Rest of the answer
disclosed in the statement of stockholders’ equity and the compensation expense disclosed in the statement of operations. Also, the ASC 718 – Compensation-Stock Compensation disclosure requirement doesn’t require a tabular presentation. Therefore, Gryphon believes the current disclosures for the stock-based compensation are in compliance with ASC 718 – Compensation-stock compensation.
below paragraphs have been extracted from Note 10 – Stockholders’ Equity from Gryphon’s footnotes for the years ended
December 31, 2022 and 2021. At the end of each paragraph, we have explained how we determined the fair value for the underlying equity issuance.
“Additionally,
Gryphon agreed to sell 3,892,424 shares of Gryphon’s common stock, including the 1,000,000 shares repurchased, to Gryphon’s officers, directors, and seed stage advisors. As of February 2, 2021, Gryphon determined that the fair market value of a share of common stock was approximately $2.40. Therefore, the cash proceeds from the Investors were below the fair market value for the shares. The additional value was considered, by management, to be compensation to the Investors as they provided services to Gryphon. The Company recorded a compensation expense of $1,671,000 for the shares sold to the seed stage advisors totaling 696,262 shares and $7,655,000 for the shares sold to officers and directors, totaling 3,189,675 shares. The officers, directors, and seed stage advisors (“Investors”) purchased 6,487 shares of Gryphon’s common stock for total proceeds of approximately $16,000.” As disclosed in Note 10
– Stockholders’ Equity “Common Stock” fifth paragraph, the value was determined based on the share value of $2.40 received from Gryphon’s private placement on March 16, 2021.
“On
June 3, 2021, Gryphon granted 1,859,434 shares of common stock to one of its consultants as payment for services payable in 40 quarterly installments of 46,486 shares per quarter. On April 4, 2022, Gryphon terminated this contract. As of the termination date, there was earned and unvested compensation expense of approximately $3,154,000, which was reversed and credited to stock-based compensation expense.
For the year ended December 31, 2022, compensation expenses recognized amounted to $1,089,000.” As disclosed in Note 1 to Gryphon’s financial statements, Gryphon entered into an Agreement and Plan of Merger (“Merger Agreement”) with Sphere 3D Corp. (“Sphere
3D”). Based on the Merger Agreement each of Gryphon’s holders of an equity security, common or preferred, would be exchanged into common stock of Sphere 3D at a specified exchange ratio. As Sphere 3D was a publicly traded company, Gryphon used the closing price, as effected by the exchange ratio, of Sphere 3D as of the grant date to determine the fair value of approximately $8.501.
December 27, 2022, Gryphon issued 25,000 shares of common stock valued at $0.05 per share for the services of a board member. The shares’ fair value was $18,000.” As disclosed in Note 1 to Gryphon’s financial statements, Gryphon entered into an Agreement and Plan of Merger (“Merger Agreement”) with Sphere 3D Corp. (“Sphere 3D”). Based on the Merger Agreement each of Gryphon’s holders of an equity security, common or preferred, would be exchanged into common stock of Sphere 3D at a specified exchange ratio. As Sphere 3D was a publicly traded company, Gryphon used the closing price, as effected for the exchange ratio, of Sphere
3D as of the grant date to determine the fair value of approximately $0.74.
Restricted common stock awards
December 10, 2020, Gryphon entered into two separate independent director agreements with two individuals. The individuals will serve as directors of Gryphon for an initial one-year period. As compensation, each director was granted 75,000 shares of Gryphon’s common stock to vest over 18 months in four equal installments of 18,750 shares, per director, starting on January 1, 2021. The value of the shares on the issuance date was de minimis.
of December 31, 2021, a total of 75,000 shares were vested for the two directors for a total compensation expense recognized amounting to $330,000. During the year ended December 31, 2022, 18,750 shares for each of the two directors were vested for a total compensation expense recognized amounted to $30,000. As of December 31, 2022, a total of 150,000 shares were issued and vested for a total compensation expense recognized amounting to $360,000.” disclosed in Note 10 – Stockholders’ Equity “Common Stock” fifth paragraph, the value was determined based on the share value of $2.40 received from Gryphon’s private placement on March 16, 2021.
February 9, 2021, Gryphon entered into a consulting agreement with a consultant. As compensation, Gryphon granted 62,340 shares of common stock amounting to $150,000 as payment for advisory services. The shares shall vest over 24 months at 2,598 shares per month starting
February 9, 2021. On May 9, 2021, Gryphon and the consultant reached an agreement to modify and accelerate the vesting of all unvested shares to date totaling 54,548 restricted common stock awards at $6.68 per share. $131,000 and $233,000 was charged to deferred compensation and additional paid-in capital, respectively, for a total of $364,000 due to the modification.” As disclosed in Note 10 –
Stockholders’ Equity “Common Stock” fifth paragraph, the value was determined based on the share value of $2.40 received from Gryphon’s private placement on March 16, 2021.
March 10, 2021, Gryphon entered into a consulting agreement with a consultant. As compensation, Gryphon granted 92,000 shares of common stock amounting to $221,000 as payment for advisory services. The shares shall vest over 24 months at 3,833 shares per month starting
March 10, 2021. In June 2021, the consultant resigned and retained ownership of the remaining 76,667 unvested restricted common stock awards valued at $2.40 per share. $184,000 was charged to deferred compensation expenses at the time of resignation.” As disclosed in Note 10 – Stockholders’ Equity “Common Stock” fifth paragraph, the value was determined based on the share value of $2.40 received from Gryphon’s private placement on March 16, 2021.
