Kiora Pharmaceuticals, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

Stock-Based Compensation

6 Months Ended

Jun. 30, 2024

Share-Based Payment Arrangement [Abstract]

Equity Incentive Plans

The Company's Board of Directors (the "Board") adopted the 2014 Equity Incentive Plan (the "2014 Plan") and the Employee Stock Purchase Plan (the “ESPP”) and the Company's Stockholders approved the 2014 Plan and ESPP in February 2015.

The Board subsequently adopted the 2024 Equity Incentive Plan (the "2024 Plan") and the Company's Stockholders approved the Plan in May 2024. Following adoption of the 2024 Plan, no further grants were made under the 2014 Plan.

Consistent with the 2014 Plan, the 2024 Plan provides for the granting of stock options (incentive and nonqualified), restricted stock or other stock-based awards to employees, officers, directors, consultants, and advisors. The Board is responsible for administration of the 2024 Plan. The Company’s Board determines the term of each option, the option exercise price, the number of shares for which each option is granted and the rate at which each option is exercisable. Incentive stock options may be granted to any officer or employee at an exercise price per share of not less than the fair value per common share on the date of the grant (not less than 110% of fair value in the case of holders of more than 10% of the Company’s voting stock) and with a term not to exceed ten years from the date of the grant (five years for incentive stock options granted to holders of more than 10% of the Company’s voting stock). Nonqualified stock options may be granted to any officer, employee, consultant, or director at an exercise price per share of not less than the par value per share. As of June 30, 2024, the maximum number of shares of Common Stock that may be issued pursuant to the 2024 Plan was 733,100 of which 555,556 shares were available for awards.

Stock-based compensation expense is presented in the same expense line items as cash compensation paid and for the three and six months ended June 30 is as follows:


	Three months ended June 30				Six months ended June 30
	2024		2023		2024		2023
Research and Development	$	94,092	$	66,226	$	188,663	$	130,913
General and Administrative	55,703		105,569		136,575		176,823
Total Stock-Based Compensation Expense	$	149,795	$	171,795	$	325,238	$	307,736

Stock Options

The Company grants time-based stock options which generally vest one-third of the underlying shares on the one-year anniversary of the grant date and the remainder ratably over a 24-month period. The fair value of time-based stock options is determined using the Black-Scholes Option Pricing Model, with such value recognized as expense over the service period, which is typically three years, net of actual forfeitures. A summary of the Company’s assumptions used in determining the fair value of the stock options granted during the six months

ended June 30, 2024 and 2023 is shown in the following table. Note there were no options granted during the six months ended June 30, 2024:


	Six months ended June 30
	2024		2023
Risk-Free Interest Rate	N/A		4.26	%
Expected Life (years)	N/A		5.00
Expected Stock Price Volatility	N/A		142	%
Expected Dividend Yield	—	%	—	%

The weighted-average grant date fair value of options granted during the six months ended June 30, 2023 was $29.30. The expected term of the options granted is based on management's estimate. Expected volatility is based on the historical volatility of the Company’s common stock. The risk-free interest rate is determined based upon a constant U.S. Treasury security rate with a contractual life that approximates the expected term of the option. Unamortized compensation expense related to the options amounted to $0.5 million as of June 30, 2024 and is expected to be recognized over a weighted average period of approximately 1.74 years.

Following is a summary of stock option activity for the six months ended June 30, 2024:


	Number of Options	Weighted- Average Exercise Price		Weighted- Average Remaining Term in Years
Outstanding at December 31, 2023	90,382	$	41.43	9.29

Expired	(423)	$	980.89
Forfeited	(966)	$	8.37
Outstanding at June 30, 2024	88,993	$	37.32	8.93
Exercisable and vested at June 30, 2024	27,701	$	96.70	8.59

The stock options outstanding and exercisable as of June 30, 2024 had no aggregate intrinsic value. The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the market price of the Company’s common stock for options that had exercise prices lower than $4.20, the closing price of the Company’s stock on June 30, 2024.

Restricted Stock Awards

Restricted stock compensation expense is recognized over the vesting period, which is typically one-third of the underlying shares on the one-year anniversary of the grant date and the remainder ratably over a 24-month period. Unamortized compensation expense related to the restricted stock awards amounted to $0.2 million as of June 30, 2024 and is expected to be recognized over a weighted average period of approximately 2.09 years. The following is a summary of restricted stock activity for the six months ended June 30, 2024:


	Number of Units	Weighted- Average Grant Date Fair Value		Weighted- Average Remaining Term in Years
Non-vested Outstanding at December 31, 2023	25,493	$	14.75	2.57

Released	(1,371)	$	34.45
Forfeited	(28)	$	34.20
Non-vested Outstanding at June 30, 2024	24,094	$	13.60	2.09

Employee Stock Purchase Plan

The Company has a non-qualified ESPP, which provides for the issuance of shares of the Company’s common stock to eligible employees of the Company that elect to participate in the plan and purchase shares of common stock through payroll deductions at a discounted price. Six month offering periods are made at the Board’s discretion. The ESPP provides for 32 aggregate shares of the Company’s common stock for participants to purchase. As of June 30, 2024 and 2023, the remaining shares reserved for future offerings was 23.