SUMMARY COMPENSATION TABLE
The following table sets forth compensation information for fiscal 2024 and 2023 for each of our named executive officers.
| Salary · Stock Awards · Option Awards · Non-Equity Incentive Plan Compensation · All Other Compensation · Total |
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| Name and Principal Position | Year | | ($) | | ($) | ($)(1) | ($) | | ($) | | ($) | |
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| James E. Besser, | | 2024 | | — | | — | | 130,480 | | — | | — | 130,480 |
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| Chief Executive Officer (2) | | 2023 | | — | | — | | — | | — | | — | — |
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| Paul DiPerna, | | 2024 | | 300,000 | | — | | 182,792 | | — | | — | 482,792 |
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| President, President Chief Financial Officer, Treasurer and Chairman | | 2023 | | 300,000 | | — | | 189,413 | | — | | — | 489,413 |
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| Kevin Schmid, | | 2024 | | 250,000 | | — | | 160,510 | | — | | — | 410,510 |
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| Chief Operating Officer (4) | | 2023 | | 176,121 | | — | | 701,945 | | — | | — | 878,066 |
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| (1) | Award amounts reflect the aggregate grant date fair value with respect to awards granted, as determined pursuant to Financial Accounting Standards Board (FASB) ASC Topic 718. The assumptions used to calculate the aggregate grant date fair value of option awards are set forth in the notes to the consolidated financial statements included in item 8 of this Report. These amounts do not reflect actual compensation earned or to be earned by our named executive officers. |
| (2) | Mr. Besser was appointed our chief executive officer in February 2022, and he is paid de minimis annual compensation of $1.00. |
| (4) | Mr. Schmid was appointed our chief operating officer in July 2022 at an annual base salary of $250,000. |
Outstanding Equity Awards at Fiscal Year-End
The following table shows certain information regarding outstanding equity awards held by our named executive officers as of March 31, 2024.
| Name · Number of Securities Underlying Unexercised Options (#) Exercisable · Number of Securities Underlying Unexercised Options (#) Unexercisable · Option Exercise Price($) · Option Expiration Date(1) |
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| James E. Besser | 135,136 | (2) | — | | 1.11 | 10/2/2033 |
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| Paul DiPerna | 1,155 | (3) | — | | 9.48 | 6/1/2030 |
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| 1,169 | (4) | — | | 9.48 | 5/1/2030 |
| 1,170 | (5) | — | | 9.48 | 4/1/2030 |
| 1,660 | (6) | — | | 7.44 | 3/2/2030 |
| 1,745 | (7) | — | | 7.44 | 2/1/2030 |
| 1,727 | (8) | — | | 7.44 | 1/1/2030 |
| 1,809 | (9) | — | | 6.75 | 12/1/2029 |
| 1,811 | (10) | — | | 6.75 | 11/1/2029 |
| 1,721 | (11) | — | | 6.75 | 10/1/2029 |
| 1,662 | (12) | — | | 6.75 | 9/15/2029 |
| 1,666 | (13) | — | | 6.75 | 8/15/2029 |
| 1,660 | (14) | — | | 6.75 | 7/15/2029 |
| 1,650 | (15) | — | | 6.75 | 6/15/2029 |
| 1,677 | (16) | — | | 6.75 | 5/15/2029 |
| 1,624 | (17) | — | | 6.75 | 4/15/2029 |
| 1,694 | (18) | — | | 6.75 | 3/15/2029 |
| 1,641 | (19) | — | | 6.75 | 2/15/2029 |
| 1,603 | (20) | — | | 6.75 | 1/15/2029 |
| 1,775 | (21) | — | | 6.75 | 12/15/2028 |
| 1,775 | (22) | — | | 6.75 | 11/15/2028 |
| 6,005 | (23) | — | | 1.98 | 10/15/2028 |
| 6,005 | (24) | — | | 1.98 | 09/15/2028 |
| 6,005 | (25) | — | | 1.98 | 08/15/2028 |
| 100,000 | (26) | — | | 6.75 | 11/25/2029 |
| 28,750 | (27) | 16,250 | (27) | 4.24 | 4/14/2032 |
| — | | 50,000 | (28) | 1.65 | 4/3/2033 |
| 90,091 | (29) | — | | 1.11 | 10/2/2033 |
| — | | 45,046 | (30) | 1.11 | 10/2/2033 |
| Kevin Schmid | 97,222 | (31) | 77,778 | (31) | 4.24 | 7/21/2032 |
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| — | | 100,000 | (32) | 1.50 | 4/3/2033 |
| 37,538 | (33) | — | | 1.11 | 10/2/2033 |
| — | | 18,769 | (34) | 1.11 | 10/2/2033 |
| (1) | The standard option term is ten years, but all of the options expire automatically unless exercised within 90 days after the cessation of service as an employee, director or consultant. |
| (2) | The option was granted on October 2, 2023, and the shares subject to this option vested in January 2024 upon the Company’s 510(k) premarket submission to the FDA for its initial pump product. |
| (3) | The option was granted on June 1, 2020, and the shares subject to this option were fully vested on the grant date. |
| (4) | The option was granted on May 1, 2020, and the shares subject to this option were fully vested on the grant date. |
| (5) | The option was granted on April 1, 2020, and the shares subject to this option were fully vested on the grant date. |
| (6) | The option was granted on March 2, 2020, and the shares subject to this option were fully vested on the grant date. |
| (7) | The option was granted on February 1,2020, and the shares subject to this option were fully vested on the grant date. |
| (8) | The option was granted on January 1, 2020, and the shares subject to this option were fully vested on the grant date. |
| (9) | The option was granted on December 1, 2019, and the shares subject to this option were fully vested on the grant date. |
