Stock Based Compensation |
Note 7 – Stock Based Compensation: 2020 Equity Incentive Plan Upon completion of the Spin-Off, the Company’s 2020 Equity Incentive Plan (the “2020 Plan”) became effective on December 7, 2020. The total number of securities available for grant under the 2020 Plan was 250,000 shares of Common Stock, subject to adjustment. On April 7, 2021, the Company held a special meeting of stockholders at which the Company’s stockholders approved an amendment to the Company’s 2020 Plan to increase the total number of shares of Common Stock from 250,000 to an aggregate of 625,000. On October 11, 2022, the Company held its annual meeting of stockholders at which the Company’s stockholders approved an amendment to the Company’s 2020 Plan to increase the total number of shares of Common Stock authorized for issuance from 625,000 to an aggregate of 1,375,000 shares. The Compensation Committee of the Company’s board of directors (the “Committee”) administers the 2020 Plan and has full power to grant stock options and Common Stock, construe and interpret the 2020 Plan, establish rules and regulations and perform all other acts, including the delegation of administrative responsibilities, as it believes reasonable and proper. The Committee, in its absolute discretion, may award Common Stock to employees, consultants, and directors of the Company, and such other persons as the Committee may select, and permit holders of options to exercise such options prior to full vesting. Stock and Option Grants The following is a summary of stock option activity under the stock option plans for the three months ended June 30, 2023: | | | | | | | | | | | | | | | | | Weighted- | | | | | | | | | Average | | Aggregate | | | | | Weighted- | | Remaining | | Intrinsic | | | Number | | Average | | Contractual | | Value | | | of | | Exercise | | Term | | (in | | | Shares | | Price | | (Years) | | millions) | Options outstanding at January 1, 2023 | | 661,850 | | $ | 7.27 | | 9.5 | | $ | — | Options granted | | 80,000 | | $ | 0.87 | | 10.0 | | | — | Less options forfeited | | — | | $ | — | | — | | | — | Less options expired/cancelled | | — | | $ | — | | — | | | — | Less options exercised | | — | | $ | — | | — | | | — | Options outstanding at June 30, 2023 | | 741,850 | | $ | 6.15 | | 9.1 | | $ | — | Options exercisable at June 30, 2023 | | 661,850 | | $ | 6.08 | | 9.0 | | $ | — |
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing stock price of $0.923 for the Company’s common shares on June 30, 2023 and the closing stock price of $1.16 for the Company’s common shares on December 31, 2022. As of June 30, 2023, the Company had unrecognized stock option expense of approximately $45,000 and a remaining weighted average period for recognition of 0.75 years. On February 16, 2022, pursuant to its 2020 Plan, the Company granted stock options to purchase an aggregate of 6,150 shares of Common Stock to its Chief Executive Officer. The stock options have an exercise price of $7.29 per share and an expiration date that is ten years from the date of issuance. As of February 16, 2023, these stock options are fully vested. The Company used the Black Scholes valuation method to determine the fair value of the options assuming the following: implied volatility of 112.75%, a risk free interest rate of 2.05% and a fair value of $42,108. The options were expensed over the one-year vesting period from date of issuance. On November 15, 2022, pursuant to its 2020 Plan, the Company granted stock options to six Board members, including two officers who are also Board members, and two employees to purchase an aggregate of 531,850 shares of Common Stock. The stock options have an exercise price of $6.07 per share and an expiration date that is ten years from the date of issuance. 50% of the options vest upon issuance with the remaining 50% vesting on May 15, 2023. The Company used the Black Scholes valuation method to determine the fair value of the options assuming the following: implied volatility of 107.05%, a risk free interest rate of 3.93% and have a fair value of $2,570,328. The options are being expensed 50% at date of issuance and the remaining 50% expensed on a straight line basis over the six-month vesting period from date of issuance. On March 29, 2023, Synaptogenix granted stock options to four Board members to purchase an aggregate of 80,000 shares of common stock. The stock options have an exercise price of $.87 per share and an expiration date of ten years. They vest on the one-year anniversary from the date of the grant. The Company used the Black Scholes valuation method to determine the fair value of the options assuming the following: implied volatility of 123.92%, a risk free interest rate of 3.66% and have a fair value of $59,763. Director’s Compensation Policy On March 29, 2023, Synaptogenix adopted an amended and restated non-employee director compensation policy (the “Director Compensation Policy”). The Director Compensation Policy provides for the annual automatic grant of nonqualified stock options to purchase up to 20,000 shares of Synaptogenix’s Common Stock to each of Synaptogenix’s non-employee directors. Such grants shall occur annually on the fifth business day after the filing of Synaptogenix’s Annual Report on Form 10-K, if available under the Plan, and shall vest on the one-year anniversary from the date of grant, subject to the director’s continued service on the Board of Directors on the vesting date. Each newly appointed or elected director will also receive 20,000 options, and such options shall vest 50% on the grant date, 25% on the first anniversary of the grant date and 25% on the second anniversary of the grant date, subject to the director’s continued service on the Board of Directors on each vesting date. The Company recorded total expenses relating to the outstanding stock options of $334,416 and $979,207 for the three and six months ended June 30, 2023, and $11,544 and $47,918 for the three and six months ended June 30, 2022, respectively. Restricted Stock Unit Grants On July 13, 2021, the Company granted a total of 495,000 restricted stock units (RSUs), of which 425,000 were granted to seven Board members (including two executives), 60,000 to the Company’s CFO