March 21, 2021, Gryphon entered into an agreement with an individual to serve as Gryphon’s director for 24 months. As compensation, the director was granted 75,000 shares of Gryphon’s common stock to vest over 18 months in four equal installments of 18,750 shares, starting on April 1, 2021. The first installment of 18,750 shares was issued on April 1, 2021. The value of the shares on the issue date was $2.40 per share. On June 2, 2021, the director resigned and forfeited 56,250 shares of restricted common stock awards.”
As disclosed in Note 10 – Stockholders’ Equity “Common Stock” fifth paragraph, the value was determined based on the share value of $2.40 received from Gryphon’s private placement on March 16, 2021.
October 1, 2021, Gryphon entered into a consulting agreement with a consultant. As compensation, Gryphon granted 199,309 shares of common stock amounting to $6,206,000 as payment for advisory services. The shares shall vest over tranches of 25% increments, with the first tranche of shares vesting on October 31, 2021. The second, third, and fourth tranches of shares shall vest on December 31, 2021, March
31, 2022, and June 30, 2022, respectively. As of December 31, 2022, issued and vested shares amounted to 199,309. Compensation expenses for the year ended December 31, 2022, amounted to $1,804,000.” As disclosed in Note 1 to Gryphon’s financial statements,
Gryphon entered into an Agreement and Plan of Merger (“Merger Agreement”) with Sphere 3D Corp. (“Sphere 3D”).
Based on the Merger Agreement each of Gryphon’s holders of an equity security, common or preferred, would be exchanged into common stock of Sphere 3D at a specified exchange ratio. As Sphere 3D was a publicly traded company, Gryphon used the closing price, as effected for the exchange ratio, of Sphere 3D as of the grant date to determine the fair value of approximately $31.14.
October 20, 2021, Gryphon entered into an agreement with an individual to continue service to Gryphon. As compensation, the consultant was granted 10,000 shares of Gryphon’s common stock, and all of the Shares shall vest over a period of two (2) years in accordance with the following vesting schedule: 2,500 Shares will vest on the six-month anniversary of the Effective Date, 2,500 Shares will vest on the first-year anniversary of the Effective Date, 2,500 Shares will vest on the eighteen-month anniversary, and the 2,500 Shares will vest on the second-year anniversary of the Effective Date. As of December 31, 2022, issued and vested shares amounted to 5,000. Compensation expenses for the year ended December 31, 2022, amounted to $241,000 of which $44,000 was recorded as an accrued expense.” As disclosed in Note 1 to Gryphon’s financial statements, Gryphon entered into an Agreement and Plan of Merger (“Merger Agreement”) with Sphere 3D Corp. (“Sphere 3D”). Based on the Merger Agreement each of Gryphon’s holders of an equity security, common or preferred, would be exchanged into common stock of Sphere 3D at a specified exchange ratio. As Sphere 3D was a publicly traded company, Gryphon used the closing price, as effected for the exchange ratio, of Sphere 3D as of the grant date to determine the fair value of approximately $39.48.
October 22, 2021, Gryphon entered into an agreement with an individual to continue service to Gryphon. As compensation, the consultant was granted 5,000 shares of Gryphon’s common stock, and all of the Shares shall vest over a period of two (2) years in accordance with the following vesting schedule: 1,250 Shares will vest on the six-month anniversary of the Effective Date, 1,250 Shares will vest on the first-year anniversary of the Effective Date, 1,250 Shares will vest on the eighteen-month anniversary, and the 1,250 Shares will vest on the second-year anniversary of the Effective Date. As of December 31, 2022, issued and vested shares amounted to 2,500. Compensation expenses for the year ended December 31, 2022, amounted to $103,000 of which $19,000 was recorded as an accrued expense.” As disclosed in Note 1 to Gryphon’s financial statements, Gryphon entered into an Agreement and Plan of Merger (“Merger Agreement”) common or preferred, would be exchanged into common stock of Sphere 3D at a specified exchange ratio. As Sphere 3D was a publicly traded company, Gryphon used the closing price, as effected for the exchange ratio, of Sphere 3D as of the grant date to determine the fair value of approximately $33.90.
October 26, 2021, Gryphon entered into an agreement with an individual to continue service to Gryphon. As compensation, the consultant was granted 10,000 shares of Gryphon’s common stock, and all of the Shares shall vest over a period of two (2) years in accordance with the following vesting schedule: 2,500 Shares will vest on the six-month anniversary of the Effective Date, 2,500 Shares will vest on the first-year anniversary of the Effective Date, 2,500 Shares will vest on the eighteen-month anniversary, and the 2,500 Shares will vest on the second-year anniversary of the Effective Date. As of December 31, 2022, issued and vested shares amounted to 5,000. Compensation expenses for the year ended December 31, 2022, amounted to $206,000 of which $39,000 was recorded as an accrued expense.” As disclosed in Note 1 to Gryphon’s financial statements, Gryphon entered into an Agreement and Plan of Merger (“Merger Agreement”) common or preferred, would be exchanged into common stock of Sphere 3D at a specified exchange ratio. As Sphere 3D was a publicly traded company, Gryphon used the closing price, as effected for the exchange ratio, of Sphere 3D as of the grant date to determine the fair value of approximately $33.48.