Alzamend Neuro, Inc. Stock Compensation Disclosure

7. STOCK-BASED COMPENSATION

 

2016 Stock Incentive Plan

 

On April 30, 2016, the Company’s stockholders approved the Company’s 2016 Stock Incentive Plan (the “Plan”). The Plan provides for the issuance of a maximum of 9,259 shares of Common Stock to be offered to the Company’s directors, officers, employees, and consultants. On March 1, 2019, the Company’s stockholders approved an additional 5,556 shares to be available for issuance under the Plan. Options granted under the Plan have an exercise price equal to or greater than the fair value of the underlying Common Stock at the date of grant and become exercisable based on a vesting schedule determined at the date of grant. The options expire between five and 10 years from the date of grant. Restricted stock awards granted under the Plan are subject to a vesting period determined at the date of grant.

 

2021 Stock Incentive Plan

 

In February 2021, the Company’s board of directors (the “Board”) adopted, and the stockholders approved, the Alzamend Neuro, Inc. 2021 Stock Incentive Plan (the “2021 Plan”). The 2021 Plan authorizes the grant to eligible individuals of (1) stock options (incentive and non-statutory), (2) restricted stock, (3) stock appreciation rights, or SARs, (4) restricted stock units, and (5) other stock-based compensation.

 

Stock Subject to the 2021 Plan. The maximum number of shares of Common Stock that may be issued under the 2021 Plan is 7,407 shares, which number will be increased to the extent that compensation granted under the 2021 Plan is forfeited, expires or is settled for cash (except as otherwise provided in the 2021 Plan). Substitute awards (awards made or shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, in each case by a company that the Company acquires or any subsidiary of the Company or with which the Company or any subsidiary combines) will not reduce the shares authorized for grant under the 2021 Plan, nor will shares subject to a substitute award be added to the shares available for issuance or transfer under the 2021 Plan.

 

Restricted Stock. In May 2021, the Company issued restricted stock awards pursuant to the 2021 Plan to one employee and four independent Board members. The restricted stock awards vest over 48 months for the employee and 12 months for the independent Board members. The awards require continued service to the Company during the vesting period. The vesting provisions of individual awards may vary as approved by the Board. Compensation expense for restricted stock is generally recorded based on its market value on the date of grant and recognized ratably over the associated service and performance period.

 

Stock Options. All options that the Company grants are granted at the per share fair value on the grant date. Vesting of options differs based on the terms of each option. The Company has valued the options at their date of grant utilizing the Black Scholes option pricing model. As of the date of issuance of these options, there was not an active public market for the Company’s shares. Accordingly, the fair value of the underlying options was determined based on the historical volatility data of similar companies, considering the industry, products and market capitalization of such other entities. The risk-free interest rate used in the calculations is based on the implied yield available on U.S. Treasury issues with an equivalent term approximating the expected life of the options as calculated using the simplified method. The expected life of the options used was based on the contractual life of the option granted. Stock-based compensation is a non-cash expense because the Company settles these obligations by issuing shares of Common Stock from its authorized shares instead of settling such obligations with cash payments. 

 

A summary of stock option activity for the year ended April 30, 2025, is presented below:

Schedule of share-based payment arrangement, option, activity
		Outstanding Options
		Shares Available for Grant				Number of Shares				Weighted Average Exercise Price				Weighted Average Remaining Contractual Life (years)				Aggregate Intrinsic Value
Balance at April 30, 2024			6,889				10,887			$	1,603.10				5.22			$	70,500
Options granted			-				-			$	-
Options exercised			-				(1,111	)		$	0.54
Options cancelled/forfeited			-				(370	)		$	1,350.00
Balance at April 30, 2025			6,889				9,406			$	1,802.18				4.80			$	-
Options vested and expected to vest at April 30, 2025							9,406			$	1,802.18				4.80			$	-
Options exercisable at April 30, 2025							8,606			$	1,819.61				4.55			$	-

 

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (i.e., the difference between the estimated fair value on the respective date and the exercise price, times the number of shares) that would have been received by the option holders had all option holders exercised their options.

 

Restricted stock unit activity for the year ended April 30, 2025 is presented below:

Schedule of nonvested restricted stock units activity
		Shares				Weighted Average Grant Date Fair Value
Unvested at April 30, 2024			18			$	3,375.00
Granted			-				-
Vested			(18	)			3,375.00
Cancelled			-				-
Unvested at April 30, 2025			-			$	-

 

Stock Options Granted to Employees and Consultants

 

There were no stock options granted during the years ended April 30, 2025 and 2024.

 

For the year ended April 30, 2025 and 2024, stock-based compensation related to restricted stock grants and stock options were $325,000 and $956,000, respectively, for employees and directors.

