EQUITY-BASED COMPENSATION

12 Months Ended

Sep. 30, 2023

EQUITY-BASED COMPENSATION

EQUITY-BASED COMPENSATION

8.  EQUITY-BASED COMPENSATION

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

	Year Ended September 30,
	2023		2022
Employees	$	6,286,231	$	11,389,932
Non-employees	$	655,740	$	762,261

As of September 30, 2023, the total compensation cost related to non-vested options and restricted stock awarded to employees and non-employees not yet recognized was approximately $6.9 million and $0.3 million, respectively, and the weighted-average period over which it is expected to be recognized is 1.78 and 0.94 years, respectively.

During the years ended September 30, 2023 and 2022 the fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions.

	2023	2022
Expected stock price volatility	99.18 – 100.18%	96.37 – 99.26%
Risk-free interest rate	3.41 – 4.25%	1.50 – 3.43%
Expected life of options	9.63 – 9.66 years	9.67 – 9.69 years
Expected dividend yield	-	-

Non-Qualified Stock Option Plans 

During the year ended September 30, 2023, the Company adopted the 2023 Non-Qualified Stock Option Plan, which provides for the issuance of up to 2,000,000 options to purchase shares of common stock.  On August 8, 2023, the Company granted 1,958,500 options to purchase shares of common stock from the 2023 Non-Qualified Stock Option Plan to officers, directors and employees.  Each option entitles the holder to purchase one share of the Company’s common stock at a price of $1.36 per share, vests in three equal annual installments commencing one year after the grant date and expires on August 7, 2033.

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 approach. 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 was recognized relating to these options as of September 30, 2023.  Management will re-assess the probability of achieving the performance condition at each reporting date.

At September 30, 2023, the Company has collectively authorized the issuance of 15,787,200 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, 2023, 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, 2023 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, 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(a)		2,040,750		$	4.24						-
Exercised		(6,500	)	$	4.59			$	45,725		(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
Vested		-									952,256		$	8.41
Granted (b)		2,065,500		$	1.37						-
Exercised		-									-
Forfeited		213,165		$	9.19						-
Expired		(58,791	)	$	61.05						(58,791	)	$	61.05
Outstanding at September 30, 2023		14,757,558		$	7.78		6.81	$	0		7,961,082		$	6.07		5.60	$	0

(a)	The weighted average grant date fair value was $3.01.
(b)	Includes 1,965,500 performance based options issued to officers and directors, 100,000 options issued to consultants. The weighted average grant date fair value was $1.22.

A summary of the status of the Company’s un-vested options for the two years ended September 30, 2023 is presented below: 

	Number of Options			Weighted Average Grant Date Fair Value
Unvested at September 30, 2021		5,509,681		$	5.17
Vested		(1,547,703	)	$	7.37
Granted		2,040,750
Forfeited		(106,331	)
Unvested at September 30, 2022		5,896,397		$	3.63
Vested		(952,256	)	$	7.30
Granted		2,065,500
Forfeited		(213,165	)
Unvested at September 30, 2023		6,796,476		$	2.25

Incentive Stock Bonus Plan – On September 30, 2023, 610,500 of the shares granted under the 2014 Incentive Stock Bonus Plan remain outstanding, of which 463,250 shares are fully vested.  During the year ended September 30, 2023, 4,000 unvested shares were forfeited. 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, 2023 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, 2023 and 2022, the Company recorded expense relating to the issuance of restricted stock pursuant to the plan of approximately $(22,000) and $45,000, respectively.  As of September 30, 2023, 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, 2023 is presented below:

	Number of Shares			Weighted Average Grant Date Fair Value
Unvested at September 30, 2021		151,250		$	13.75
Forfeited		-
Vested		-
Unvested at September 30, 2022		151,250		$	13.75
Forfeited		(4,000	)
Vested		-
Unvested at September 30, 2023		147,250		$	13.75

Stock Bonus Plans – As of September 30, 2023, the Company authorized to issue up to 1,283,760 shares of common stock from the Stock Bonus Plans and has issued a total of 512,972 shares of common stock under its Stock Bonus Plans.  All employees, directors, officers, consultants, and advisors are eligible to be granted shares. 

Stock Compensation Plans – On September 30, 2023, 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 during the years ended September 30, 2023 and 2022.