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Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934

For the transition period from   ____________ to  ____________

Commission File Number: 001-12584

SYNTHETIC BIOLOGICS, INC.

(Exact name of Registrant as Specified in Its Charter)

Nevada

13-3808303

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

9605 Medical Center Drive, Suite 270

Rockville, MD

20850

(Address of Principal Executive Offices)

(Zip Code)

(301) 417-4364

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock

SYN

NYSE American

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes       No   ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes       No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer, “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

Accelerated Filer

Non-accelerated Filer

Smaller Reporting Company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨       No

As of November 3, 2021, the registrant had 132,042,538 shares of common stock, $0.001 par value per share, outstanding.

Table of Contents

SYNTHETIC BIOLOGICS, INC.

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In particular, statements contained in this Quarterly Report on Form 10-Q, including but not limited to, statements regarding the timing of our clinical trials, the development and commercialization of our pipeline products, the sufficiency of our cash, our ability to finance our operations and business initiatives and obtain funding for such activities and the timing of any such financing, our future results of operations and financial position, business strategy and plan prospects, or costs and objectives of management for future research, development or operations, are forward-looking statements. These forward-looking statements relate to our future plans, objectives, expectations and intentions and may be identified by words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “seeks,” “goals,” “estimates,” “predicts,” “potential” and “continue” or similar words. Readers are cautioned that these forward-looking statements are based on our current beliefs, expectations and assumptions and are subject to risks, uncertainties, and assumptions that are difficult to predict, including those identified below, under Part II, Item 1A. “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q, and those identified under Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 Form 10-K”) filed with the Securities and Exchange Commission (the “SEC”) on March 4, 2021. Therefore, actual results may differ materially and adversely from those expressed, projected or implied in any forward-looking statements. We undertake no obligation to revise or update any forward-looking statements for any reason.

NOTE REGARDING COMPANY REFERENCES

Throughout this Quarterly Report on Form 10-Q, “Synthetic Biologics,” the “Company,” “we,” “us” and “our” refer to Synthetic Biologics, Inc.

NOTE REGARDING TRADEMARKS

All trademarks, trade names and service marks appearing in this Quarterly Report on Form 10-Q are the property of their respective owners.

Table of Contents

SYNTHETIC BIOLOGICS, INC.

FORM 10-Q

TABLE OF CONTENTS

Page

PART I. FINANCIAL INFORMATION

3

Item 1.

Financial Statements (Unaudited)

3

 

Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020

3

Condensed Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2021 and 2020

4

Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the Nine Months ended September 30, 2021 and 2020

5

Condensed Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2021 and 2020

6

Notes to Condensed Consolidated Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

23

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

35

Item 4.

Controls and Procedures

35

PART II. OTHER INFORMATION

35

Item 1.

Legal Proceedings

35

Item 1A.

Risk Factors

35

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

39

Item 3.

Defaults Upon Senior Securities

39

Item 4.

Mine Safety Disclosures

40

Item 5.

Other Information

40

Item 6.

Exhibits

40

 

SIGNATURES

41

2

Table of Contents

PART I–FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

Synthetic Biologics, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands except share and par value amounts)

    

September 30, 2021

    

December 31, 2020

Assets

 

  

 

  

Current Assets

 

  

 

  

Cash and cash equivalents

$

72,135

$

6,227

Prepaid expenses and other current assets

 

1,422

 

1,707

Total Current Assets

 

73,557

 

7,934

Property and equipment, net

 

115

 

174

Right of use asset

 

1,426

 

279

Deposits and other assets

 

23

 

23

Total Assets

$

75,121

$

8,410

Liabilities and Stockholders' Equity (Deficit)

 

 

  

Current Liabilities:

 

 

  

Accounts payable

$

1,255

$

886

Accrued expenses

 

1,009

 

925

Accrued employee benefits

 

721

 

868

Operating lease liability

 

175

 

287

Total Current Liabilities

 

3,160

 

2,966

Lease liability - long term

 

1,401

 

186

Total Liabilities

 

4,561

 

3,152

Commitments and Contingencies

 

 

  

Series A Preferred Stock, $0.001 par value; 10,000,000 shares authorized; 0 and 120,000 issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

 

-

 