 

Performance Contingent Stock Options Granted to Employee

 

On November 26, 2019, the Board granted 3,148 performance and market contingent awards to certain key employees and a director. These grants were made outside of the Plan. These awards have an exercise price of $2,025.00 per share. These awards have multiple separate market triggers for vesting based upon either (i) the successful achievement of stepped target closing prices on a national securities exchange for 90 consecutive trading days later than 180 days after the Company’s initial public offering (“IPO”) for its Common Stock, or (ii) stepped target prices for a change in control transaction. The target prices ranged from $13,500 per share to $54,000 per share. In the event any of the stock price milestones are not achieved within three years, the unvested portion of the performance options will be reduced by 25%.

 

On November 22, 2022, the Compensation Committee of the Board modified the performance criteria for these awards. The target price range is now $13,500 per share to $27,000 per share. Additionally, if the stock price milestones are now not achieved by November 27, 2026, as opposed to within three years, the unvested portion of the portion of the performance options will be reduced by 25%. Due to the significant risks and uncertainties associated with achieving the market-contingent awards, as of April 30, 2025, Management believes that the achievement of the requisite performance conditions is not probable and, as a result, no compensation cost has been recognized for these awards.

 

On November 29, 2022, the Compensation Committee of the Board granted 1,481 performance-based stock option to the Chief Executive Officer at an exercise price of $1,579.50 per share, of which 50% vest upon the completion and announcement of topline data from the Company’s Phase II clinical trial of AL001 within three years from grant date and the remaining 50% vest upon the completion and announcement of topline data from the Company’s Phase II clinical trial of ALZN002 within four years from the grant date. During the year ended April 30, 2023, the Company believed that it was probable that the performance condition of the completion and announcement of topline data from the Company’s Phase II clinical trial of AL001 would be achieved and had recognized the related stock-based compensation. As of April 30, 2025, the Company believed that the achievement of the second performance condition was not probable and, as a result, no compensation cost has been recognized related to Phase I/IIA of ALZN002.

 

Performance Contingent Stock Options Granted to TAMM Net

 

On March 23, 2021, the Company issued performance-based stock options to the certain team members at TAMM Net, Inc. (“TAMM Net”) to purchase an aggregate of 333 shares of Common Stock at a per share exercise price of $2,025.00 per share, of which 50% vest upon the completion of Phase I of AL001 by March 31, 2022, and the remaining 50% vest upon completion of Phase I of ALZN002 by December 31, 2022. The performance goal of completing Phase I of AL001 was achieved on March 22, 2022.

 

On January 19, 2023, the Board modified the performance criteria for these awards. The remaining 50% of the grant would have vested upon the completion and announcement of topline data of the first cohort from a Phase I/IIA clinical trial of ALZN002 on/or before March 31, 2024. The modified performance criteria was not met on or before March 31, 2024 and, as a result, the remaining unvested stock options were cancelled and no compensation cost has been recognized for these awards related to ALZN002.

 

Performance Contingent Stock Options Granted to Consultants

 

On October 14, 2021, the Company issued performance-based stock options to two consultants to purchase an aggregate of 148 shares of Common Stock with an exercise price of $3,267.00 per share, of which 37 vest upon completion of each of the Phase II clinical trials of AL001 for a BD indication, AL001 for a PTSD indication, AL001 for an MDD indication and ALZN002 for an Alzheimer’s indication.

 

On January 19, 2023, the Board modified the performance criteria for these awards. The revised grant will vest 25% if the Company (a) completes and announces topline data from a Phase II clinical trial of AL001 and ALZN002, as applicable, that would support a new drug application for the drug candidate and the indication listed below, and (b) obtained a “Study May Proceed” letter from the U.S. Food and Drug Administration (“FDA”) for the additional Investigational New Drug (“IND”) on/or before December 31, 2023, as follows: (i) AL001 – BD; (ii) AL001- MDD; (iii) AL001 – PTSD; and (iv) ALZN002 – Alzheimer’s.

 

During the year ended April 30, 2024, the Company filed INDs for BD, MDD and PTSD and received a “Study May Proceed” letter for BD in October 2023, MDD in November 2023 and PTSD in December 2023. As a result, 75% of the performance grant vested and the Company recognized stock-based compensation related to the vesting. The remaining requisite performance condition was not met on or before December 31, 2024 and, as a result, the remaining unvested stock options were cancelled and no compensation cost has been recognized for these awards related to ALZN002 – Alzheimer’s.

 

Stock-Based Compensation Expense

 

The Company’s results of operations include expenses relating to stock-based compensation for the years ended April 30, 2025 and 2024, were comprised of the following:

Schedule of stock-based compensation
		For the Year Ended April 30,
		2025				2024
Research and development		$	-			$	213,905
General and administrative			325,108				741,728
Total		$	325,108			$	955,633

 

As of April 30, 2025, total unamortized stock-based compensation expense related to unvested employee and non-employee awards that are expected to vest was $89,930. The weighted-average period over which such stock-based compensation expense will be recognized is approximately 0.5 years.