ASC 718 requires compensation expense associated with share-based awards to be recognized over the requisite service period which, for the Company, is the period between the grant date and the date the award vests or becomes exercisable. Most of the awards granted by the Company (and still outstanding) vest ratably over one to four years. The Company recognizes all share-based awards under the straight-line attribution method, assuming that all granted awards will vest. Forfeitures are recognized in the periods when they occur.

Stock based compensation has been reported within expense line items on the consolidated statement of operations for the three months ended March 31, 2023 and 2022 as shown in the following table (in $000s):


	Three Months Ended
	March 31,
	2023		2022
General and administrative	$	279	$	252
Research and development		122	$	128
Stock-based compensation costs before income taxes	$	401	$	380

In May 2018, the Company’s stockholders approved the 2018 Equity Incentive Plan (the “2018 Plan”), under which Cyclacel may make equity incentive grants to its officers, employees, directors and consultants. The 2018 Plan replaced the 2015 Equity Incentive Plan (the “2015 Plan”). On April 28, 2023, the Board of Directors adopted a resolution approving, subject to approval by the Company’s stockholders, an amendment of the 2018 Equity Incentive Plan to increase the number of shares of Common Stock available for grant under the 2018 Plan by adding an additional 900,000 shares.

The 2018 Plan allows for various types of award grants, including stock options and restricted stock units.

As of March 31, 2023, the Company has reserved 142,158 shares of the Company’s common stock under the 2018 Plan for future issuances, 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.

In October 2020, the Inducement Equity Incentive Plan (the “Inducement Plan”), became effective. Under the Inducement Plan, Cyclacel may make equity incentive grants to new senior level Employees (persons to whom the Company may issue securities without stockholder approval). The Inducement Plan allows for the issuance of up to 200,000 shares of the Company’s common stock (or the equivalent of such number). As of March 31, 2023, 120,000 shares under the Inducement Plan have been issued, leaving a remaining reserve of 80,000 shares.

There were 11,000 options granted during the three months ended March 31, 2023. These options had a grant date fair value ranging between $0.50 - $0.73 per option. There were 265,000 options granted during the three months ended March 31, 2022. These options had a grant date fair value ranging between $2.62 - $2.90 per option. 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:



	Three months ended	Three months ended
	March 31, 2023	March 31, 2022
Expected term (years)	5	5
Risk free interest rate	3.660% – 4.160%	1.370% – 1.530%
Volatility	89% – 90%	93%
Expected dividend yield over expected term	0.00%	0.00%

There were no stock options exercised during each of the three months ended March 31, 2022 and 2023, respectively. The Company does not expect to be able to benefit from the deduction for stock option exercises that may occur because the company has tax loss carryforwards from prior periods that would be expected to offset any potential taxable income.


				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, 2022	1,610,590	$	5.85	8.34	$	—
Granted	11,000	$	0.79	—		—
Cancelled/forfeited	(17,762)	$	41.90	—		—
Options outstanding at March 31, 2023	1,603,828	$	5.41	8.20	$	—
Unvested at March 31, 2023	779,526	$	2.96	8.73	$	—
Vested and exercisable at March 31, 2023	824,302	$	7.73	7.70	$	—

The Company issued 257,000 restricted stock units during the three months ended March 31, 2023. These restricted stock units shall vest on the third anniversary of their date of grant, or earlier if certain defined clinical trial related performance targets are met. A three-year vesting assumption was applied to these restricted stock units as satisfaction of the performance conditions is not probable at this time. Each restricted stock unit was valued at $0.90 based on their fair value at the date of grant, which was equivalent to the market price of a share of the Company’s common stock on the date of grant.

The Company issued 118,665 restricted stock units during the year ended December 31, 2022. These restricted stock units will vest over a period of one year for grants to directors and three years for grants to employees. Each restricted stock unit was valued at $1.11 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 as of March 31, 2023 is as follows:


		Weighted		Weighted
		Average		Average
	Restricted	Grant Date		Remaining
	Stock Units	Value Per Share		Term
Restricted Stock Units outstanding at March 31, 2023	394,657	$	—	9.54 years
Unvested at March 31, 2023	377,248	$	0.99	9.64 years
Vested and exercisable at March 31, 2023	17,409	$	6.69	7.26 years