12,798

Stockholders' Equity (Deficit):

 

 

  

Series B Preferred Stock, $1,000 par value; 10,000,000 shares authorized, 0 issued and outstanding and 3,973 issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

 

-

 

2,477

Common stock, $0.001 par value; 200,000,000 shares authorized, 132,044,866 issued and 132,042,538 outstanding at September 30, 2021 and 29,252,253 issued and 29,249,925 outstanding at December 31, 2020

 

132

 

29

Additional paid-in capital

 

339,223

 

240,821

Accumulated deficit

 

(266,021)

 

(248,094)

Total Synthetic Biologics, Inc. and Subsidiaries Equity (Deficit)

 

73,334

 

(4,767)

Non-controlling interest

 

(2,774)

 

(2,773)

Total Stockholders' Equity (Deficit)

 

70,560

 

(7,540)

Total Liabilities and Stockholders' Equity (Deficit)

$

75,121

$

8,410

See accompanying notes to unaudited condensed consolidated financial statements.

3

Table of Contents

Synthetic Biologics, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In thousands, except share and per share amounts)

(Unaudited)

    

For the three months ended September 30, 

    

For the nine months ended September 30, 

2021

2020

2021

2020

Operating Costs and Expenses:

 

  

 

  

 

  

 

  

General and administrative

$

1,303

$

1,197

$

3,988

$

3,876

Research and development

 

1,972

 

914

 

5,021

 

4,152

Total Operating Costs and Expenses

 

3,275

 

2,111

 

9,009

 

8,028

Loss from Operations

 

(3,275)

 

(2,111)

 

(9,009)

 

(8,028)

Other Income:

Interest income

 

2

 

-

 

4

 

44

Total Other Income

 

2

 

-

 

4

 

44

Net Loss

 

(3,273)

 

(2,111)

 

(9,005)

 

(7,984)

Net Loss Attributable to Non-controlling Interest

 

-

 

(8)

 

(1)

 

(50)

Net Loss Attributable to Synthetic Biologics, Inc. and Subsidiaries

$

(3,273)

$

(2,103)

$

(9,004)

$

(7,934)

Series A Preferred Stock Dividends

-

(64)

(24)

(189)

Effect of Series A Preferred Stock price adjustment

-

-

(7,402)

-

Series B Preferred Stock Dividends

 

-

 

(519)

 

(1,496)

 

(1,315)

Net Loss Attributable to Common Stockholders

$

(3,273)

$

(2,686)

$

(17,926)

$

(9,438)

Net Loss Per Share - Basic and Dilutive

$

(0.02)

$

(0.14)

$

(0.15)

$

(0.52)

Weighted average number of shares outstanding during the period - Basic and Dilutive

 

132,042,538

 

19,398,339

 

118,448,633

 

18,302,585

See accompanying notes to unaudited condensed consolidated financial statements.

4

Table of Contents

Synthetic Biologics, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders Equity (Deficit)

(In thousands, except share and par value amounts)

Common Stock $0.001 Par Value

Series B Preferred

Accumulated

Non-Controlling

Total Stockholders’

    

Shares

    

Amount

    

Shares

    

Amount

    

APIC

    

Deficit

    

Interest

    

Deficit

Balance at December 31, 2020

 

29,249,925

$

29

 

3,973

$

2,477

$

240,821

$

(248,094)

$

(2,773)

$

(7,540)

Stock-based compensation

 

-

 

-

 

-

 

-

 

101

 

-

 

-

 

101

Stock issued under "at-the-market" offering

 

78,685,315

 

79

 

-

 

-

 

65,881

 

-

 

-

 

65,960

Warrants Exercised

 

11,655,747

 

12

 

-

 

-

 

8,030

 

-

 

-

 

8,042

Series A Preferred Stock Dividends

 

-

 

-

 

-

 

-

 

-

 

(24)

 

-

 

(24)

Effect of Series A Preferred Stock price adjustment

 

-

 

-

 

-

 

-

 

7,402

 

(7,402)

 

-

 

-

Conversion of Series A Preferred Stock to Common

 

8,996,768

 

9

 

-

 

-

 

12,813

 

-

 

-

 

12,822

Conversion of Series B Preferred Stock to Common

3,454,783

3

(3,973)

