In March 2017, the Board of Directors adopted, and the stockholders approved, the 2017 Stock Option and Incentive Plan (the “2017 Plan”), that became effective in April 2017. The 2017 Plan provides for the issuance of incentive awards up to 4,600,000 shares of common stock to officers, employees, consultants and directors, less the number of shares subject to issued and outstanding awards under the 2011 Plan that were assumed in the Merger. The 2017 Plan also provides that the number of shares reserved for issuance thereunder will be increased annually on the first day of each year beginning in 2018 by four percent (4%) of the shares of common stock outstanding on the last day of the immediately preceding year or such smaller increase as determined by the Board of Directors. In January 2021, the Board of Directors approved a 4% increase adding 1,890,052 shares to the 2017 Plan, which was effective as of January 1, 2021.

The options granted generally vest over 48 months. Under the 2017 Plan, options vest in installments of 25% at the one-year anniversary and thereafter in 36 equal monthly installments beginning on the 1^st of the month after the one-year anniversary date, subject to the employee’s continuous service with the Company. In May 2019, the Company issued a special retention grant of options to purchase an aggregate of 2,419,050 shares of common stock which vest in installments of 50% at June 30, 2020 and 50% at June 30, 2021, subject to the employee’s continuous service with the Company. The options generally expire ten years after the date of grant. The fair value of the options at the date of grant is recognized as an expense over the requisite service period. During the three months ended June 30, 2021 and 2020, option awards to purchase an aggregate of 216,535 and 260,720 shares of common stock were granted, respectively, and option awards to purchase an aggregate of 287,963 and 962,720 shares of common stock were granted in the six months ended June 30, 2021 and 2020, respectively.

As of June 30, 2021 and December 31, 2020, 5,324,959 and 3,634,905 shares were reserved for issuance under the 2017 Plan, respectively.

The following table summarizes the stock option activity during the six months ended June 30, 2021:

	Stock Option Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in Years)		Aggregate Intrinsic Value
Outstanding, January 1, 2021		4,642,240		$	1.81		7.00	$	358,209
Granted		287,963			1.48
Exercised		(92,355	)		0.87
Expired/cancelled		(208,208	)		2.02
Outstanding, June 30, 2021		4,629,640		$	1.80		6.58	$	2,196,969
Expected to vest, June 30, 2021		873,594		$	1.65		1.50	$	578,185
Options exercisable, June 30, 2021		3,756,046		$	1.83		6.23	$	1,618,784

Aggregate intrinsic value represents the estimated fair value of the Company’s common stock at in excess of the weighted average exercise price multiplied by the number of options outstanding or exercisable. As of June 30, 2021, there was $804,852 of unrecognized compensation cost related to stock options, which is expected to be recognized over a weighted average period of 1.50 years.

During the three months ended June 30, 2021, the Company’s non-employee directors were awarded 42,016 shares of the Company’s common stock at a fair market value of $1.69 for the shares. For the six months ended June 30, 2021, 83,410 shares of the Company’s common stock were issued to non-employee directors. For the six months ended June 30, 2021, the market value per share ranged

from $1.03 to $2.05. The awards were in the form of Unrestricted Stock Awards (as defined in the 2017 Plan) equal to the quarterly cash retainer payable to such directors under the Company’s non-employee director compensation policy currently in effect divided by the average closing price of the Company’s common stock on the Nasdaq Capital Market during the respective quarter end.

The Company recognized the following compensation cost related to employee and non-employee stock-based compensation activity for the periods presented:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Research and development	$	105,157	$	176,110	$	213,172	$	371,899
General and administrative		452,066		132,231		689,807		263,909
Total	$	557,223	$	308,341	$	902,979	$	635,808

The total expense related to stock options recorded in research and development expense for the three and six months ended June 30, 2021 was $105,157 and $213,172, respectively. The total expense recorded in general and administrative expense for the three and six months ended June 30, 2021 was $452,066 and $689,807, respectively, and consisted of $71,007 and $124,405 from stock awards and $381,059 and $565,402 from stock options, respectively.

The Company uses the Black-Scholes option pricing model to determine the estimated fair value for stock-based awards. Option pricing and models require the input of various assumptions, including the option’s expected life, expected dividend yield, price volatility and risk-free interest rate of the underlying stock. Accordingly, the weighted-average fair value of the options granted during the six months ended June 30, 2021 and 2020 was $0.90 and $0.43 per share, respectively. The calculation was based on the following assumptions.

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Expected term (years)		5.00		5.50		5.08	5.92
Risk-free interest rate	0.85%		0.38%		0.77%		0.53%
Expected volatility	74.57%		74.82%		74.47%		69.36%
Expected dividend yield	0.00%		0.00%		0.00%		0.00%