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Stock-Based Compensation
 8 Months Ended
Mar. 01, 2023
Stock-Based Compensation [Abstract]  
Stock-Based Compensation

Note 3 - Stock-Based Compensation

 

The Company’s Equity Incentive Plan (the “Plan”) permits the grant of stock options, stock appreciation rights, restricted stock, or restricted stock units to officers, employees, directors, consultants, agents, and independent contractors of the Company. The Company believes that such awards better align the interests of its employees, directors, and consultants with those of its stockholders. Option awards are generally granted with an exercise price equal to the market price of the Company’s stock at the date of grant; those option awards generally vest over two years from the grant date and generally have ten-year contractual terms. Certain option awards provide for accelerated vesting (as defined in the Plan).

 

The Company has reserved 383,333 shares of common stock to be available for granting under the Plan.

 

The Company estimates the fair value of each option award using a Black Scholes Model (“BSM”) that uses the weighted average assumptions included in the table below. Expected volatilities are based on historical volatility of comparable companies. The Company uses historical data to estimate option exercise within the valuation model or estimates the expected option exercise when historical data is unavailable. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The Company has not paid any dividends on common stock since its inception and does not anticipate paying dividends on its common stock in the foreseeable future. When calculating the amount of annual compensation expense, the Company has elected not to estimate forfeitures and instead accounts for forfeitures as they occur.

 

The following table summarizes the assumptions used for estimating the fair value of the stock options granted for the nine months ended:

 

   March 31,
2023		   March 31,
2022		 
Expected term (years)   9.97    10.00 
Risk-free interest rate   2.2%   1.75%-2.2%
Expected volatility   92.98%   78%-93%
Dividend yield   0%   0%

  

A summary of option activity for the nine months ended March 31, 2023 is presented below:

 

Options  Number of Shares   Weighted Average Exercise Price   Weighted Average Remaining Contractual Term
(in years)		 
Outstanding at July 1, 2022   263,599   $22.68   7.34 
Granted   1,092    4.75   10.00 
Cancelled   (7,505)   15.07   6.98 
Outstanding and expected to vest at March 31, 2023   257,186          

 

The weighted-average grant-date fair value of options granted during the nine months ended March 31, 2023 as $3.00. The options contained time-based vesting conditions satisfied over four years from the grant date.

 

For the three months ended March 31, 2023 and 2022, the Company recognized $6,930 and $414,746, in expense related to the Plan, respectively. For the nine months ended March 31, 2023 and 2022, the Company recognized $104,809 and $1,226,357, in expense related to the Plan, respectively.

  

Beginning in January 2022, Board of Directors compensation at the rate of $305,500 annually was implemented with Directors opting for receipt via stock options under the Equity Incentive Plan or cash. For the nine months ended March 31, 2023, $175,500 in stock option grants were awarded and $53,625 of cash payments were made.

 

As of March 31, 2023, there was approximately $124,570 of total unrecognized compensation cost for employees and non-employees related to nonvested options. These costs are expected to be recognized through December 2026.