XML 32 R16.htm IDEA: XBRL DOCUMENT

Stock-Based Compensation

12 Months Ended

Sep. 30, 2022

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

NOTE 9 - Stock-Based Compensation

During the years ended September 30, 2022 and 2021, stock-based expense related to the stock options, restricted stock units and stock awards was included in selling, general and administrative and research and development costs as follows in the accompanying statements of operations:

		2022				2021
Selling, general and administrative		$	780,818			$	1,550,841
Research and development			166,394				242,358
Total stock-based compensation expense		$	947,212			$	1,793,199

The Company’s 2017 Equity Incentive Plan (“2017 Plan”) provides for the issuance of restricted shares and stock options to employees, directors, and consultants of the Company. Effective October 1, 2021, no shares were available for issuance under the 2016 Equity Incentive Plan.

Inducement Plan

In addition to the Company’s 2017 Plan, the Company adopted the NeuroOne Medical Technologies Corporation 2021 Inducement Plan (the “Inducement Plan”) on October 4, 2021, pursuant to which the Company reserved 420,350 shares of its common stock to be used exclusively for grants of awards to individuals who were not previously employees or directors of the Company, as an inducement material to the individual’s entry into employment with the Company within the meaning of Rule 5635(c)(4) of the Nasdaq Listing Rules. The Inducement Plan was approved by the Company’s Board of Directors without stockholder approval in accordance with such rule.

Evergreen provision

Under the 2017 Plan, the shares reserved automatically increase on January 1st of each year, for a period of not more than ten years from the date the 2017 Plan is approved by the stockholders of the Company, commencing on January 1, 2019 and ending on (and including) January 1, 2027, to an amount equal to 13% of the fully-diluted shares outstanding as of December 31st of the preceding calendar year. Notwithstanding the foregoing, the Board may act prior to January 1st of a given year to provide that there will be no January 1st increase in the share reserve for such year or that the increase in the share reserve for such year will be a lesser number of shares of common stock than would otherwise occur pursuant to the preceding sentence. “Fully Diluted Shares” as of a date means an amount equal to the number of shares of common stock (i) outstanding and (ii) issuable upon exercise, conversion or settlement of outstanding awards under the 2017 Plan and any other outstanding options, warrants or other securities of the Company that are (directly or indirectly) convertible or exchangeable into or exercisable for shares of common stock, in each case as of the close of business of the Company on December 31 of the preceding calendar year. On January 1, 2022 and 2021, 1,614,538 and 484,622 shares were added to the 2017 Plan, respectively, as a result of the evergreen provision.

Stock Options

During the years ended September 30, 2022 and 2021, 152,690 and 703,117 stock options were granted to employees, directors and consultants, respectively, with a weighted average grant date fair value of $0.76 and $3.01 per share, respectively. The options granted have vesting periods ranging from being immediate to four years. All options expire ten years from the date of grant. The total expense for the years ended September 30, 2022 and 2021 related to the stock options was $582,329 and $983,301, respectively.

The following table summarizes the Company’s stock option plan activity for the years ended September 30, 2022 and 2021 as follows:

		Number of Options				Weighted Average Exercise Price				Weighted- Average Remaining Contractual Term (years)				Aggregate Intrinsic Value(1)
Outstanding at September 30, 2020			492,842			$	6.13				8.8			$	96,088
Granted			703,117			$	5.83				—				—
Exercised			(1,538	)		$	6.60				—				—
Forfeited/Cancelled			(71,861	)		$	6.85				—				—
Outstanding at September 30, 2021			1,122,560			$	5.89				8.8			$	127,339
Granted			152,690			$	1.50				—				—
Exercised			—			$	—				—				—
Forfeited/Cancelled			(35,335	)		$	4.14				—				—
Outstanding at September 30, 2022			1,239,915			$	5.40				8.0			$	89,295
Vested and expected to vest at September 30, 2022			1,239,915			$	5.40				8.0			$	89,295
Vested and exercisable at September 30, 2022			783,494			$	5.76				7.7			$	56,542

(1)

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair value of our common stock as of September 30, 2022 and 2021 of $1.69 and $3.95 per share, respectively. As of September 30, 2022 and 2021, 1,125,710 and 1,055,376 outstanding options, respectively, had no intrinsic value.

The weighted-average assumptions used in the Black-Scholes option-pricing model are as follows for the stock options granted during the years ended September 30:

		2022				2021
Expected stock price volatility			53.5	%			55.9	%
Expected life of options (years)			5.6				6.0
Expected dividend yield			0	%			0	%
Risk free interest rate			2.3	%			0.6	%

During the years ended September 30, 2022 and 2021, 327,615 and 280,557 stock options vested, respectively. 1,538 stock options were exercised during the year ended September 30, 2021 with an intrinsic value of $2,648. No options were exercised during the year ended September 30, 2022.

Restricted Stock Units

A summary of restricted stock unit (“RSU”) activity is as follows for the years ended September 30, 2022 and 2021:

		Number of
		Shares
Non-vested at September 30, 2020			26,698
Granted			13,776
Vested			(29,090	)
Non-vested at September 30, 2021			11,384
Granted			443,670
Vested			(40,624	)
Non-vested at September 30, 2022			414,430

During the years ended September 30, 2022 and 2021, 443,670 and 13,776 RSUs were granted to members of the Company’s board of directors and employees that vest over a period ranging from an immediate to a two year period, with a grant date fair value of $1.91 and $7.26 per unit, respectively. During the years ended September 30, 2022 and 2021, 40,624 and 29,090 RSUs vested, respectively. The total expense for the years ended September 30, 2022 and 2021 related to the RSU’s was $364,883 and $163,988, respectively. No RSUs were forfeited during the years ended September 30, 2022 and 2021.

Other Stock-Based Awards

2022 Activity

The Company did not issue any other stock-based awards, outside of stock options and RSUs, during the year ended September 30, 2022.

2021 Activity

In April 2021, two consulting agreements were executed whereby a total of 62,659 shares of common stock were issued and vested as of September 30, 2022.

In July 2021, two consulting agreements were executed whereby a total of 11,668 shares of common stock were issued and vested as of September 30, 2022.

Activity Prior to 2021

In August 2020, an additional consulting agreement was executed whereby 40,000 shares of common stock were issued, subject to Company repurchase. The stock award under the agreement vested over a six-month period. As of September 30, 2021 all of the shares vested under this agreement.

Compensation expense related to the stock awards granted under the consulting agreements referenced above amounted to zero and $645,910 for the years ended September 30, 2022 and 2021, respectively, and was included in stock-based compensation expense. The expense recognition related to the grants was based on the fair value of the underlying common stock at the point of vesting which ranged from $5.22 to $6.62 per share.

General

As of September 30, 2022, 1,703,872 shares were available for future issuance on a combined basis under the 2017 Plan and the Inducement Plan. Unrecognized stock-based compensation was $1.7 million as of September 30, 2022. The unrecognized share-based expense is expected to be recognized over a weighted average period of 2.0 years.