Stock-Based Compensation

9 Months Ended

Sep. 30, 2024

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

5. Stock-Based Compensation

MDB stock-based compensation

Between April 19, 2022 and September 21, 2022, the Company granted 3,675,000 restricted stock units (“RSUs”). These units will vest when 20% of the one-half of the total number of RSUs, by each individual person, on the thirteenth (13) month anniversary of the listing of the Class A Shares on a United States national exchange, then at a rate of 10% of one-half the number of RSUs each six months after the date of the initial vesting, until the last vesting on the fifth year anniversary of the Date of Grant, at which any previously unvested will fully vest. These RSUs were granted to officers, directors, employees, and contractors. As these RSUs do not begin to vest until the completion of an initial public offering by the Company, which occurred on September 20, 2023. On May 8, 2024, two officers forfeited 100,000 of their shares before the vesting of the shares, then between May 8, 2024 and June 17, 2024, an additional 295,000 RSUs were issued that will vest at a rate of 10% of one-half the number of RSUs each six months after the date of the initial grant date, until the last vesting on the fifth-year anniversary of the Date of Grant. $2,635,588 and $7,651,316 of stock-based compensation expense related to these RSUs was recorded for the three and nine-months ended September 30, 2024, respectively. The total unrecognized compensation expense based on the shares price sold in the private placement or the stock price on the date of the grant is $26,844,415.

On April 19, 2022, the Company granted 2,000,000 restricted stock units (“RSUs”). These units will vest when 20% of the one-half of the total number of RSUs, by each individual person, on the thirteenth (13) month anniversary of the listing of the Class A Shares on a United States national exchange. Class A Shares have traded in the market since September 20, 2023. The RSUs will vest once the Class A Shares are listed for any 90 consecutive calendar days at an average price of $20.00 or more during the period commencing from the Date of Grant and prior to the five year anniversary of the Date of Grant, with an average monthly trading volume of 2,000,000 Class A Shares or more during the 90 consecutive calendar day period, or the Class A Shares are listed for any 90 consecutive calendar days at an average price of $25.00 or more during the period commencing the Date of Grant and prior to the five year anniversary of the Date of Grant; provided further, that if there is a distribution of cash, stock or other property by the Company on the Class A Shares, then the foregoing average amounts of $20.00 or $25.00 will be reduced, from time to time, by the value of any one or more per share distributions after the Date of Grant until vested. As these RSUs do not begin to vest until the completion of an initial public offering by the Company, which occurred on September 20, 2023, $1,113,573 and $3,316,511 of stock-based compensation expense related to these RSUs was recorded for the three and nine-months ended September 30, 2024, respectively. The estimated unrecognized compensation expense for performance/market vesting RSUs is $11,256,771.

A summary of restricted stock unit activity during the nine-months ended September 30, 2024 and 2023 is presented below:

	Time-Based					Performance-Based
	Number of Restricted Stock Units			Weighted Average Grant Date Fair Value		Number of Restricted Stock Units		Weighted Average Grant Date Fair Value
Restricted stock units outstanding at September 30, 2023		3,675,000		$	10.00		2,000,000	$	7.91
Granted		-			-		-		-
Exercised		-			-		-		-
Expired		-			-		-		-
Restricted stock units outstanding at December 31, 2023		3,675,000		$	10.00		2,000,000	$	7.91
Granted		295,000			8.71		-		-
Exercised		-			-		-		-
Expired		-			-		-		-
Forfeited		(100,000	)		10.00		-		-
Restricted stock units outstanding at September 30, 2024		3,870,000		$	9.90		2,000,000	$	7.91
Restricted stock units at September 30, 2023		-		$	-		-	$	-
Restricted stock units at September 30, 2024		-		$	-		-	$	-

Invizyne stock-based compensation

Invizyne’s 2020 Equity Incentive Plan (the “2020 Plan”), which was approved by the Invizyne shareholders, permits grants to its officers, directors, and employees for up to 1,877,664 shares of Invizyne’s Common Stock. On May 1^st, 2023 the board and shareholders approved an increase of 3,116,351 shares under the plan. The 2020 Plan authorizes the issuance of stock options, shares of restricted stock, and restricted stock units, among other forms of equity based awards.

