|3 Months Ended|
Mar. 31, 2023
|Share-Based Payment Arrangement [Abstract]|
On June 19, 2019, our stockholders approved, and we adopted the Processa Pharmaceuticals Inc. 2019 Omnibus Equity Incentive Plan (the “2019 Plan”). The 2019 Plan allows us, under the direction of our Board of Directors or a committee thereof, to make grants of stock options, restricted and unrestricted stock and other stock-based awards to employees, including our executive officers, consultants and directors. The 2019 Plan provides for the aggregate issuance of shares of our common stock. At March 31, 2023, we have shares available for future grants.
Stock Compensation Expense
Schedule of Stock-based Compensation Expense
At March 31, 2023, we recorded an expense and related accrued liability of $1.3 million related to the warrant we issued to Spartan, which is not included in the table above. No tax benefits were attributed to the stock-based compensation expense because a valuation allowance was maintained for all net deferred tax assets relating to this expense.
During the three months ended March 31, 2023, stock options to purchase shares of common stock expired and there were no exercises or grants of stock options. At March 31, 2023, we had outstanding and exercisable options for the purchase of shares with a weighted average exercise price of $ , a weighted average remaining contractual life of years. At March 31, 2023, we did not have any unrecognized stock-based compensation expense related to our granted stock options.
Restricted Stock Awards
Schedule of Restricted Stock Awards (“RSAs”) Activity
On January 1, 2023, we granted RSAs totaling of their compensation by equal amounts on a retroactive basis, to the beginning of their respective service periods. Accordingly, we cancelled RSAs representing shares of common stock. shares of common stock to three directors for their service for the six month period ending June 30, 2023 in order to align their compensation plan with their service period and change the annual service period to begin and end on the date of respective Annual Meetings rather than the calendar year. Our directors are compensated through a combination of cash and equity. On March 8, 2023, the directors increased the cash component and decreased the equity component
At March 31, 2023, the total unrecognized stock-based compensation expense related to the outstanding and unvested RSAs was $, which is expected to be recognized over a weighted average period of years.
Restricted Stock Units
Schedule of Restricted Stock Units (“RSUs”) Activity
At March 31, 2023, unrecognized stock-based compensation expense of $ for RSUs is expected to be fully recognized over a weighted average period of years. The unrecognized expense excludes $ of expense related to certain RSUs with a performance milestone that is not probable of occurring at this time.
Holders of our vested RSUs have our promise to issue shares of our common stock upon meeting the distribution restrictions contained in their Restricted Stock Unit Award Agreement. The distribution restrictions are different (longer) than the vesting schedule, imposing an additional restriction on the holder. Unlike RSAs, while certain employees may hold fully vested RSUs, the individual does not hold any shares or have any rights of a shareholder until the distribution restrictions are met. Upon distribution to the employee, each RSU converts into one share of our common stock. The RSUs contain dividend equivalent rights.
During the three months ended March 31, 2023, we agreed to grant a warrant to purchase a total of shares of our common stock as compensation for services provided under an amended consulting agreement with Spartan, the placement agent for the Offering. The warrant was issued and exercisable on April 17, 2023 with an exercise price of $1.02 and expiration date of April 17, 2026. The warrant contains both call and cashless exercise provisions. We recorded $1,310,875 as a general and administrative expense and related accrued liability representing the fair value of this warrant on February 14, 2023, the date we amended the consulting agreement, since there were no contingent conditions on that date through April 17, 2023.
At March 31, 2023, we had outstanding stock purchase warrants, including the warrant issued on April 17, 2023, for the purchase of 3,366,480 shares with a weighted average exercise price of $1.61 and a weighted average remaining contractual life of years. Stock purchase warrants for the purchase of shares were exercisable at March 31, 2023 and the remaining outstanding stock purchase warrants will be exercisable in the second quarter of 2023.
At March 31, 2023, we did not have any unrecognized stock-based compensation expense related to our granted stock purchase warrants.
The entire disclosure for share-based payment arrangement.
Reference 1: http://www.xbrl.org/2003/role/exampleRef