EQUITY, STOCK-BASED COMPENSATION AND LOSS PER SHARE

6 Months Ended

Mar. 31, 2023

EQUITY, STOCK-BASED COMPENSATION AND LOSS PER SHARE

EQUITY, STOCK-BASED COMPENSATION AND LOSS PER SHARE

12.EQUITY, STOCK-BASED COMPENSATION AND LOSS PER SHARE

Increase in Authorized Shares and Equity Plan Reserve

On November 4, 2021, the Company’s shareholders approved an amendment to the Company’s Second Amended and Restated Articles of Incorporation to increase the number of authorized shares from 20,000,000 shares, consisting of 19,000,000 common shares and 1,000,000 preferred shares, to 75,000,000 shares, consisting of 74,000,000 common shares and 1,000,000 preferred shares. Approval of this matter by the Inotiv shareholders was a condition to the closing of the Envigo acquisition. The amendment was effective on November 4, 2021. On November 4, 2021, the Company’s shareholders approved an amendment to the Company’s 2018 Equity Incentive Plan (the “Equity Plan”) to increase the number of shares available for awards thereunder by 1,500,000 shares and to make certain corresponding changes to certain limitations in the Equity Plan. At March 31, 2023, 502,685 shares remained available for grants under the Equity Plan.

Stock Issued in Connection with Acquisitions

During the three and six months ended March 31, 2023, no common shares were issued in relation to acquisitions. During the three and six months ended March 31, 2022, 1,106,457 and 9,480,595 common shares, respectively, were issued in relation to acquisitions. See Note 4 – Business Combinations for further discussion of consideration for each acquisition.

Stock-Based Compensation

The Company expenses the estimated fair value of stock options, restricted stock and restricted stock units over the vesting periods of the grants. The Company recognizes expense for awards subject to graded vesting using the straight-line attribution method and forfeitures, as they are incurred. Stock based compensation expense for the three months ended March 31, 2023 and 2022, was $1,781 and $1,138, respectively. Stock based compensation expense for the six months ended March 31, 2023 and 2022, was $3,827 and $25,070, respectively. Of the $25,070 stock based compensation expense during the six months ended March 31, 2022, $23,014 related to post-combination expense recognized in connection with the Envigo transaction (see Note 4 – Business Combinations), which was inclusive of $4,772 of stock based compensation settled in cash.

Net Loss per Share

The Company computes basic loss per share using the weighted average number of common shares outstanding. The Company computes diluted loss per share using the if-converted method for preferred shares and convertible debt, if any, and the treasury stock method for stock options and restricted stock units. Shares issuable upon exercise of 1,797,189 options and shares issuable upon vesting of 803,972 restricted stock units were not considered in computing diluted loss per share for the three and six months ended March 31, 2023 because they were anti-dilutive. Shares issuable upon exercise of 1,695,070 options and shares issuable upon vesting of 682,357 restricted stock units were not considered in computing diluted loss per share for the three and six months ended March 31, 2022 because they were anti-dilutive. Additionally, there are 3,040,268 shares of common stock issuable upon conversion in connection with the convertible debt entered into on September 27, 2021, which were not considered in computing diluted loss per share for the three and six months ended March 31, 2023 and 2022 because they were anti-dilutive.

The following table reconciles the computation of basic net loss per share to diluted net loss per share:

	Three Months Ended				Six Months Ended
	March 31,				March 31,
	2023		2022		2023		2022
Basic and diluted net loss per share:
Net loss applicable to common shareholders	$	(9,994)	$	(6,087)	$	(97,317)	$	(89,134)
Weighted average common shares outstanding (in thousands)
Basic and diluted:		25,687		25,315		25,645		23,197
Basic and diluted net loss per share	$	(0.39)	$	(0.24)	$	(3.79)	$	(3.84)