STOCK COMPENSATION

12 Months Ended

Sep. 30, 2022

STOCK COMPENSATION

STOCK COMPENSATION

8. STOCK COMPENSATION

The Company recognized the following expenses for options issued or vested and restricted stock awarded during the year:

	Year Ended September 30,
	2022		2021
Employees	$	11,389,932	$	13,685,046
Non-employees	$	762,261	$	1,226,690

During the years ended September 30, 2022 and 2021 the fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model using the following assumptions.

	2022		2021
Expected stock price volatility	96.37 – 99.26%		90.42 – 97.22%
Risk-free interest rate	1.50 – 3.43%		0.85 – 1.65%
Expected life of options	9.67 – 9.69 years		9.68 – 9.69 years
Expected dividend yield		-		-

Non-Qualified Stock Option Plans –

During the year ended September 30, 2022, the Company adopted the 2022 Non-Qualified Stock Option Plan, which provides for the issuance of up to 2,000,000 options to purchase shares of common stock.  On November 19, 2021, the Company granted 250,000 performance-based stock options from the 2020 Non-Qualified Stock Option Plan to officers. Each option entitles the holder to purchase one share of the Company’s common stock at a price of $10.48 per share, the fair value on the date of issuance. The stock options will vest 100% upon approval of the first marketing application for any pharmaceutical based upon the Company’s Multikine technology in any of the USA, Canada, UK, Germany, France, Italy, Spain, Japan, or Australia.  None of the options will be exercisable before November 19, 2022.  All options which have not vested as of November 18, 2031 will be canceled.  On the grant date, the options were valued using a Monte Carlo Simulation. A Monte Carlo Simulation is a statistical technique that is used to model probabilistic systems and establish the probabilities for a variety of outcomes. However, because attainment of the performance condition cannot be considered probable, no compensation cost is recognized relating to these options as of September 30, 2022.  Management will reassess the probability of achieving the performance condition at each reporting date.

During the year ended September 30, 2021, the Company adopted the 2021 Non-Qualified Stock Option Plan, which provides for the issuance of up to 1,800,000 options to purchase shares of common stock. On May 14, 2021, the Company granted 1,800,000 performance-based stock options from the 2021 Non-Qualified Stock Option Plan and 72,000 performance-based stock options from the 2020 Non-Qualified Stock Option Plan to officers and directors.  Each option entitles the holder to purchase one share of the Company's common stock at a price of $20.61 per share, the fair value on the date of issuance. The stock options will vest 100% upon the achievement of the following performance goals: (a) the filing of the first marketing application for any pharmaceutical based upon the Company's Multikine technology in the US, Canada, UK, Germany, France, Italy, Spain, Japan, or Australia or (b) the closing price of the Company's common stock exceeds $42.00. The options first became exercisable on May 13, 2022.  All options which have not vested as of May 13, 2031, will be canceled and will no longer be exercisable.  The options were recorded in permanent equity in accordance with ASC 718, Compensation – Stock Compensation. On the grant date, the options were valued using a Monte Carlo Simulation approach.    That valuation resulted in a per share fair value of $0.34 and an aggregate value of approximately $636,000 on the grant date.  The aggregate value will be expensed over the requisite service period of the options, which was determined to be 1.3 years. This resulted in compensation expense of approximately $189,000 during the year ended September 30, 2021.  The remaining $447,000 was expensed during the year ended September 30, 2022.

At September 30, 2022, the Company has collectively authorized the issuance of 13,787,200  options to purchase shares of common stock under its Non-Qualified Stock Option Plans. Options typically vest over a three-year period and expire no later than ten years after the grant date. Terms of the options were determined by the Company’s Compensation Committee, which administers the plans. The Company’s employees, directors, officers, and consultants or advisors are eligible to be granted options under the Non-Qualified Stock Option Plans.

Incentive Stock Option Plans – At September 30, 2022, the Company had collectively authorized the issuance of 138,400 options to purchase shares of common stock under its Incentive Stock Option Plans.  Options typically vest over a three-year period and expire no later than ten years after the grant date.  Terms of the options were determined by the Company’s Compensation Committee which administers the plans.  Only the Company’s employees are eligible to be granted options under the Incentive Stock Option Plans.