| (10) | The option was granted on November 1, 2019, and the shares subject to this option were fully vested on the grant date. |
| (11) | The option was granted on October 1, 2019, and the shares subject to this option were fully vested on the grant date. |
| (12) | The option was granted on September 15, 2019, and the shares subject to this option were fully vested on the grant date. |
| (13) | The option was granted on August 15, 2019, and the shares subject to this option were fully vested on the grant date. |
| (14) | The option was granted on July 15, 2019, and the shares subject to this option were fully vested on the grant date. |
| (15) | The option was granted on June 15, 2019, and the shares subject to this option were fully vested on the grant date. |
| (16) | The option was granted on May 15, 2019, and the shares subject to this option were fully vested on the grant date. |
| (17) | The option was granted on April 15, 2019, and the shares subject to this option were fully vested on the grant date. |
| (18) | The option was granted on March 15, 2019, and the shares subject to this option were fully vested on the grant date. |
| (19) | The option was granted on February 15, 2019, and the shares subject to this option were fully vested on the grant date. |
| (20) | The option was granted on January 15, 2019, and the shares subject to this option were fully vested on the grant date. |
| (21) | The option was granted on December 15, 2018, and the shares subject to this option were fully vested on the grant date. |
| (22) | The option was granted on November 15, 2018, and the shares subject to this option were fully vested on the grant date. |
| (23) | The option was granted on October 15, 2018, and the shares subject to this option were fully vested on the grant date. |
| (24) | The option was granted on September 15, 2018, and the shares subject to this option were fully vested on the grant date. |
| (25) | The option was granted on August 15, 2018, and the shares subject to this option were fully vested on the grant date. |
| (26) | The option was granted on November 25, 2019, and the shares subject to this option vested monthly over three years commencing January 1, 2020, subject to continued service as an employee, director or consultant. |
| (27) | The option was granted on April 14, 2022, and the shares subject to this option vest: i) one-third on the annual anniversary of the grant date and ii) the remaining two-thirds monthly over the next two years, subject to continued service as an employee, director or consultant |
| (28) | The option was granted on April 3, 2023, and the shares subject to this option vest: i) one-third on the annual anniversary of the grant date and ii) the remaining two-thirds monthly over the next two years subject to continued service as an employee, director or consultant. |
| (29) | The option was granted on October 2, 2023, and the shares subject to this option vested in January 2024 upon the Company’s 510(k) premarket submission to the U.S. Food and Drug Administration (“FDA”) for its initial pump product. |
| (30) | The option was granted on October 2, 2023, and the shares subject to this option vest if the Company receives notification of FDA clearance of the 510(k) premarket submission on or before August 1, 2024, subject to continued service as an employee, director or consultant. |
| (31) | The option was granted on July 21, 2022, and the shares subject to this option vest: i) one-third on the annual anniversary of the grant date and ii) the remaining two-thirds monthly over the next two years subject to continued service as an employee, director or consultant. |
| (32) | The option was granted on April 3, 2023, and the shares subject to this option vest: i) one-third on the annual anniversary of the grant date and ii) the remaining two-thirds vest over the next two years subject to continued service as an employee, director or consultant. |
| (33) | The option was granted on October 2, 2023, and the shares subject to this option vested in January 2024 upon the Company’s 510(k) premarket submission to the FDA for its initial pump product. |
| (34) | The option was granted on October 2, 2023, and the shares subject to this option vest if the Company receives notification of FDA clearance of the 510(k) premarket submission on or before August 1, 2024, subject to continued service as an employee, director or consultant. |
Employment Agreements
We have entered into our standard form of employment, confidential information and invention assignment agreement with each of our named executive officers. We also have entered into agreements to indemnify our directors and executive officers, in addition to the indemnification provided for in our articles of incorporation and bylaws. These agreements, among other things, provide for indemnification of our directors and certain executive officers for many expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred by any such person in any action or proceeding, including any action by or in the right of the Company, arising out of such person’s services as a director or executive officer of ours, any subsidiary of ours or any other company or enterprise to which such person provided services at our request.
