11. Stock-Based Compensation

Stock based compensation has been reported within expense line items on the consolidated statement of operations for the years ended 2018 and 2019 as shown in the following table (in thousands):


	Year Ended
	December 31,
	2018		2019
General and administrative	$	88		166
Research and development		243		300
Stock-based compensation costs before income taxes	$	331		466

2018 Plan

In May 2018, the Company’s stockholders approved the 2018 Equity Incentive Plan, or 2018 Plan, under which Cyclacel may make equity incentive grants to its officers, employees, directors and consultants. The 2018 Plan replaces the 2015 Equity Incentive Plan, or 2015 Plan.

The 2018 Plan allows for the issuance of up to 1,500,000 shares of the Company’s common stock pursuant to various types of award grants, including stock options and restricted stock units. In addition, the 2018 Plan allows up to 709,889 additional shares to be issued if awards outstanding under the 2018 Plan are cancelled or expire on or after the date of the Company’s 2018 annual meeting of stockholders.

As of December 31, 2019, the Company has reserved 208,789 shares of the Company’s common stock under the 2018 Plan, including shares that were available under the 2015 Plan and carried forward to the 2018 Plan. Stock option awards granted under the Company’s equity incentive plans have a maximum life of 10 years and generally vest over a one to four-year period from the date of grant.

There were 306,304 options granted during the year ended December 31, 2018. Exactly 174,272 of these options are performance based, which would have vested upon the fulfillment of certain clinical conditions. The Company determined that the satisfaction of one criterion, the commencement of the HEM study by December 31, 2018, occurred as of December 31, 2018, but that the other vesting criteria related to these awards were not probable as of December 31, 2018. As such, the Company recognized compensation cost for these grants under the expectation that 25% of these awards (the portion associated with the HEM study) will vest. Subsequently, in 2019, the Company recognized compensation cost for an additional 25% of these awards once satisfaction of other vesting criteria became probable. There is no possibility of the remaining performance conditions being met.

There were 1,550,270 options granted during the year ended December 31, 2019.

The weighted average grant-date fair values of options granted during the years ended December 31, 2018 and 2019 were $1.25 and $0.58, respectively.

As of December 31, 2019, the total remaining unrecognized compensation cost related to the non-vested stock options with service conditions amounted to approximately $0.6 million, which will be amortized over the weighted-average remaining requisite service period of 1.86 years.

During the years ended December 31, 2018 and 2019, the Company did not settle any equity instruments with cash.

There were no stock option exercises during the years ended 2018 and 2019. No income tax benefits were recorded for the years ended December 31, 2018 and 2019 because the Company has accumulated net operating losses for tax purposes and is not likely to benefit from any deductions associated with exercises of granted option awards.

Outstanding Options

A summary of the share option activity and related information is as follows:


				Weighted
		Weighted		Average
	Number of	Average		Remaining	Aggregate
	Options	Exercise		Contractual	Intrinsic
	Outstanding	Price Per Share		Term (Years)	Value ($000)
Options outstanding at December 31, 2017	535,617	$	11.10	8.23	$	—
Granted	306,304	$	1.51
Exercised	—
Cancelled/forfeited	(10,310)	$	82.38
Options outstanding at December 31, 2018	831,611	$	6.68	8.13	$	—
Granted	1,550,270	$	0.71
Exercised	—
Cancelled/forfeited	(376,319)	$	3.23
Options outstanding at December 31, 2019	2,005,562	$	2.72	—	$	—

Unvested at December 31, 2019	1,154,273	$	0.74	9.06	$	—

Vested and exercisable at December 31, 2019	851,289	$	5.40	8.02	$	4

The fair value of the stock options granted is calculated using the Black-Scholes option-pricing model as prescribed by ASC 718 using the following assumptions:



	Year Ended	Year Ended
	December 31, 2018	December 31, 2019
Expected term (years)	6	5 – 6
Risk free interest rate	2.730% – 2.855%	2.105 – 2.610%
Volatility	105% – 107%	103 – 110%
Expected dividend yield over expected term	0.00%	0.00%
Resulting weighted average grant date fair value	$1.25	$0.71

Restricted Stock Units

The Company issued 280,000 restricted stock units to employees during the year ended December 31, 2019, the vesting of which is dependent upon the fulfillment of certain clinical conditions. The Company determined that the satisfaction of the clinical conditions was not probable at December 31, 2019 and, as a result, recorded no compensation expense related to restricted stock units for the year ended December 31, 2019. The restricted stock units were valued based on their fair value at the date of grant, which is equivalent to the market price of a share of the Company’s common stock. Summarized information for restricted stock units’ activity for the year ended December 31, 2019 is as follows:


	Restricted Stock Units		Weighted Average Grant Date Value Per Share
Restricted Stock Units outstanding at December 31, 2019		280,000	$	0.53
Unvested at December 31, 2019		280,000	$	0.53
Vested and exercisable at December 31, 2019		0	$	0.00