Stock Options

9 Months Ended

Sep. 30, 2024

In March 2023, the Company’s Board of Directors and stockholders approved the 2023 Stock Incentive Plan (“2023 Plan”). The 2023 Plan allows the Compensation Committee to grant up to 66,667 shares of Common Stock in the form of incentive and non-statutory stock options, restricted stock awards, restricted stock units, and other stock-based awards to employees, directors, and non-employees. As of September 30, 2024, options to purchase 1,333 shares of common stock had been granted and were outstanding under the 2023 Plan and 65,334 shares of common stock were available for grant under the plan. On October 3, 2024, the Company’s Board of Directors approved amendments to the 2023 Plan that, subject to stockholder approval, would (i) increase the number of shares of Common Stock that may be issued under the 2023 Plan by 1,144,401 shares and (ii) adopt an evergreen provision to the 2023 Plan providing for an automatic 5% annual increase in the shares of Common Stock available for issuance under the 2023 Plan over the next 10 years. Both amendments are subject to the approval of the Company’s stockholders and will be submitted for approval at the Company’s annual stockholder meeting to be held on November 20, 2024.

During 2016, the Company established the Azitra Inc. 2016 Stock Incentive Plan ("2016 Plan") which provides for the grant up to 49,687 shares of Common Stock in the form of stock options and restricted shares to the Company’s employees, officers, directors, advisors and consultants. As of September 30, 2024, options to purchase 40,275 shares of common stock had been granted and 7,457 shares of common stock were available for grant under the 2016 Plan.

During the three and nine months ended September 30, 2024 and 2023, the Company did not grant any equity awards under the 2016 or 2023 Plans. During the three and nine months ended September 30, 2024, the Company recognized stock compensation expense of $143,534 and $211,875, respectively, relating to the issuance of service-based and performance-based stock options. During the three and nine months ended September 30, 2023, the Company recognized stock compensation expense of $39,073 and $116,660, respectively, relating to the issuance of service-based stock options. At September 30, 2024, there was $114,564 of unamortized compensation expense that will be amortized over the remaining vesting period. At September 30, 2024 and 2023, there were 0 and 3,105 performance-based options outstanding, respectively with fair values of $0 and $109,551, respectively. During the three and nine months ended September 30, 2024, the Company recognized compensation expense for performance-based options. The Company determined the options qualified as plain vanilla under the provisions of SAB 107 and the simplified method was used to estimate the expected option life.

The following table summarizes information about options outstanding and exercisable at September 30, 2024:


		Options Outstanding				Options Exercisable
Exercise Price		Number of Options at September 30, 2024	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number of Options at September 30, 2024	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price

$	14.32	6,871	1.3 years	$	14.32	6,871	1.3 years	$	14.32
$	27.80	6,735	1.3 years	$	27.80	6,735	1.3 years	$	27.80
$	51.08	26,669	6.5 years	$	51.08	24,748	6.4 years	$	51.08
$	62.10	1,333	8.9 years	$	62.10	389	8.9 years	$	62.10
		41,608				38,743

Total stock option activity for the nine months ended September 30, 2024, is summarized as follows:


	Shares	Weighted Average Exercise Price
Outstanding at December 31, 2023	42,941	$	41.10
Granted	—	—
Exercised	(1,333)	14.32
Forfeited	—	—
Outstanding at September 30, 2024	41,608	$	41.60

- Definition

The entire disclosure for a company's election to apply the fair value option for measurement and reporting of eligible financial assets and liabilities (as defined), as well as certain other eligible items (as defined) included in the statement of financial position, whether such option is elected for a single eligible item or a group of similar eligible items and is in addition to other disclosures concerning fair value which the company may be required to provide. Such disclosure might be expected to include: (1) for items included in the statement of financial position: (a) the reasons for electing a fair value option for each eligible item or group of similar eligible items; (b) if the fair value option is elected for some but not all eligible items within a group of similar eligible items: (i) a description of those similar items and the reasons for partial election and (ii) information of how the group of similar items relates to individual balance sheet line items; (c) for each line item in the statement of financial position that includes an item or items for which the fair value option has been elected: (i) information of how each line item in the statement of financial position relates to major categories of assets and liabilities presented in accordance with other fair value disclosures and (ii) the aggregate carrying amount of ineligible items included in each line item in the balance sheet, if any; (d) the difference between the aggregate fair value and the aggregate unpaid principal balance (assuming contractual principal amounts and fair value option elected) of: (i) loans and long-term receivables (other than securities otherwise reported at fair value) and (ii) long-term debt instruments; (e) for loans held as assets for which the fair value option has been elected: (i) the aggregate fair value of loans that are 90 days or more past due, (ii) if the policy is to recognize interest income separately from other changes in fair value, the aggregate fair value of loans in nonaccrual status, and (iii) the difference between the aggregate fair value and the aggregate unpaid principal balance for loans that are 90 days or more past due, in nonaccrual status, or both; (f) for investments that would have been accounted for under the equity method if the entity had not chosen to apply the fair value option, the information required for such investments, if material either individually or in the aggregate; (2) for items included in the income statement: (a) the amounts of gains and losses from fair value changes included in earnings and in which line in the income statement those gains and losses are reported whether or not combined with gains and losses from items required to be accounted for at fair value; (b) a description of how interest and dividends are measured and where they are reported in the income statement; (c) for loans and other receivables held as assets: (i) the estimated amount of gains or losses included in earnings attributable to changes in instrument-specific credit risk and (ii) how the gains or losses attributable to changes in instrument-specific credit risk were determined; (d) for liabilities with fair values that have been significantly affected during the reporting period by changes in the instrument-specific credit risk: (i) the estimated amount of gains and losses from fair value changes included in earnings that are attributable to changes in the instrument-specific credit risk, (ii) qualitative information about the reasons for those changes, and (iii) how the gains and losses attributable to changes in instrument-specific credit risk were determined; and (3) certain other disclosures as required or determined to be provided.

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