The DiPerna Employment and Related Agreements
We entered into an employment agreement dated August 1, 2018, with Mr. DiPerna pursuant to which Mr. DiPerna is employed by us as our president. Mr. DiPerna’s employment agreement had an initial two-year term and automatically renews for additional one-year terms. Pursuant to such agreement, we agreed to pay Mr. DiPerna: i) an annual salary of $200,000 in cash, ii) $100,000 per year in fully-vested stock options granted monthly at an exercise price determined by our board of directors in its sole discretion and iii) an annual bonus of $300,000, payable at the discretion of our board of directors, either in shares or in cash. If the board chooses to pay the bonus in shares, such shares will be valued at a price determined by our board of directors. Pursuant to such employment agreement (i) if (a) we terminate Mr. DiPerna’s employment without cause or he resigns with good reason, we will pay Mr. DiPerna a lump sum of $200,000, and (b) we terminate Mr. DiPerna’s employment for cause, we are not obligated to make any severance payment and Mr. DiPerna will receive only his base compensation through the last day of his employment, (ii) upon Mr. DiPerna’s death or disability, he will receive his base compensation through the last day of his employment and will remain eligible for all applicable benefits relative to death or disability pursuant to any plans that we have in place at such time, and (iii) upon a change of control (as defined in the employment agreement), Mr. DiPerna will be paid a lump sum of $100,000 within sixty days of the time at which such change of control takes place.
In May 2020, we amended our employment agreement with Mr. DiPerna to provide that in the event of a change in control:
| ● | within 60 days of the date the change in control occurs, Mr. DiPerna shall be paid by us or our successor in interest a lump sum cash payment equal to 12 months of Mr. DiPerna’s then annual Base Compensation (as defined in the employment agreement); and |
| ● | immediately prior to such change of control, any unvested stock options or other unvested securities of ours issued to Mr. DiPerna shall automatically accelerate and immediately become fully vested and exercisable. |
In June 2020, our board of directors approved an amendment to the employment agreement to provide that Mr. DiPerna’s base salary would be paid entirely in cash commencing July 1, 2020. The payment of the additional cash component of Mr. DiPerna’s annual base salary ($8,333.33 per month) was initially be deferred (the Deferred Salary) and accrue for Mr. DiPerna’s benefit until we have received $5,000,000 of cumulative gross proceeds of financing, at which time the Deferred Salary shall be paid to Mr. DiPerna and the salary deferrals will cease. The salary deferrals ceased and the Deferred Salary was paid to Mr. DiPerna in May 2021. In August 2021, Mr. DiPerna resigned as our chief executive officer, and he continues to serve as our president, chief financial officer, treasurer and chairman of our board of directors.
If a change of control occurred on March 31, 2024, under his employment agreement, Mr. DiPerna would be entitled to the following:
| ● | payment of a lump sum of $300,000 within 60 days of the time at which such change of control takes place. |
| ● | accelerated vesting of 111,296 shares of common stock under unvested stock options. The value of the shares subject to accelerated vesting is calculated as the intrinsic value per share multiplied by the number of shares that would become fully vested upon a change of control. The intrinsic value per share would be calculated as the excess of the closing price of the common stock of $1.85 on the Nasdaq Capital Market on March 28, 2024 over the exercise price of the option. As of March 31, 2024, the intrinsic value of the shares subject to accelerated vesting was approximately $67,000. |
In connection with our acquisition of Quasuras, we entered into an Intellectual Property Transfer Agreement dated as of July 24, 2017, with Quasuras and Mr. DiPerna, pursuant to which Mr. DiPerna transferred to us all intellectual property rights owned directly and/or indirectly by him related to our business. Separately, we agreed to pay Mr. DiPerna, as part of his compensation for services to be performed for us, pursuant to a royalty agreement, certain fees based upon future sales, if any, of our potential product subject to a maximum $10,000,000 cap on the aggregate amount of fees that Mr. DiPerna could earn from such arrangement.