and 10,000 to two employees. On November 30, 2022, one director and one officer forfeited a total of 86,000 RSUs to satisfy the 2020 Plan limitation of total issuances per year to any individual holder. The Company reversed approximately $370,000 of expense resulting from the forfeited RSUs. The RSUs were amended on January 12, 2022, to vest 100% on September 15, 2022 and then further amended on June 20, 2022 to vest 100% on the earlier of release of Phase 2 clinical trial top line data or December 31, 2022. Top line data was announced on December 16, 2022, and so the RSUs vested on such date. As of December 31, 2022, 100% of the 411,000 RSUs vested and were exercised. As of June 30, 2023 and December 31, 2022, the Company had unrecognized stock option and RSU expense of approximately $0 and $2.56 million, respectively. The fair value of the RSUs issued was based upon the closing trading price of the Company’s Common stock on the grant date of $9.75 per share. The grant date fair value of the RSUs granted was approximately $4.8 million. The Company recorded total expense, using straight line method over the vesting period of the RSUs, of $0 for the six months ended June 30, 2023 and $1,005,146 and $1,680,330 relating to the RSUs for the three and six months ended June 30, 2022, respectively. Restricted Stock Issuances On February 15, 2022, the Company granted 13,775 shares of restricted stock to two consultants that were engaged to provide investor relations services with a total fair market value on date of issuance of $91,429. On March 14, 2022, the Company granted 692 shares of restricted stock to a consultant that was engaged to provide investor relations services with a total fair market value on date of issuance of $4,500. On June 7, 2022, the Company granted 679 shares of restricted stock to a consultant that was engaged to provide investor relations services with a total fair market value on date of issuance of $4,500. On July 8, 2022, the Company granted 30,303 shares of restricted stock to a consultant that was engaged to provide investor relations services with a total fair market value on date of issuance of $150,000 and warrants to purchase 15,459 shares of Common Stock with an exercise price of $13.26 per share for a period of five years from the date of issuance. The Company used the Black Scholes valuation method to determine fair value assuming the following: implied volatility of 112.75%, a risk free interest rate of 3.05% and a fair value of $75,000. The warrants are expensed over the three-month term of the consulting agreement. On September 8, 2022, the Company issued 540 shares of restricted stock to a consultant that was engaged to provide investor relations services with a total fair market value on date of issuance of $4,500. All stock issuances are expensed upon issuance. On October 8, 2022, the Company issued 6,878 shares of restricted stock to a consultant that was engaged to provide investor relations services with a total fair market value on date of issuance of $50,000 and warrants to purchase 4,659 shares of Common Stock with an exercise price of $14.54 per share for a period of five years from the date of issuance. The Company used the Black Scholes valuation method to determine fair value assuming the following: implied volatility of 112.75%, a risk free interest rate of 4.14%, a fair value of $25,000 and are expensed upon issuance. During November 2022, the Company issued to Sherwood 7,092 shares of restricted Common Stock valued at $50,000 and were expensed when issued, and warrants to purchase 4,795 shares of Common Stock, with an exercise price of $14.10 per share. The Company used the Black Scholes valuation method to determine fair value assuming the following: implied volatility of 112.75%, a risk free interest rate of 4.39% and a fair value of $25,000. The warrants are expensed when issued. On December 7, 2022, the Company issued 893 shares of restricted stock to a consultant that was engaged to provide investor relations services with a total fair market value on date of issuance of $4,501, expensed upon issuance. On January 5, 2023, the Company issued 88,339 shares of restricted stock to a consultant that was engaged to provide investor relations services with a total fair market value on date of issuance of $100,000. On March 22, 2023, the Company issued 4,500 shares of restricted stock to a consultant that was engaged to provide investor relations services with a total fair market value on date of issuance of $4,500, expensed upon issuance. On June 7, 2023, the Company issued 5,409 shares of restricted stock to a consultant that was engaged to provide investor relations services with a total fair market value on date of issuance of $4,500, expensed upon issuance. Stock Compensation Expense Total stock-based compensation for the three and six months ended June 30, 2023 was $334,416 and 979,197, respectively, of which $49,863 and $149,589, respectively, was classified as research and development expense, and $284,553 and $829,608 was classified as general and administrative expense, respectively. Total stock-based compensation for the three and six months ended June 30, 2022 was $1,016,690 and $1,728,248, respectively, of which $172,601 and $293,651, respectively, was classified as research and development expense, and $844,089 and $1,434,597 was classified as general and administrative expense, respectively. The Company currently estimates, beginning at the closing date of the November Private Placement, implied volatility factor for all options and warrants based upon a blend of the Parent Company’s and Company’s historical volatility. Up until November 21, 2022, the Company computed implied volatility based upon a blend of the Parent Company’s and Company’s historical volatility along with the volatility of selected comparable publicly traded companies as, at that time, the Company lacked sufficient historical stock trading activity. It incorporated the historical volatility of the Parent Company as the Parent Company’s historical volatility provides a good estimation of the Company’s volatility since its operations were identical to the Company’s prior to the spin-out.
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