(2,477)

3,971

(1,497)

-

-

Net loss

-

-

-

-

-

(2,536)

-

(2,536)

Non-controlling interest

-

-

-

-

-

-

(1)

(1)

Balance at March 31, 2021

132,042,538

$

132

 

-

$

-

$

339,019

$

(259,553)

$

(2,774)

$

76,824

Stock-based compensation

-

-

-

-

102

-

-

102

Net loss

-

-

-

-

-

(3,195)

-

(3,195)

Balance at June 30, 2021

132,042,538

$

132

 

-

$

-

$

339,121

$

(262,748)

$

(2,774)

$

73,731

Stock-based compensation

-

-

-

-

102

-

-

102

Net loss

-

-

-

-

-

(3,273)

-

(3,273)

Balance at September 30, 2021

132,042,538

$

132

-

$

-

$

339,223

$

(266,021)

$

(2,774)

$

70,560

Common Stock $0.001 Par Value

Series B Preferred

Accumulated

Non-Controlling

Total Stockholders’

Shares

    

Amount

Shares

    

Amount

APIC

Equity

Interest

Deficit

Balance at December 31, 2019

16,806,430

$

17

7,638

$

4,761

$

232,580

$

(235,537)

$

(2,878)

$

(1,057)

Stock-based compensation

-

-

-

-

83

-

-

83

Series A Preferred Stock Dividends ($0.01 per share)

-

-

-

-

-

(62)

-

(62)

Issuance of SYN Biomics Stock

-

-

-

-

-

-

26

26

Conversion of Series B Preferred Stock to Common ($0.03 per share)

933,045

1

(1,073)

(669)

1,072

(404)

-

-

Net loss

-

-

-

-

-

(2,964)

-

(2,964)

Non-controlling interest

-

-

-

-

-

-

(26)

(26)

Balance at March 31, 2020

17,739,475

 

$

18

 

6,565

 

$

4,092

 

$

233,735

 

$

(238,967)

 

$

(2,878)

 

$

(4,000)

Stock-based compensation

-

-

-

-

86

-

-

86

Series A Preferred Stock Dividends ($0.01 per share)

-

-

-

-

-

(63)

-

(63)

Issuance of SYN Biomics Stock

-

-

-

-

-

-

10

10

Conversion of Series B Preferred Stock to Common ($0.03 per share)

904,349

1

(1,040)

(648)

1,039

(392)

-

-

Net loss

-

-

-

-

-

(2,867)

-

(2,867)

Non-controlling interest

-

-

-

-

-

-

(16)

(16)

Balance at June 30, 2020

 

18,643,824

 

$

19

 

5,525

 

$

3,444

 

$

234,860

 

$

(242,289)

 

$

(2,884)

 

$

(6,850)

Stock-based compensation

-

-

-

-

82

-

-

82

Series A Preferred Stock Dividends ($0.01 per share)

-

-

-

-

-

(64)

-

(64)

Issuance of SYN Biomics Stock

-

-

-

-

-

-

142

142

Conversion of Series B Preferred Stock to Common ($0.03 per share)

1,199,131

1

(1,379)

(860)

1,378

(519)

-

-

Net loss

-

-

-

-

-

(2,103)

-

(2,103)

Non-controlling interest

-

-

-

-

-

-

(16)

(8)

Balance at September 30, 2020

 

19,842,955

 

$

20

 

4,146

 

$

2,584

 

$

236,320

 

$

(244,975)

 

$

(2,750)

 

$

(8,801)

See accompanying notes to unaudited condensed consolidated financial statements.

