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Stock-based Compensation | 12 Months Ended
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Dec. 31, 2024
Share-Based Payment Arrangement [Abstract] |
Stock-based Compensation | Note 3 - Stock-based Compensation The Processa Pharmaceuticals Inc. 2019 Omnibus Equity Incentive Plan (the “2019 Plan”) allows us to make grants of stock options, restricted and unrestricted stock and other stock-based awards to employees, including our executive officers, consultants and directors. The 2019 Plan originally provided for the aggregate issuance of 150,000 shares of our common stock. On June 28, 2024, our shareholders approved an increase of shares available under the 2019 Plan, which now provides for the aggregate issuance of 800,000 shares of our common stock. At December 31, 2024, we have 353,641 shares available for future grants. Stock Compensation Expense We recorded stock-based compensation expense for the years ended December 31, 2024 and 2023 as follows: Schedule of Stock-based Compensation Expense
|  | 2024 |  |  | 2023 |
|  | Year Ended December 31, |
|  | 2024 |  |  | 2023 |
Research and development |  | $ | 169,414 |  |  | $ | 363,956 |
General and administrative |  |  | 460,100 |  |  |  | 2,007,258 |
Total |  | $ | 629,514 |  |  | $ | 2,371,214 |
No tax benefits were attributed to the stock-based compensation expense because a valuation allowance was maintained for all net deferred tax assets relating to this expense. Stock Options The following table summarizes our stock option activity during the years ended December 31, 2023 and 2024: Schedule of Stock Option Activity
|  | Total options Outstanding |  |  | Weighted average exercise price |  |  | Weighted average remaining contractual life (in years) |
Outstanding as of January 1, 2023 |  |  | 8,943 |  |  | $ | 341.34 |  |  |  |  |
Options granted |  |  | - |  |  |  |  |  |  |  |  |
Forfeited or expired |  |  | (1,951 | ) |  |  | 257.28 |  |  |  |  |
Outstanding as of December 31, 2023 |  |  | 6,992 |  |  |  | 364.72 |  |  |  | 2.1 |
Options granted |  |  | - |  |  |  |  |  |  |  |  |
Forfeited or expired |  |  | (4,245 | ) |  |  | 336.00 |  |  |  |  |
Outstanding and exercisable as of December 31, 2024 |  |  | 2,747 |  |  | $ | 409.09 |  |  |  | 3.7 |
No forfeiture rate was applied to these stock options. The aggregate intrinsic value of outstanding options, all of which are exercisable, was $0 at both December 31, 2023 and 2024. No stock options were exercised during the years ended December 31, 2023 or 2024 and there is no unamortized expense at December 31, 2024 since the options are fully vested. Restricted Stock Awards The following table summarizes our restricted stock award (RSA) activity during the years ended December 31, 2023 and 2024: Schedule of Restricted Stock Awards (“RSAs”) Activity
|  | Number of shares |  |  | Weighted- average grant-date fair value per share |
Unvested as of January 1, 2023 |  |  | 3,095 |  |  | $ | 94.44 |
Granted |  |  | 10,750 |  |  |  | 14.59 |
Forfeited |  |  | (1,250 | ) |  |  | 133.00 |
Cancelled |  |  | (2,555 | ) |  |  | 22.13 |
Vested and issued |  |  | (8,790 | ) |  |  | 24.44 |
Unvested as of December 31, 2023 |  |  | 1,250 |  |  |  | 9.26 |
Granted |  |  | - |  |  |  | - |
Forfeited |  |  | - |  |  |  | - |
Cancelled |  |  | - |  |  |  | - |
Vested and issued |  |  | (1,250 | ) |  |  | 9.26 |
Unvested as of December 31, 2024 |  |  | - |  |  | $ | - |
Restricted Stock Units The following table summarizes our restricted stock unit (RSU) activity during the years ended December 31, 2023 and 2024: Schedule of Restricted Stock Units (“RSUs”) Activity
|  | Number of shares |  |  | Weighted- average grant-date fair value per share |
Outstanding at January 1, 2023 |  |  | 135,741 |  |  | $ | 73.81 |
Granted |  |  | 116,078 |  |  |  | 14.18 |
Forfeited |  |  | (12,296 | ) |  |  | 21.69 |
Cancelled |  |  | (16,801 | ) |  |  | 71.36 |
Issued |  |  | (17,093 | ) |  |  | 110.59 |
Outstanding at December 31, 2023 |  |  | 222,722 |  |  |  | 45.82 |
Granted |  |  | 192,026 |  |  |  | 1.63 |
Forfeited |  |  | (14,019 | ) |  |  | 71.68 |
Issued |  |  | (17,093 | ) |  |  | 110.59 |
Outstanding at December 31, 2024 |  |  | 383,636 |  |  |  | 19.87 |
Vested and unissued |  |  | (149,013 | ) |  |  | 43.10 |
Unvested at December 31, 2024 |  |  | 234,623 |  |  | $ | 5.11 |
During the year ended December 31, 2024, we granted the following RSUs:
| ● | On June 28, 2024, we granted RSUs for the future issuance of 39,202 shares of common stock to our employees which vest accordingly: RSUs for the future issuance of 14,969 shares of common stock vest on January 1, 2025; RSUs for the future issuance of 18,173 shares of common stock vest over a three-year period upon meeting service requirements; RSUs for the future issuance of 3,030 shares of common stock vested upon grant due to regaining Nasdaq compliance; and RSUs for the future issuance of 3,030 shares of common stock vested on October 2, 2024 when we dosed the first patient in our Phase 2 study in NGC-Cap.