Activity in the Company’s Non-Qualified and Incentive Stock Option Plans for the two years ended September 30, 2022 is summarized as follows:

Non-Qualified and Incentive Stock Option Plans

	Outstanding									Exercisable
	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value		Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding at September 30, 2020		8,653,703		$	7.01		8.39	$	56,193,415		3,297,229		$	5.85		7.48	$	29,090,662
Vested											2,401,961		$	6.26
Granted (a)		2,605,000		$	20.58
Exercised		(149,788	)	$	4.98						(149,788	)	$	4.98
Forfeited		(49,832	)	$	9.56
Expired		(9,374	)	$	172.73						(9,374	)	$	172.73
Outstanding at September 30, 2021		11,049,709		$	10.08		7.93	$	54,843,283		5,540,028		$	5.77		6.96	$	43,589,598
Vested											1,547,703		$	8.60
Granted		2,040,750		$	4.24
Exercised		(6,500	)	$	4.59						(6,500	)	$	4.59
Forfeited		(106,331	)	$	11.53
Expired		13,614	)	$	97.50						(13,614	)	$	97.50
Outstanding at September 30, 2022		12,964,014		$	9.06		7.35	$	1,866,240		7,067,617		$	6.21		6.21	$	1,866,105

(a) Includes 1,872,000 performance based options issued to officers and directors, 728,000 options issued to employees and 5,000 options issued to consultants.

A summary of the status of the Company’s non-vested options for the two years ended September 30, 2022 is presented below: 

	Number of Options			Weighted Average Grant Date Fair Value
Unvested at September 30, 2020		5,356,474		$	4.76
Vested		(2,401,961	)
Granted		2,605,000
Forfeited		(49,832	)
Unvested at September 30, 2021		5,509,681		$	5.17
Vested		(1,547,703	)
Granted		2,040,750
Forfeited		(106,331	)
Unvested at September 30, 2022		5,896,397		$	3.63

Incentive Stock Bonus Plan – On September 30, 2022, 614,500 of the shares granted under the 2014 Incentive Stock Bonus Plan remain outstanding, of which 463,250 shares are fully vested.  The shares are being earned upon the achievement of certain milestones leading to the commercialization of the Company’s Multikine technology, or specified increases in the market price of the Company’s stock.  The fair value of the shares on the grant date was calculated using the market value on the grant date for issuances where the attainment of performance criteria is likely and using a Monte Carlo Simulation for issuances where the attainment of performance criteria is uncertain.  The grant date fair value of shares issued that remain outstanding as of September 30, 2022 was approximately $8.6 million.  The total value of the shares, if earned, is being expensed over the requisite service periods for each milestone, provided the requisite service periods are rendered, regardless of whether the market conditions are met.  No compensation cost is recognized for awards where the requisite service period is not rendered.  During the years ended September 30, 2022 and 2021, the Company recorded expense relating to the issuance of restricted stock pursuant to the plan of approximately $45,000 and $0.3 million.  As of September 30, 2022, all compensation expense related to the 2014 Incentive Stock Bonus Plan has been fully recognized.

A summary of the status of the Company’s restricted common stock issued from the Incentive Stock Bonus Plan for the two years ended September 30, 2022 is presented below:

	Number of Shares			Weighted Average Grant Date Fair Value
Unvested at September 30, 2020		304,500		$	13.75
Forfeited		(2,000	)
Vested		(151,250	)
Unvested at September 30, 2021		151,250		$	13.75
Forfeited		-
Vested		-
Unvested at September 30, 2022		151,250		$	13.75

Stock Bonus Plans – As of September 30, 2022, the Company authorized to issue up to 783,760 shares of common stock under its Stock Bonus Plans and has issued a total of 415,968 shares of common stock from the Stock Bonus Plans.  All employees, directors, officers, consultants, and advisors are eligible to be granted shares. 

Stock Compensation Plans – On September 30, 2022, 634,000 shares were authorized for issuance pursuant to the Company’s Stock Compensation Plans, of which 153,195 shares were issued and outstanding.  No shares were issued from the Stock Compensation Plans to consultants for payment of services during the years ended September 30, 2022, and 2021.