5

Table of Contents

Synthetic Biologics, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

For the Nine Months Ended September 30,

    

2021

    

2020

Cash Flows from Operating Activities:

 

  

 

  

Net loss

$

(9,005)

$

(7,984)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

Stock-based compensation

 

305

 

251

Subsidiary stock issued to vendor

-

 

178

Depreciation

 

74

 

169

Changes in operating assets and liabilities:

 

 

Prepaid expenses and other current assets

 

285

 

724

Right of use asset

 

123

 

103

Accounts payable

 

368

 

(1,324)

Accrued expenses

 

85

 

(788)

Accrued employee benefits

 

(147)

 

(182)

Operating lease liability

 

(168)

 

(183)

Net Cash Used in Operating Activities

 

(8,080)

 

(9,036)

Cash Flows from Investing Activities

 

 

Purchase of property and equipment

(14)

(4)

Net Cash Used in Investing Activities

(14)

(4)

Cash Flows from Financing Activities

 

 

Proceeds from "at the market" stock issuance

 

65,960

 

-

Proceeds from issuance of common stock for warrant exercises

8,042

-

Net Cash Provided by Financing Activities

74,002

-

Net increase (decrease) in cash and cash equivalents

 

65,908

 

(9,040)

Cash and cash equivalents at the beginning of the period

 

6,227

 

15,045

Cash and cash equivalents at the end of the period

$

72,135

$

6,005

Noncash Financing Activities:

 

 

Effect of Series A Preferred Stock price adjustment

$

7,402

$

-

Right of use asset from operating lease

$

1,270

$

-

Conversion of Series B Preferred Stock

$

2,477

$

2,177

Deemed dividends for accretion of Series B Preferred Stock discount

$

1,496

$

1,315

In-kind dividends paid in preferred stock

$

24

$

189

See accompanying notes to unaudited condensed consolidated financial statements.

6

Table of Contents

Synthetic Biologics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Organization, Nature of Operations and Basis of Presentation

Description of Business

Synthetic Biologics, Inc. (the “Company” or “Synthetic Biologics”) is a diversified clinical-stage company developing therapeutics designed to prevent and treat gastrointestinal (GI) diseases in areas of high unmet need. The Company’s lead clinical development candidates are: (1) SYN-004 (ribaxamase) which is designed to degrade certain commonly used intravenous (IV) beta-lactam antibiotics within the gastrointestinal (GI) tract to prevent (a) microbiome damage, (b) Clostridioides difficile infection (CDI), (c) overgrowth of pathogenic organisms, (d) the emergence of antimicrobial resistance (AMR) and (e) acute graft-versus-host-disease (aGVHD) in allogeneic hematopoietic cell transplant (HCT) recipients, and (2) SYN-020, a recombinant oral formulation of the enzyme intestinal alkaline phosphatase (IAP) produced under Current Good Manufacturing Practice (cGMP) conditions and intended to treat both local GI and systemic diseases.

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for complete financial statements. The accompanying condensed consolidated financial statements include all adjustments, comprised of normal recurring adjustments, considered necessary by management to fairly state the Company’s results of operations, financial position and cash flows. The operating results for the interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2020 Form 10-K.

The condensed consolidated financial statements are prepared in conformity with U.S. GAAP, which requires the use of estimates, judgments and assumptions that affect the amounts of assets and liabilities at the reporting date and the amounts of revenue and expenses in the periods presented. The Company believes that the accounting estimates employed are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in making estimates, actual results may differ from the original estimates, requiring adjustments to these balances in future periods.

Recent Accounting Pronouncements and Developments

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). This ASU amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity’s own equity and improves and amends the related earnings per share guidance for both Subtopics. The ASU will be effective for annual reporting periods after December 15, 2023 and interim periods within those annual periods and early adoption is permitted in annual reporting periods ending after December 15, 2020. The Company is currently assessing the impact of ASU 2020-06 on its consolidated financial statements.

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Table of Contents

Synthetic Biologics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

1. Organization, Nature of Operations and Basis of Presentation – (continued)

Impairment of Long-Lived Assets

Long-lived assets include property, equipment and right-of-use assets. In accordance with ASC 360, Property, Plant and Equipment (“ASC 360”), management reviews the Company’s long-lived assets for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. The Company determines the extent to which an asset may be impaired based upon its expectation of the asset’s future usability as well as whether there is reasonable assurance that the future cash flows associated with the asset will be in excess of its carrying amount. If the total of the expected undiscounted future cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and the carrying value of the asset. During the three months ended March 31, 2020, the Company identified a new strain of coronavirus originating in Wuhan, China (the “COVID-19” outbreak) as a triggering event and performed a qualitative assessment of the fair value of its long-lived assets. The results from this analysis determined that it is still more likely than not that the fair value of its long-lived assets remain higher than the carrying value of these assets. As a result, no impairment charges were recorded during the three and nine months ended September 30, 2021 and 2020.

