NOTE 8 – SHARE-BASED PAYMENTS TO VENDORS

While the Company was a limited liability company in its pre-IPO phase of corporate development, the Company granted Class A Membership Interests to certain vendors in the ordinary course of business in exchange for consulting services relating to research and development activities and investor relations. The Company granted 0 and 28,967 Class A Membership Interests for the three months ended September 30, 2021 and 2020, respectively, and 30,145 and 135,845 Class A Membership Interests for the nine months ended September 30, 2021 and 2020, respectively. The fair value of the Class A Membership Interests granted was equal to the value of the most recent private placement, the fair value at grant date. The Company recognized the expense in the same period and in the same manner as if the Company had paid cash for the services. The Company recorded general and administrative expenses and research and development expenses for vendor equity grants in the amounts of $37,500 and $0 for the three months ended September 30, 2021 and $78,125 and $53,520 for the three months ended September 30, 2020, respectively; $188,875 and $21,596 for the nine months ended September 30, 2021 and $278,000 and $195,716 for the nine months ended September 30, 2020.

In October 2019, the Company granted a total of 150,000 restricted Class A Membership Interests to three consultants for investor related consulting services performed in 2019 and for services which are ongoing. These Class A Membership Interests vest on the second anniversary of the grant date, and are subject to accelerated vesting provisions upon a change of control of the Company. The fair value of the Class A Membership Interests granted is equal to the value of the most recent private placement, the fair value at grant date. The Company is recognizing the expense on a straight-line basis over the vesting period. The Company recorded general and administrative expenses of $37,500 for each of the three months ended September 30, 2021 and 2020, and $112,500 for each of the nine months ended September 30, 2021 and 2020 with an unrecognized expense of $12,500 at September 30, 2021.

During 2020, the Company issued 10,077 warrants to an investment banker for services relating to the October 2020 private placement. Each warrant vested upon issuance is exercisable for 10 years from the date of issuance and has an exercise price of $3.25 per Class A Membership Interest. The Company used the Black Scholes model to calculate the value of the warrants. The inputs utilized in the calculation were as follows: ten-year term, 0.32% risk-free rate, stock price at grant date of $3.25, and a 94% volatility. The Company reduced the proceeds of the respective equity issuance by $23,177 relating to the warrant issuance.

ACURX PHARMACEUTICALS, INC

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

In the second quarter of 2021, the Company entered into a number of agreements with vendors pursuant to which the Company will make future grants of a total of 175,000 shares of common stock, 100,000 options and cash payments in the amount of $343,500. These contracts have terms which range from six months to three years. The cash payments will be expensed over the service period and the equity component expensed consistent with the contractual vesting. These shares and options were granted in the third quarter pursuant to the Plan.

In the third quarter of 2021, the Company granted vendors a total of 35,695 shares of common stock pursuant to the Plan. The Company recorded selling, general, and administrative expense of $208,270 for the nine months ended September 30, 2021.