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EQUITY INCENTIVE PLANS
 12 Months Ended
Sep. 30, 2022
EQUITY INCENTIVE PLANS  
EQUITY INCENTIVE PLANS

10. EQUITY INCENTIVE PLANS

 

On August 12, 2021, the Company established its 2021 Equity Incentive Plan (the “2021 Plan”), which was adopted by stockholders on October 15, 2021. The Company initially had 20,000,000 shares of its common stock authorized as the maximum number of shares of common stock that may be delivered to participants under the 2021 Plan, subject to adjustment for certain corporate changes affecting the shares, such as stock splits. This number was increased to 22,000,000 shares of common stock as of January 1, 2022 as a result of the automatic share reserve increase described below.

 

On January 23, 2019, the Board approved an amendment to its 2011 Stock Incentive Plan increasing the number of shares of common stock reserved under the Incentive Plan from 2,200,000 to 2,500,000 to common shares. On May 22, 2019, the Compensation Committee approved an amendment to its 2011 Stock Incentive Plan increasing the number of shares of common stock reserved under the Incentive Plan from 2,500,000 to 3,000,000 to common shares. On November 23, 2020, the Board of Directors increased the size of the stock available under the Stock Option Plan by 9,750,000 shares. This increase is based on an industry peer group study. The 2011 Plan terminated on April 19, 2021.

The Company initially had 20,000,000 shares of its common stock authorized as the maximum number of shares of the Company’s common stock that may be delivered to participants under the 2021 Plan, subject to adjustment for certain corporate changes affecting the shares, such as stock splits. This number was increased to 22,000,000 shares of common stock as of January 1, 2022 as a result of the automatic share reserve increase.  Shares subject to an award under the 2021 Plan for which the award is canceled, forfeited or expires again become available for grants under the 2021 Plan. Shares subject to an award that is settled in cash will not again be made available for grants under the 2021 Plan. As of the date of this report on Form 10-K, 13,816,370 shares of our common stock remain available for issuance under the 2021 Plan. The 2021 Plan also authorizes for issuance the sum of (A) any shares of our common stock that, as of the date of stockholder approval of the 2021 Plan, have been reserved but not issued pursuant to any awards granted under our 2011 Stock Incentive Plan, as amended, or the 2011 Plan, and (B) any shares of our common stock subject to stock options or similar awards granted under the 2011 Plan that, after the date of stockholder approval of the 2021 Plan, expire or otherwise terminate without having been exercised in full and shares of our common stock issued pursuant to awards granted under the 2011 Plan that are forfeited to or repurchased by us, with the maximum number of shares of our common stock to be added to the 2021 Plan pursuant to clause (ii) equal to 13,816,370.

 

Year Ended September 30, 2022

 

On December 16, 2021, the Company issued a stock option grant to Ronald P. Erickson for 1,000,000 shares at an exercise price of $2.09 per share. The stock option grant expires in five years. The stock option grant vests quarterly over four years.

 

On December 16, 2021, the Company issued a stock option grant to Phillip A. Bosua for 1,300,000 shares at an exercise price of $2.09 per share. The stock option grant expires in five years. The stock option grant vests quarterly over four years.

 

On May 20, 2022, the Company issued a stock option grant to Peter Conley for 1,000,000 shares at an exercise price of $1.48 per share. The stock option grant expires in five years. The stock option grant vests quarterly over four years after two quarters.

 

During the year ended September 30, 2022, the Company also issued stock option grants to nineteen employees and consultants for 3,336,000 shares at an average exercise price of $1.726 per share. The stock option grants expire in five years. The stock option grants primarily vest quarterly over four years.

 

During the year ended September 30, 2022, the Company issued 26,293 shares related to the exercise of stock option grants and received $26,887.

 

During the year ended September 30, 2022, eight employees and consultants forfeited stock option grants for 1,132,457 shares at an average of $2.057 per share.

 

Year Ended September 30, 2021

 

During the year ended September 30, 2021, the Company issued stock option grants to seventeen employees and consultants totaling 10,650,745 shares of common stock at an average price of $1.766 per share. The stock option grants expire in five years. Stock option grants totaling 9,145,745 vest when earned based on certain performance criteria and 1,505,000 option grants generally vest quarterly over 4 years, with nothing vesting in the first two quarters. No stock compensation expense has been recorded through September 30, 2021 for those options with performance milestones.