The Schmid Offer Letter
Pursuant to an offer letter with the Company (the “Offer Letter”), Mr. Schmid shall receive an annual salary of $250,000 (the “Schmid Base Salary”) for his services as our chief operating officer. Additionally, he is eligible for an annual discretionary target incentive bonus of up to 50% of his Base Salary. In connection with his appointment, Mr. Schmid was granted a stock option to purchase 175,000 shares of our common stock. The stock option vests over a three-year period with one-third of the shares subject to the stock option vesting on the one-year anniversary of the grant date and the remaining shares vesting monthly thereafter, subject to Mr. Schmid’s continuous service with us. In the event of termination of his employment by us other than for cause or good reason (as defined in the Offer Letter), Mr. Schmid will receive an amount equal to six months of his then-current base salary as a severance payment.
James Besser
As compensation for his services as our chief executive officer, Mr. Besser is paid de minimis compensation of $1.00 per year.
Director Compensation
In the first quarter of fiscal 2022, our board of directors approved our outside (non-employee) director compensation plan (the Director Plan). Pursuant to the Director Plan, outside directors are paid the following annual retainers:
| ● | $25,000 for service as a member of the board of directors; and |
| ● | $5,000 for service as chair of a committee of the board of directors. |
The annual retainers are paid in quarterly installments in either cash, options to purchase shares of our common stock or in shares of our common stock, as directed by each director based on an annual election.
In addition, under the Director Plan, each director receives an annual service equity award of $100,000 paid in quarterly installments in either options to purchase shares of our common stock or shares of our common stock, as directed by each director based on an annual election. In July 2022, the Board amended the Director Plan to provide that a minimum price of $10.00 per share of common stock would be used to calculate the number of shares subject to options or share awards.
In addition, upon appointment to our board of directors, we award our non-employee directors an equity award under our Amended 2017 Equity Incentive Plan (the 2017 Plan), and such awards vest over three years.
The following table summarizes the compensation earned by our non-employee directors in fiscal 2024:
| Fee Compensation | Restricted Stock Awards | Option Awards | All Other Compensation | Total |
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| Name | ($) | ($)(1)(2) | ($)(2)(3) | ($)(2)(4) | ($) |
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| Duane DeSisto | 22,170 | 227,500 | — | 12,103 | 261,773 |
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| William Febbo(5) | 7,500 | — | — | 2,328 | 9,828 |
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| Steven Felsher | — | — | 36,312 | 4,377 | 40,689 |
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| Morgan Frank | — | — | 45,390 | — | 45,390 |
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| Philip Sheibley | 30,000 | — | — | 14,550 | 60,795 |
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| Carmen Volkart | — | — | 36,312 | 3,658 | 39,970 |
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| Ellen O’Connor Vos | 25,000 | — | 36,312 | — | 42,562 |
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| (1) | Mr. DeSisto was appointed to our board of directors in July 2023, and, upon his appointment, was granted a restricted stock unit (the “DeSisto RSU”) for 250,000 shares of our common stock. As of March 31, 2024, 187,499 shares of our common stock remained unvested under the DeSisto RSU. |
| (2) | Award amounts reflect the aggregate grant date fair value with respect to awards granted, as determined pursuant to FASB ASC Topic 718. The assumptions used to calculate the aggregate grant date fair value of option awards are set forth in the notes to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K. These amounts do not reflect actual compensation earned or to be earned by our directors. |
| (3) | As of March 31, 2024, our non-employee directors each held outstanding options to purchase the following number of shares of our common stock: Steven Felsher, 98,084; Morgan Frank, 177,458; Philip Sheibley, 16,667; Carmen Volkart; 150,558, Ellen O’Connor Vos, 166,020. |
| (4) | Represents stock awards under the Director Plan; we calculated the estimated fair value of the stock awards issued to Messrs. DeSisto, Felsher and Sheibley and Ms. Volkart using the closing price per share of our common stock on the day prior to the grant date in accordance with the Director Plan. |
| (5) | Mr. Febbo resigned from our board of directors in July 2023. |