2. Fair Value of Financial Instruments

Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement, defines fair value as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is determined based upon assumptions that market participants would use in pricing an asset or liability. Fair value measurements are rated on a three-tier hierarchy as follows:

Level 1 inputs: Quoted prices (unadjusted) for identical assets or liabilities in active markets;
Level 2 inputs: Inputs, other than quoted prices, included in Level 1 that are observable either directly or indirectly; and
Level 3 inputs: Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions.

In many cases, a valuation technique used to measure fair value includes inputs from multiple levels of the fair value hierarchy described above. The lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy.

The carrying amounts of the Company’s short-term financial instruments, including cash and cash equivalents, other current assets, accounts payable and accrued liabilities approximate fair value due to the relatively short period to maturity for these instruments.

8

Table of Contents

Synthetic Biologics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

3. Selected Balance Sheet Information

Prepaid expenses and other current assets (in thousands)

September 30, 

December 31, 

    

2021

    

2020

Prepaid clinical research organizations

$

1,182

$

470

Prepaid consulting, subscriptions and other expenses

157

90

Prepaid insurances

83

639

Stock sales receivable

 

-

 

469

Prepaid manufacturing expenses

 

-

 

39

Total

$

1,422

$

1,707

Prepaid clinical research organizations (“CROs”) expense is classified as a current asset. The Company makes payments to the CROs based on agreed upon terms that include payments in advance of study services.

Property and equipment, net (in thousands)

    

September 30, 

December 31, 

2021

    

2020

Computers and office equipment

$

827

$

813

Leasehold improvements

 

94

 

439

Software

 

11

 

11

 

932

 

1,263

Less: accumulated depreciation and amortization

 

(817)

 

(1,089)

Total

$

115

$

174

Accrued expenses (in thousands)

    

September 30, 

December 31, 

2021

    

2020

Accrued clinical consulting services

$

756

$

700

Accrued vendor payments

 

253

 

225

Total

$

1,009

$

925

Accrued employee benefits (in thousands)

    

September 30, 

December 31, 

2021

    

2020

Accrued bonus expense

$

543

$

724

Accrued vacation expense

 

178

 

144

Total

$

721

$

868

9

Table of Contents

Synthetic Biologics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

4. Stock-Based Compensation

Stock Incentive Plans

On March 20, 2007, the Company’s Board of Directors approved the 2007 Stock Incentive Plan (the “2007 Stock Plan”) for the issuance of up to 71,429 shares of common stock to be granted through incentive stock options, nonqualified stock options, stock appreciation rights, dividend equivalent rights, restricted stock, restricted stock units and other stock-based awards to officers, other employees, directors and consultants of the Company and its subsidiaries. This plan was approved by the stockholders on November 2, 2007. The exercise price of stock options under the 2007 Stock Plan was determined by the compensation committee of the Board of Directors and could be equal to or greater than the fair market value of the Company’s common stock on the date the option is granted. The total number of shares of stock with respect to which stock options and stock appreciation rights may be granted to any one employee of the Company or a subsidiary during any one-year period under the 2007 stock plan shall not exceed 7,143. Options become exercisable over various periods from the date of grant and generally expire ten years after the grant date. As of September 30, 2021, there were 5,145 options issued and outstanding under the 2007 Stock Plan.

On November 2, 2010, the Board of Directors and stockholders adopted the 2010 Stock Incentive Plan (“2010 Stock Plan”) for the issuance of up to 85,714 shares of common stock to be granted through incentive stock options, nonqualified stock options, stock appreciation rights, dividend equivalent rights, restricted stock, restricted stock units and other stock-based awards to officers, other employees, directors and consultants of the Company and its subsidiaries. From time to time the number of shares authorized for options was increased such that 4,000,000 million were authorized as of September 30, 2021. The exercise price of stock options under the 2010 Stock Plan is determined by the compensation committee of the Board of Directors and may be equal to or greater than the fair market value of the Company’s common stock on the date the option is granted. Options become exercisable over various periods from the date of grant and expire between five and ten years after the grant date. As of September 30, 2021, the