On August 5, 2014, the Company approved a stock option grant plan (the “2014 Equity Incentive Plan”) for employees, directors, and non-employee consultants, which provides for the issuance of options to purchase common stock. As of September 30, 2023 there

were 7,334,036 shares of common stock reserved for issuance under the 2014 Equity Incentive Plan, with 3,237,007 shares of common stock available for grant and 4,097,029 shares of common stock underlying outstanding grants.

The Company adopted the 2021 Omnibus Equity Incentive Plan (the “2021 Equity Incentive Plan”, and collectively with the 2014 Equity Incentive Plan, the “Equity Compensation Plans”), which reserved 11,000,000 shares of common stock for issuance. At of the beginning of each calendar year, the shares reserved for future issuance shall increase by two percent (2%) of the total number of shares of common stock issued and outstanding as of the end of the most recently completed fiscal year. As of September 30, 2023 there were 12,877,631 shares of common stock reserved for issuance under the 2021 Equity Incentive Plan, with 6,484,556 shares of common stock available for grant and 6,393,075 shares of common stock underlying outstanding grants.

The expected term of the stock options was estimated using the “simplified” method, as defined by the SEC’s Staff Accounting Bulletin No. 107, Share-Based Payment. The volatility assumption was determined by examining the historical volatilities for industry peer companies, as the Company does not have sufficient trading history for its common stock. The risk-free interest rate assumption is based on the U.S. Treasury instruments whose term was consistent with the expected term of the options. The dividend assumption is based on the Company’s history and expectation of dividend payouts. The Company has never paid dividends on its common stock and does not anticipate paying dividends on its common stock in the foreseeable future. Therefore, the Company has assumed no dividend yield for purposes of estimating the fair value of the options.

Stock option activity for employees and non-employees under the Equity Compensation Plans for the nine months ended September 30, 2023 was as follows:


	Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)		Aggregate Intrinsic Value
Outstanding options, December 31, 2022		7,095,462		$	1.99		5.79	$	109,891
Granted		2,911,750		$	0.57
Forfeited		(40,409	)	$	1.99
Exercised		(8,000	)	$	0.54
Expired		(137,574	)	$	2.06
Outstanding options, September 30, 2023		9,821,229		$	1.57		6.41	$	437,894
Options vested and exercisable, September 30, 2023		5,049,015		$	1.97		3.75	$	193,470

Total unrecognized compensation cost related to non-vested stock options as of September 30, 2023 was approximately $3.6 million and is expected to be recognized within future operating results over a weighted-average period of 3.14 years.

No options were granted during three months ended September 30, 2023 and the weighted average grant date fair value of options granted during the three months ended September 30, 2022 was $0.57 per share . During the three months ended September 30, 2023 and 2022, 619,104 and 108,611 options vested, respectively.

The weighted average grant date fair value of options granted during the nine months ended September 30, 2023 and 2022, was $0.41 per share and $0.78 per share, respectively. During the nine months ended September 30, 2023 and 2022, 924,715 and 314,380 options vested, respectively.

The estimated fair value of stock options granted to employees and consultants during the three and nine months ended September 30, 2023 and 2022, were calculated using the Black-Scholes option-pricing model using the following assumptions:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023	2022			2023			2022
Expected volatility	*	97.4		%	80.2 - 81.9		%	78.0 - 97.4		%
Weighted-average volatility	*		97.4	%		81.7	%		94.1	%
Expected dividends	*	—		%	—		%	—		%
Expected term (in years)	*	5.77 - 6.08			5.77 - 6.08			5.50 - 6.08
Risk-free rate	*	3.55 - 3.56		%	3.50 - 3.90		%	1.38 - 3.56		%

* No options were granted during the three months ended September 30, 2023.

Stock award activity for employees and non-employees under the Equity Compensation Plans for the nine months ended September 30, 2023 was as follows:


	Number of shares			Weighted Average Grant Date Fair Value
Unvested as of December 31, 2022		350,000		$	1.72
Granted		318,875		$	0.54
Vested		(106,250	)	$	1.72
Unvested as of September 30, 2023		562,625		$	1.04

At September 30, 2023, the Company had an aggregate of $551,650 of unrecognized equity-based compensation related to restricted stock units outstanding. During the three months ended September 30, 2023, 31,250 shares with a fair value of $44,325 vested. During the nine months ended September 30, 2023 106,250 shares with a fair value of $186,075 vested. As of September 30, 2023, the Company had 106,250 restricted stock units vested but not issued. The unrecognized expense for restricted stock units is expected to be recognized within future operating results over a weighted average period of 3.11 years.

Stock-based compensation expense for the three and nine months ended September 30, 2023 and 2022 was as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Research and development	$	155,596	$	165,607	$	469,821	$	683,646
General and administrative		483,650		412,596		1,417,020		1,362,018
Total	$	639,246	$	578,203	$	1,886,841	$	2,045,664