7. Share-Based Compensation

In April 2020, the Company adopted the 2020 Omnibus Equity Incentive Plan (the “Plan”). On January 1, 2024, the total number of shares authorized under the Plan increased to 122,780. There were 14,480 shares available for issuance under the Plan as of December 31, 2023. The Plan increases the amount of shares issuable under the Plan by four percent of the outstanding shares of common stock at each January 1, each year. The Plan permits the granting of share-based awards, including stock options, restricted stock units and awards, stock appreciation rights and other types of awards as deemed appropriate, in each case, in accordance with the terms of the Plan. The terms of the awards are determined by the Company’s Board of Directors.

Sonnet BioTherapeutics Holdings, Inc.

Notes to Unaudited Interim Consolidated Financial Statements

Restricted stock units and awards

Any unvested restricted stock units (“RSUs”) or restricted stock awards (“RSAs”) will be forfeited upon termination of services. The fair value of an RSU or RSA is equal to the fair market value of the Company’s common stock on the date of grant. RSU and RSA expense is amortized straight-line over the vesting period.

The Company recorded share-based compensation expense associated with the RSUs and RSAs in its accompanying unaudited interim consolidated statements of operations as follows:

 Schedule of Share-based Compensation Expense

The following table summarizes RSU activity under the Plan:

 Schedule of Restricted Stock Units Activity

During the three months ended December 31, 2023, there were no RSUs granted, vested or forfeited. As of December 31, 2023, there is no remaining unrecognized compensation expense as the RSUs vested on January 1, 2024.

On January 1, 2024, 73,440 RSUs were granted, 100% of which vest on January 1, 2025.

The following table summarizes RSA activity under the Plan:

Schedule of Restricted Stock Awards Activity

During the three months ended December 31, 2023, there were no RSAs granted, vested or forfeited. As of December 31, 2023, there is no remaining unrecognized compensation expense as the RSAs vested on January 1, 2024.

On January 1, 2024, 63,819 RSAs were granted, 100% of which vest on January 1, 2025.