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Stock-Based Compensation

3 Months Ended

Dec. 31, 2023

Stock-Based Compensation [Abstract]

Stock-Based Compensation

NOTE 8 – Stock-Based Compensation

During the three-month periods ended December 31, 2023 and 2022, stock-based compensation expense was included in selling, general and administrative and research and development costs as follows in the accompanying condensed statements of operations.

		2023				2022
Selling, general and administrative		$	243,198			$	255,465
Research and development			65,440				44,716
Total stock-based compensation expense		$	308,638			$	300,181

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.

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. On November 9, 2023, the Company’s Board of Directors adopted the First Amendment to the Company’s Inducement Plan, increasing the aggregate number of shares of common stock that may be issued pursuant to equity incentive awards under the Inducement Plan by 150,000 shares for a total of 570,350 shares of common stock that may be issued pursuant to equity incentive awards under the Inducement Plan.

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 Company’s Board of Directors 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, 2024, 1,051,556 shares were added to the 2017 Plan as a result of the evergreen provision. See Note 12 – Subsequent Events.

Stock Options

During the three months ended December 31, 2023 and 2022, under the 2017 Plan and the Inducement Plan, the Company granted 1,160,669 and 73,731 stock options, respectively, to its employees and consultants. Vesting generally occurs over an immediate to 48 month period based on a time of service condition. The weighted-average grant date fair value of the grants issued during the three months ended December 31, 2023 and 2022 was $1.08 and $0.66 per share, respectively. The total expense for the three months ended December 31, 2023 and 2022 related to stock options was $187,431 and $181,744, respectively. The total number of stock options outstanding as of December 31, 2023 and September 30, 2023 was 2,814,096 and 1,708,427, respectively.

The weighted-average assumptions used in the Black-Scholes option-pricing model are as follows for the stock options granted during the three-month periods ended December 31, 2023 and 2022:

		2023				2022
Expected stock price volatility			112.0	%			53.5	%
Expected life of options (years)			6.1				5.1
Expected dividend yield			0	%			0	%
Risk free interest rate			4.7	%			4.0	%

During the three months ended December 31, 2023 and 2022, 56,616 and 127,446 stock options vested, and 55,000 and zero stock options were forfeited during these periods, respectively.

Restricted Stock Units

There were no restricted stock units (“RSUs”) granted during the three months ended December 31, 2023 and 2022. 37,679 and 21,930 previously granted RSUs vested during these periods, respectively. The total expense for the three months ended December 31, 2023 and 2022 related to these RSUs was $121,207 and $118,437, respectively. No RSUs were forfeited during the three months ended December 31, 2023 and 2022.

General

As of December 31, 2023, 182,314 shares were available in the aggregate for future issuance under the 2017 Equity Incentive Plan and Inducement Plan. Unrecognized stock-based compensation was $2,372,540 as of December 31, 2023. The unrecognized share-based expense is expected to be recognized over a weighted average period of 2.5 years.