 

On December 15, 2020, the Company issued stock option grants to purchase 3,997,870 shares to two officers which vest in increments if the market capitalization of the Company commons stock exceeds for 20 consecutive trading days starting at $100 million to $1 billion.  The Company estimated at grant date the fair value of these options at approximately $1,116,146 which is being amortized over 5 years.  As of September 30, 2022 there is expense of $716,618 to be recognized over the remaining service period.  The Company valued these stock options using the Monte Carlo pricing model which included key assumptions of 100% stock volatility, five year life and no forfeitures.    

During the year ended September 30, 2021, two consultants exercised stock option grants for 20,625 shares at $1.359 per share.

 

During the year ended September 30, 2021, an employee forfeited a stock option grant for 120,000 shares at $3.30 per share.

 

Stock option activity for the years ended September 30, 2022 and 2021 was as follows:

 

 

 

 

 

 Weighted Average

 

 

 

 

 

 Options

 

 

 Exercise Price

 

 

 Proceed $

 

Outstanding as of September 30, 2020

 

 

4,805,000

 

 

$1.161

 

 

$5,580,550

 

Granted

 

 

10,650,745

 

 

 

1.766

 

 

 

18,807,990

 

Exercised

 

 

(20,625)

 

 

(1.359)

 

 

(28,031)

Forfeitures

 

 

(120,000)

 

 

(3.300)

 

 

(396,000)

Outstanding as of September 30, 2021

 

 

15,315,120

 

 

 

1.565

 

 

 

23,964,509

 

Granted

 

 

6,636,000

 

 

 

1.815

 

 

 

12,045,330

 

Exercised

 

 

(26,293)

 

 

(1.376)

 

 

(36,170)

Forfeitures

 

 

(1,132,457)

 

 

(2.057)

 

 

(2,329,267)

Outstanding as of September 30, 2022

 

 

20,792,370

 

 

$1.618

 

 

$33,644,402

 

  

The following table summarizes information about stock options outstanding and exercisable as of September 30, 2022:

 

 

 

 

 

 

 

Weighted

 

 

Weighted

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

Average

 

 

Average

 

 

 

 

 

Average

 

Range of

 

 

Number

 

 

Remaining Life

 

 

Exercise Price

 

 

Number

 

 

Exercise Price

 

Exercise Prices

 

 

Outstanding

 

 

In Years

 

 

Outstanding

 

 

Exerciseable

 

 

Exerciseable

 

$

0.25

 

 

 

230,000

 

 

 

0.96

 

 

$0.250

 

 

 

215,625

 

 

$0.250

 

1.10-1.25

 

 

 

2,905,625

 

 

 

3.21

 

 

 

1.100

 

 

 

1,765,951

 

 

 

1.100

 

1.28-1.67

 

 

 

12,320,745

 

 

 

2.34

 

 

 

1.499

 

 

 

1,788,625

 

 

 

1.380

 

1.79-3.67

 

 

 

5,336,000

 

 

 

4.04

 

 

 

2.312

 

 

 

928,250

 

 

 

2.128

 

 

 

 

 

 

20,792,370

 

 

 

3.93

 

 

$1.618

 

 

 

4,698,451

 

 

$1.452

 

  

There are stock option grants of 20,792,370 shares as of September 30, 2022 with an aggregate intrinsic value of $14,265,304.

 

There are 20,792,370 (including unearned stock option grants totaling 9,704,620 shares related to performance milestones) options to purchase common stock at an average exercise price of $1.618 per share outstanding as of September 30, 2022 under the 2021 Plan. The Company recorded $4,421,634 and $1,028,522 of compensation expense, net of related tax effects, relative to stock options for the years ended September 30, 2022 and 2021, respectively, in accordance with ASC 718. As of September 30, 2022, there is $8,850,989 of total unrecognized costs related to employee granted stock options that are not vested. These costs are expected to be recognized over a period of approximately 3.93 years.

 

As of September 30, 2021, the 2020 Particle Stock Incentive Plan was terminated and all stock option grants were cancelled by the participants. The Company recorded $197,553 of compensation expense, net of related tax effects, relative to Particle stock options for the year ended September 30, 2021 in accordance with ASC 718.