Kiora Pharmaceuticals, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Equity Incentive Plan

Equity Incentive Plan

12 Months Ended

Dec. 31, 2022

In 2005, the Company approved the 2005 Equity Incentive Plan (the “2005 Plan”). The 2005 Plan provides for the granting of options, restricted stock or other stock-based awards to employees, officers, directors, consultants, and advisors. During 2010, the maximum number of shares of Common Stock that may be issued pursuant to the 2005 Plan was increased to 59,414 shares. The Board of Directors (the “Board”) is responsible for administration of the 2005 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. Following adoption of the 2014 Equity Incentive Plan (the “2014 Plan”), no further grants were made under the 2005 Plan. General terms of the 2014 Plan remain the same as that of the 2005 plan.

The Company’s Board adopted the 2014 Plan and the Employee Stock Purchase Plan (the “ESPP”), and the Company’s Stockholders approved the 2014 Plan and the ESPP Plan in February 2015. As of December 31, 2022, the maximum number of shares of Common Stock that may be issued pursuant to the 2014 Plan and the ESPP was 220,733 and 284 shares, respectively.

In January 2022, the number of shares of common stock issuable under the 2014 Plan automatically increased by 583 shares pursuant to the terms of the 2014 Plan. Additionally, in September 2022, the number of shares of common stock issuable under the 2014 Plan was increased by 200,000 shares, as approved by the Company’s Stockholders. These additional shares are included in the total of 220,733 shares issuable under the 2014 Plan.

The following is a summary of stock option activity for the years ended December 31, 2022 and 2021:


	Number of Options	Weighted Average Exercise Price		Weighted Average Contractual Life (In Years)
Outstanding at December 31, 2020	6,249	$	840.88	2.30
Granted	8,654	164.30
Expired	(825)	1,046.00
Forfeited	(1,124)	259.70
Outstanding at December 31, 2021	12,954	$	426.25	5.56
Exercisable at December 31, 2021	5,087	$	847.31	3.09
Vested and Expected to Vest at December 31, 2021	12,954	$	426.25	5.56
Granted	78,641	8.49
Expired	(14)	842.57
Forfeited	(6,830)	446.34
Outstanding at December 31, 2022	84,751	$	36.92	9.59
Exercisable at December 31, 2022	4,939	$	442.52	7.27
Vested and Expected to Vest at December 31, 2022	84,751	$	36.92	9.59

During the years ended December 31, 2022 and 2021, the Board approved the grant of options to purchase 78,641 and 8,654 shares of its Common Stock, respectively. All option grants were pursuant to the 2014 Plan. In general, options granted under the 2014 Plan vest with respect to one-third of the underlying shares on the one-year anniversary of the grant date and the remainder ratably over a 24-month period. For the years ended December 31, 2022 and 2021, the fair value of each option grant has been estimated on the date of grant using the Black-Scholes Option Pricing Model with the following weighted-average assumptions:


	2022	2021
Risk-Free Interest Rate	2.42%	1.82%
Expected Life	5.0 years	10.0 years
Expected Average Volatility	140%	140%
Expected Dividend Yield	0%	0%

Using the Black-Scholes Option Pricing Model, the estimated weighted average fair value of an option to purchase one share of common stock granted during the years ended December 31, 2022 and 2021 was $27.08 and $145.63 respectively.

The following is a summary of restricted stock activity for the years ended December 31, 2022 and 2021:


	Number of Shares	Weighted-Average Grant Date Fair Value		Weighted-Average Remaining Recognition Period
Non-vested Outstanding at December 31, 2020	1,697	$	283.23	1.66
Released	(1,173)	292.62
Forfeited	(149)	264.04
Non-vested Outstanding at December 31, 2021	375	$	261.47	1.09
Awarded	30,000	6.78
Released	(248)	261.45
Forfeited	(127)	261.51
Non-vested Outstanding at December 31, 2022	30,000	$	6.78	2.79

During the years ended December 31, 2022 and 2021, 127 and 149 shares of restricted stock, which had not vested, were forfeited and returned to the Company, respectively. During the years ended December 31, 2022 and 2021, the Board approved the grant of 30,000 and 0 restricted shares of Common Stock, respectively. All grants of restricted shares were pursuant to the 2014 Plan. These vest with respect to 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 total stock-based compensation expense for employees and non-employees is included in the accompanying Consolidated Statements of Operations and as follows:


	Year Ended December 31,
	2022		2021
Research and Development	$	343,475	$	246,386
General and Administrative	118,975		596,089
Total Stock-Based Compensation Expense	$	462,450	$	842,475

The fair value of options granted for the years ended December 31, 2022 and 2021 was approximately $0.6 million and $1.2 million, respectively. As of December 31, 2022 and 2021, there was approximately $0.9 million and $1.0 million of total unrecognized compensation expense related to unvested stock-based compensation arrangements granted, which cost is expected to be recognized over a weighted average period of 2.5 and 2.3 years, respectively. The aggregate intrinsic value of stock options outstanding at December 31, 2022 and 2021 was $0.

As of December 31, 2022, there were 101,850 shares of Common Stock available for grant under the 2014 Plan and 191 shares available under the Company’s ESPP.