| ● | On July 16, 2024, Russell Skibsted was appointed as our Chief Financial Officer (“CFO”). In addition to cash compensation, the Compensation Committee awarded RSUs for the future issuance of 28,000 shares of common stock to Mr. Skibsted, which vest accordingly: 14,000 vest on July 16, 2025; 7,000 vest upon reaching a market capitalization (i.e. total value of Processa’s outstanding shares of stock at the then current market price) of at least $30 million; and 7,000 vest upon receipt of cumulative financing(s) of at least $15 million.
| ● | On September 3, 2024, RSUs for the future issuance of 124,824 shares of common stock were granted to our independent directors and vest on the earlier of June 28, 2025 or the next annual shareholder meeting.
| ● | At December 31, 2024, unrecognized stock-based compensation expense for RSUs of approximately $613,000 is expected to be fully recognized over a weighted average period of 0.7 years. The unrecognized expense excludes $432,060 related to certain RSUs with a performance milestone that is not currently probable of occurring.
Holders of our vested RSUs will be issued shares of our common stock upon the satisfaction of the distribution restrictions contained in their Restricted Stock Unit Award Agreement. The distribution restrictions are typically different (longer) than the vesting schedule, imposing an additional restriction on the holder. Unlike RSAs, while employees may hold fully vested RSUs, the individual does not hold any shares or have any rights of a shareholder until the distribution restrictions are met. Upon distribution to the employee, each RSU converts into one share of our common stock. The RSUs contain dividend equivalent rights. Warrants The following table summarizes our warrant activity during the years ended December 31, 2023 and 2024. Schedule of Warrants Activity
|  | Total warrants outstanding |  |  | Weighted average exercise price |  |  | Weighted average remaining contractual life (in years) |
Outstanding as of January 1, 2023 |  |  | 14,283 |  |  | $ | 205.01 |  |  |  |  |
Granted |  |  | 173,007 |  |  |  | 19.27 |  |  |  |  |
Expired |  |  | (6,783 | ) |  |  | 266.96 |  |  |  |  |
Not exercisable |  |  | (7,500 | ) |  |  | 7.40 |  |  |  |  |
Exercisable |  |  | 7,500 |  |  |  | 7.40 |  |  |  |  |
Outstanding and exercisable as of December 31, 2023 |  |  | 173,007 |  |  |  | 25.41 |  |  |  | 2.2 |
Exercisable |  |  | 7,500 |  |  |  | 7.40 |  |  |  |  |
Granted |  |  | 1,617,777 |  |  |  | 4.54 |  |  |  |  |
Expired or cancelled |  |  | (22,500 | ) |  |  | 54.62 |  |  |  |  |
Outstanding and exercisable as of December 31, 2024 |  |  | 1,775,784 |  |  | $ | 5.95 |  |  |  | 3.8 |
During the year ended December 31, 2024, we did not grant any warrants to purchase shares of our common stock other than warrants to purchase 1,617,777 shares of common stock as part of the Offering (see Note 4). Warrants to purchase 7,500 shares of our common stock expired unexercised. We also repurchased a warrant issued to a consultant in 2023 for the purchase of 15,000 shares of our common stock in exchange for a payment of $10,000. In February 2023, we amended our financial consulting agreement with Spartan Capital Securities, LLC (“Spartan”), our placement agent for our registered direct offering in February 2023, by extending the term until February 10, 2024. We compensated Spartan for financial consulting services provided under the amendment by granting warrants to purchase 158,007 shares of our common stock on April 17, 2023, with an exercise price of $20.40. The warrants expire on April 17, 2026, and contain both call and cashless exercise provision. We also granted warrants to purchase 15,000 shares of our common stock to a consultant on November 18, 2023, of which warrants to purchase 7,500 shares of our common stock were exercisable, with an exercise price of $7.40. These warrants expire on November 18, 2025. We used the Black-Scholes option pricing model to calculate the grant date fair value of the two warrants granted in 2023 with the following assumptions: Schedule of Warrant Valuation Assumption
Average risk-free rate of interest |  |  | 4.32-4.88 | %
Expected term (years) |  |  | 2.00–3.00 |
Expected stock price volatility |  |  | 82.85-108.47 | %
Dividend yield |  |  | 0 | %

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