STOCK-BASED COMPENSATION

The 2015 Employee, Director and Consultant Equity Incentive Plan

Prior to the Cerulean/Private Daré stock purchase transaction, Private Daré maintained the 2015 Employee, Director and Consultant Equity Incentive Plan, or the 2015 Private Daré Plan. Upon closing of the Cerulean/Private Daré stock purchase transaction, the Company assumed the 2015 Private Daré Plan and each then outstanding award granted thereunder, which consisted of options and restricted stock. Based on the exchange ratio for the Cerulean/Private Daré stock purchase transaction and after giving effect to the reverse stock split effected in connection with the closing of that transaction, the outstanding options and restricted stock awards granted under the 2015 Private Daré Plan were replaced with options to purchase 10,149 shares of the Company’s common stock with a correspondingly adjusted exercise price, all of which were outstanding as of June 30, 2019, and 223,295 restricted shares of the Company’s common stock. Those options are fully vested and expire in December 2025.

No further awards may be granted under the 2015 Private Daré Plan following the closing of the Cerulean/Private Daré stock purchase transaction.

2014 Employee Stock Purchase Plan

The Company’s 2014 Employee Stock Purchase Plan, or the ESPP, became effective in April 2014, but no offering period has been initiated thereunder since January 2017 and there was no stock-based compensation related to the ESPP for the six months ended June 30, 2019 or June 30, 2018.

Amended and Restated 2014 Stock Incentive Plan

The Company maintains the Amended and Restated 2014 Plan, or the Amended 2014 Plan. There were 2,046,885 shares of common stock authorized for issuance under the Amended 2014 Plan when it was approved by the Company's stockholders in July 2018. The number of authorized shares increases annually on the first day of each fiscal year until, and including, the fiscal year ending December 31, 2024 by the least of (i) 2,000,000, (ii) 4% of the number of outstanding shares of common stock on such date, or (iii) an amount determined by the Company’s board of directors. On January 1, 2019, the number of authorized shares increased by 456,886 to 2,503,771, which increase represented 4% of the number of outstanding shares of common stock on such date.

Summary of Stock Option Activity

The table below summarizes stock option activity under the Amended 2014 Plan, and related information for the six months ended June 30, 2019. The exercise price of all options granted during the six months ended June 30, 2019 was equal to the market value of the Company’s common stock on the date of the grant. As of June 30, 2019, unamortized stock-based compensation expense of $1,348,159 will be amortized over a weighted average period of 2.9 years. At June 30, 2019, 497,032 shares of common stock were reserved for future issuance under the Amended 2014 Plan.



	Number of Shares		Weighted Average Exercise Price
Outstanding at December 31, 2018 (1)	1,635,790		$	11.08
Granted	698,000		0.79
Exercised	—		—
Canceled/forfeited	(316,832	)	24.55
Expired	(70	)	59.48
Outstanding at June 30, 2019 (unaudited) (1)	2,016,888		$	5.40
Exercisable at June 30, 2019 (unaudited)	427,702		$	21.83

(1)Includes 10,149 shares subject to options granted under the 2015 Private Daré Plan assumed in connection with the Cerulean/Private Daré stock purchase transaction.

Compensation Expense

Total stock-based compensation expense related to stock options granted to employees and directors recognized in the consolidated statement of operations is as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Research and development	$	26,996	$	—	$	51,699	$	—
General and administrative	84,355		9,423		157,620		18,547
Total	$	111,351	$	9,423	$	209,319	$	18,547

The assumptions used in the Black-Scholes option-pricing model for stock options granted to employees and to directors in respect of board services during the six months ended June 30, 2019 are as follows:



	Three Months Ended June 30, 2019	Six Months Ended June 30, 2019
Expected life in years	10.0	10.0
Risk-free interest rate	2.09%	2.58%
Expected volatility	123%	121%
Forfeiture rate	0.0%	0.0%
Dividend yield	0.0%	0.0%
Weighted-average fair value of options granted	$0.86	$0.75