On May 1, 2023, stock options to purchase 103,880 shares of Common Stock were granted at an exercise price of $1.66 per share, which was equal to the fair value of the Common Stock on the date of grant and are exercisable for a period of 7 years. The stock options vest ratably over a period of 5 years. The inputs used to determine the fair value was Common Stock price of $1.66, option exercise price of $1.66, expected life in years of 5 years, with a contract life of 7 years, risk-free rate of 3.64%, expected annual volatility of 121.70%, and annual rate of dividends of $0.

On November 1, 2023, stock options to purchase 914,129 shares of Common Stock were granted at an exercise price of $1.66 per share, which was equal to the fair value of the Common Stock on the date of grant and are exercisable for a period of 7 years. The stock options vest ratably over a period of 5 years. The inputs used to determine the fair value was Common Stock price of $1.66, option exercise price of $1.66, expected life in years of 5 years, with a contract life of 7 years, risk-free rate of 4.67%, expected annual volatility of 144.94%, and annual rate of dividends of $0.

On February 1, 2024, stock options to purchase 311,636 shares of Common Stock were granted at an exercise price of $1.66 per share, which was equal to the fair value of the Common Stock on the date of grant and are exercisable for a period of 7 years. The stock options vest ratably over a period of 5 years. The inputs used to determine the fair value was Common Stock price of $1.66, option exercise price of $1.66, expected life in years of 5 years, with a contract life of 7 years, risk-free rate of 4.20%, expected annual volatility of 95.85%, and annual rate of dividends of $0.

As of September 30, 2024 stock options to purchase 638,144 shares of Common Stock were vested, the weighted average exercise price is $4.62, the aggregate intrinsic value is $0.00, and the weighted average remaining contractual term is 6.01 years. Invizyne stock-based compensation were $317,277 and $61,336 for the three-months ended September 30, 2024 and 2023. Invizyne stock-based compensation were $808,362 and $174,440 for the nine-months ended September 30, 2024 and 2023. As of September 30, 2024, the unrecognized stock-based compensation is $4,874,597.

A summary of stock option activity during the nine-months ended September 30, 2024 and 2023 is presented below:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in Years)
Stock options outstanding at January 1, 2023		533,680		$	2.44		4.83
Granted		51,940			3.32		7.00
Exercised		-			-		-
Expired		-			-		-
Stock options outstanding at September 30, 2023		585,620		$	2.44		4.83
Granted		457,067			3.32		7.00
Exercised		-			-		-
Expired		-			-		-
Stock options outstanding at December 31, 2023		1,042,687		$	1.43		5.47
Granted		725,878			7.00		7.00
Exercised		(3,376	)		-		-
Expired		(12,206	)		2.44		-
Stock options outstanding at September 30, 2024		1,752,983			4.57		6.01
Stock options exercisable at September 30, 2023		288,959		$	2.52		4.54
Stock options exercisable at September 30, 2024		638,144		$	4.62		6.01

On March 28, 2022, Invizyne granted 232,689 restricted stock units (“RSUs”) at a value of $1.22 per share. These RSUs were issued in 2021 in lieu of cash bonuses. As these RSUs do not vest until the expiration of any lock up subsequent to an initial public offering of the Company, or upon the change of control of the Company by Invizyne, which is outside of the control of the Company, no compensation expense related to these RSUs has been recorded. These RSUs fully vest upon the expiration of any lockup period subsequent to an initial public offering, or upon the change of control of Invizyne. The Company will record stock-based compensation for these RSUs when the RSUs begin to vest, and the unrecognized stock-based compensation is $788,705.

On May 1, 2023, Invizyne granted 97,050 restricted stock units (“RSUs”) at a value of $1.66 per share. These RSUs were issued in 2023 in lieu of cash bonuses. As these RSUs do not vest until the expiration of any lock up subsequent to an initial public offering of the Company, or upon the change of control of the Company by Invizyne, which is outside of the control of the Company, no compensation expense related to these RSUs has been recorded. These RSUs fully vest upon the expiration of any lockup period subsequent to an initial public offering, or upon the change of control of Invizyne. The Company will record stock-based compensation for these RSUs when the RSUs begin to vest, and the unrecognized stock-based compensation is $333,852.