share for a total value of $2,449,000.

In March 2023, the Company issued an aggregate of 1,256,750 shares of restricted common stock to its Chief Executive Officer and Chairman and a director that vests quarterly over one year from the date of the grant. The Company determined that the fair value of these awards was $1.80 per share for a total value of $2,262,150.

In August 2023, the Company issued 300,000 and 200,000 shares of restricted common stock pursuant to one employee and one director for employment services, respectively. The Company determined that the fair value of these awards was $0.55 per share and $1.22 per share, respectively for a total combined value of $409,000. In January 2024, the employee that had received shares in August 2023 resigned and 225,000 unvested shares were forfeited and cancelled.

In October 2023, the Company was obligated to issue $100,000 of common stock to a board member for his services.  These shares were not awarded as of June 30, 2024, however, all related stock based compensation was recorded totaling $100,000 in October 2023.

In March 2024, the Company was obligated to issue 978,466 shares of restricted stock that vest over the period ending February 2025 to its Chief Executive Officer for his services during 2023. These shares were not issued as of June 30, 2024, however, stock based compensation was recorded beginning in March 2024.

In March 2024, the Company was obligated to issue 100,000 shares of restricted stock that vest over the period ending October 2024 to an executive of PET Labs Pharmaceuticals for his services.  These shares were issued in June 2024, however, stock based compensation was recorded beginning in March 2024.

In January 2024, the Company was obligated to issue $100,000 of common stock to a board member for his services.  These shares were not awarded as of June 30, 2024, however, all related stock based compensation was recorded totaling $100,000 in January 2024.

In June 2024, the Company awarded and issued an aggregate of 150,000 shares of restricted common stock to two employees that vests quarterly over one year from each employee’s start date. The Company determined that the fair value of these awards was $3.15 per share for a total value of $472,500.

The Company recorded stock compensation from stock awards totaling $2,323,171 and $2,164,912 for the three months ended June 30, 2024 and 2023, respectively. The Company recorded stock compensation from stock awards totaling $3,840,639 and $3,952,800 for the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024, there is $6,996,549 of unrecognized compensation cost related to the non-vested portion of restricted stock awards that is expected to be recognized over the next year.

The following table summarizes vesting of restricted common stock:

	Number of Shares			Weighted Average Grant Date Fair Value Per Share
Unvested as of December 31, 2023		4,489,186		$	1.42
Granted		250,000		$	3.54
Vested		(1,864,186	)	$	0.54
Forfeited and retired		(325,000	)	$	1.19
Unvested as of June 30, 2024		2,550,000		$	2.45

Stock-based Compensation Expense

Stock-based compensation expense for all stock awards recognized in the accompanying consolidated statements of operations and comprehensive loss is as follows:

	Three Months Ended June 30, 2024		Three Months Ended June 30, 2023		Six Months Ended June 30, 2024		Six Months Ended June 30, 2023
Selling, general and administrative	$	2,436,295	$	2,281,277	$	4,066,886	$	4,332,985
Research and development		81,721		93,409		164,784		185,800
Total	$	2,518,016	$	2,374,686	$	4,231,670	$	4,518,785