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, 2024 and 2023 as shown in the following table (in $000s):


	Three Months Ended
	March 31,
	2024		2023
General and administrative	$	149	$	279
Research and development		54		122
Stock-based compensation costs	$	203	$	401

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”).

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

On June 13, 2023, the Company’s stockholders approved an additional 60,000 shares of common stock that may be issued under the 2018 Plan. As of March 31, 2024, the Company has reserved 9,213 shares of the Company’s common stock under the 2018 Plan for future issuances. 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 13,333 shares of the Company’s common stock (or the equivalent of such number). As of March 31, 2024, 8,000 shares under the Inducement Plan have been issued, leaving a remaining reserve of 5,333 shares.

There were 12,500 options granted during the quarter ended March 31, 2024, all issued under the 2018 Plan. These options had a grant date fair value of $1.77 per option. There were 733 options granted during the three months ended March 31, 2023. These options had a grant date fair value ranging between $7.56-$10.98 per option.

All of the options granted during the quarter ended March 31, 2024 shall vest six months from their date of grant. All of the options granted in the quarter ended March 31, 2023 will vest in monthly installments over three years from the date of grant.

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, 2024	March 31, 2023
Expected term (years)	6	5
Risk free interest rate	3.995%	3.660% – 4.160%
Volatility	93%	89% – 90%
Expected dividend yield over expected term	0.00%	0.00%
Resulting weighted average grant date fair value	$1.77	$8.49

There were no stock options exercised during each of the three months ended March 31, 2024 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.

As of March 31, 2024, the total remaining unrecognized compensation cost related to the non-vested stock options with service conditions amounted to approximately $0.7 million, which will be amortized over the weighted-average remaining requisite service period of 1.1 years.


				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, 2023	142,796	$	50.20	7.96	$	—
Granted	12,500	$	2.28	—	$	—
Exercised	—	$	—	—	$	—
Cancelled/forfeited	(6,718)	$	21.78	—	$	—
Options outstanding at March 31, 2024	148,578	$	47.46	7.25	$	—

Unvested at March 31, 2024	57,232	$	15.10	9.06	$	—
Vested and exercisable at March 31, 2024	91,346	$	67.73	6.12	$	—

The Company issued 12,500 restricted stock units during the three months ended March 31, 2024. These restricted stock units vest monthly over a six-month service period. These restricted stock units were valued at $2.28 at the date of grant, which was equivalent to the market price of a share of the Company’s common stock on that date.

Exactly 17,133 restricted stock units issued in January 2023 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 $13.50 at the date of grant, which was equivalent to the market price of a share of the Company’s common stock on that date. During 2023, 300 of these restricted stock units were forfeited as the recipient voluntarily terminated employment with the Company. As of March 31, 2024, an additional 2,080 of these restricted stock units have been forfeited due to the holders termination of employment with the Company.

Summarized information for restricted stock units as of March 31, 2024 is as follows:


		Weighted		Weighted
		Average		Average
	Restricted	Grant Date		Remaining
	Stock Units	Value Per Share		Term
Restricted Stock Units outstanding at December 31, 2023	34,498	$	16.26	8.96 years
Granted	12,500		2.28
Cancelled/forfeited	(2,080)		13.50
Restricted Stock Units outstanding at March 31, 2024	44,918	$	12.50	9.00 years

Unvested at March 31, 2024	32,682	$	9.67	9.17 years

Vested at March 31, 2024	12,236	$	20.06	8.56 years