ACTUATE THERAPEUTICS, INC. Stock Compensation Disclosure
Stock Incentive Plans
In connection with the Company’s IPO, our board of directors adopted and our stockholders approved our 2024 Plan, which became effective on August 12, 2024, the effective date of the registration statement for the Company’s IPO. The purpose of the 2024 Plan is to enhance the Company’s ability to attract, retain and motivate individuals by providing these individuals with equity ownership and incentive opportunities. All of the Company’s employees, as well as all of the Company’s non-employee directors and other consultants, advisors and other persons who provide services to the Company are eligible to receive incentive awards under the 2024 Plan, including stock options grants, stock appreciation rights (“SARs”), restricted stock awards (“RSAs”), restricted stock units (“RSUs”), and other awards. Up to shares of common stock were reserved for future issuance under the 2024 Plan, which number included shares of common stock reserved for issuance under the 2015 Plan as of the closing of the IPO. In addition, the number of shares of common stock available for issuance under the 2024 Plan is subject to an annual increase on the first day of each calendar year beginning on January 1, 2025 and ending on and including January 1, 2034 equal to the lesser of (i) 5% of the aggregate number of shares of common stock outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares of common stock as determined by the Board. As of December 31, 2024, there were shares available for grant under the 2024 Plan.
In addition, the Company had previously adopted the 2015 Stock Incentive Plan (the “2015 Plan”). As of December 31, 2024, there were stock options outstanding and unvested RSAs outstanding under the 2015 Plan. Upon the effective date of the 2024 Plan on August 12, 2024, there were no remaining shares available for grant under the 2015 Plan.
Restricted Stock Awards
There were no RSAs granted during the two years ended December 31, 2024. At December 31, 2024, the total estimated unrecognized compensation cost related to unvested service-based RSAs and unvested performance based RSAs was approximately $66,000 and $42,000, respectively. The unrecognized cost related for service-based RSAs is expected to be recognized over the remaining weighted average vesting period of years. The unrecognized cost related to performance-based RSAs will be recognized ratably over the performance period based upon the probable number of shares expected to vest. During the years ended December 31, 2024 and 2023, there was no expense recorded for the outstanding performance-based RSAs.
The following summarizes our RSAs transaction activity for two years ended December 31, 2024:
| Restricted Common Stock Award Shares | Weighted Average Grant Date Fair Value | |||||||
| Unvested balance at December 31, 2022 | 364,526 | $ | 2.23 | |||||
| Granted | – | $ | – | |||||
| Vested | (195,496 | ) | $ | 2.24 | ||||
| Forfeited | – | $ | – | |||||
| Unvested balance at December 31, 2023 | 169,030 | $ | 2.21 | |||||
| Granted | – | $ | – | |||||
| Vested | (122,567 | ) | $ | 2.11 | ||||
| Forfeited | – | $ | – | |||||
| Unvested balance at December 31, 2024 | 46,463 | $ | 2.48 | |||||
Restricted Stock Units
Upon the closing of the IPO, we granted RSUs to our president and chief executive officer pursuant to his employment agreement. At December 31, 2024, the total estimated unrecognized compensation cost related to unvested RSUs was approximately $4,026,000. This cost is expected to be recognized over the remaining weighted average vesting period of years.
There were RSUs granted or outstanding for the year ended December 31, 2023. The following summarizes our RSUs transaction activity for the year ended December 31, 2024:
| Restricted Common Stock Unit Shares | Weighted Average Grant Date Fair Value | |||||||
| Unvested balance at December 31, 2023 | – | $ | – | |||||
| Granted | 544,111 | $ | 9.15 | |||||
| Vested | – | $ | – | |||||
| Forfeited | – | $ | – | |||||
| Unvested balance at December 31, 2024 | 544,111 | $ | 9.15 | |||||
Stock Options
The following summarizes our stock option transaction activity for the two years ended December 31, 2024:
| Number of Shares | Weighted- (per share) | Weighted- (in years) | Aggregate Intrinsic Value | |||||||||||
| Outstanding at December 31, 2022 | – | $ | – | |||||||||||
| Options granted | 265,566 | 2.14 | ||||||||||||
| Options exercised | – | – | ||||||||||||
| Options canceled and forfeited | – | – | ||||||||||||
| Outstanding at December 31, 2023 | 265,566 | $ | 2.14 | |||||||||||
| Options granted | 542,751 | 7.13 | ||||||||||||
| Options exercised | – | – | ||||||||||||
| Options canceled and forfeited | (27,778 | ) | 4.68 | |||||||||||
| Outstanding at December 31, 2024 | 780,539 | $ | 5.52 | $ | 1,919,951 | |||||||||
| Vested and expected to vest as of December 31, 2024 | 780,539 | $ | 5.52 | $ | 1,919,951 | |||||||||
| Exercisable as of December 31, 2024 | 189,703 | $ | 2.90 | $ | 960,376 | |||||||||
The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the Company’s closing stock price on the last trading day of 2024 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on the last trading day of 2024. This amount changes based on the fair market value of the Company’s common stock.
As of December 31, 2024, total unrecognized stock-based compensation cost related to stock options was approximately $. This cost is expected to be recognized over the weighted average remaining period of years.
The following table provides the assumptions used in determining the estimated fair value of stock option awards granted during the years ended December 31, 2024 and 2023:
| Year Ended December 31, | ||||
| 2024 | 2023 | |||
| Weighted average expected volatility | % | % | ||
| Weighted average risk-free interest rate | % | % | ||
| Expected dividend yield | % | % | ||
| Weighted average expected term (in years) | ||||
The following table summarizes the stock-based compensation expense recorded in the accompanying consolidated statements of operations during the years ended December 31, 2024 and 2023:
| Year Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Research and development | $ | 147,533 | $ | 129,642 | ||||
| General and administrative | 1,848,260 | 293,897 | ||||||
| Total | $ | 1,995,793 | $ | 423,539 | ||||
The Company has not recognized and does not expect to recognize in the near future, any tax benefit related to employee stock-based compensation expense as a result of the full valuation allowance related to its net deferred tax assets.
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.