In June 2013, the Company adopted the 2013 Equity Incentive Plan, or 2013 Plan, under which the Company granted equity-based awards, including stock options, stock appreciation rights, restricted stock, and restricted stock units to individuals who were then employees, officers, non-employee directors or consultants of the Company or its subsidiaries. A total of 8,700,000 shares of common stock were reserved for issuance under the 2013 Plan. In addition, “returning shares” that may become available from time to time were added back to the plan. “Returning shares” included shares that were subject to outstanding awards granted under the Company's prior 2004 Equity Incentive Plan that expired or terminated prior to exercise or settlement, were forfeited because of the failure to vest, were repurchased, or were withheld to satisfy tax withholding or purchase price obligations in connection with such awards. Although the Company no longer grants equity awards under the 2013 Plan, all outstanding stock awards granted under the 2013 Plan will continue to be subject to the terms and conditions as set forth in the agreements evidencing such stock awards and the terms of the 2013 Plan.

In June 2023, the Company adopted the 2023 Equity Incentive Plan, or 2023 Plan, under which the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units and other awards to individuals who are then employees, officers, non-employee directors or consultants of the Company or its subsidiaries. The 2023 Plan is the successor to the 2013 Plan. The number of shares of common stock that may be issued under the 2023 Plan is equal to the sum of (a) shares subject to awards granted under the 2013 Plan that were outstanding upon expiration of the 2013 Plan and are subsequently forfeited, expire or lapse unexercised or unsettled and shares issued pursuant to awards granted under the 2013 Plan that were outstanding upon expiration of the 2013 Plan and are subsequently forfeited to or reacquired by the Company and (b) shares reserved under the 2013 Plan that were not issued or subject to outstanding awards under the 2013 Plan upon expiration of the 2013 Plan. While a maximum of 9,934,567 shares may become available for issuance under the 2023 Plan from the 2013 Plan, since this figure assumes that all awards outstanding under the 2013 Plan upon expiration of the 2013 Plan will be forfeited, the Company expects the actual number of shares added to the 2023 Plan to be less. In general, to the extent that awards under the 2023 Plan are forfeited, cancelled or expire for any reason before being exercised or settled in full, the shares subject to such awards will again become available for issuance under the 2023 Plan. If stock appreciation rights are exercised or restricted stock units are settled, then only the number of shares (if any) actually issued to the participant will reduce the number of shares available under the 2023 Plan. If restricted shares or shares issued upon exercise of options are reacquired by the Company pursuant to a forfeiture provision, repurchase right or for any other reason, then such shares shall again become available for issuance under the 2023 Plan. Shares withheld to pay the exercise price of options or satisfy tax withholding obligations related to an award shall again become available for issuance under the 2023 Plan. Further, to the extent an award is settled in cash rather than shares, the cash settlement shall not reduce the number of shares available for issuance under the 2023 Plan.

As of December 31, 2024, 2,893,673 shares remain available for future grant under the 2023 Plan.

Certain of the employee stock options granted contain performance conditions, the vesting of which is based on a determination made by the board of directors or its compensation committee as to the achievement of certain corporate objectives at the end of the performance period. The grant date of such awards is the date on which the board of directors or its compensation committee makes its determination. For periods preceding the grant date, the expense related to these awards is measured based on their fair value at each reporting date. The estimated fair value of the performance awards granted and the resulting expense is based upon a certain level of achievement of the corporate objectives and other assumptions in determining fair value. The amount of expense ultimately recognized upon the grant date at completion of the performance period could change from the estimate as a result of various factors, including the level of achievement of the corporate objectives, changes in the assumptions used in the Black-Scholes model in determining fair value or fluctuations in the Company’s stock price during the performance period. As of December 31, 2024, there were a total of 809,000 shares underlying performance options that were subject to vesting based on achievement of corporate objectives for 2024. In January 2025, the compensation committee and the board of directors determined that the performance milestones were achieved at various levels, and accordingly 783,000 of these options vested and the remaining shares were forfeited.

Options granted under the 2023 Plan and the 2013 Plan have terms of ten years from the date of grant unless earlier terminated and generally vest over a one to four-year period.

The exercise price of all options granted during the years ended December 31, 2024 and 2023 was equal to the market value of the Company’s common stock on the date of grant.

A summary of stock option activity and related information for the years ended December 31, 2024 and 2023 is as follows:


	Number of Option Shares			Weighted Average Exercise Price
Outstanding at December 31, 2022		7,985,250		$	5.55
Granted		788,683		$	2.39
Exercised		—		$	-
Cancelled		(992,184	)	$	3.27
Outstanding at December 31, 2023		7,781,749		$	5.52
Granted		1,100,000		$	1.51
Exercised		—		$	-
Cancelled		(1,840,855	)	$	4.64
Outstanding at December 31, 2024		7,040,894		$	5.12
Exercisable at December 31, 2024		6,180,894		$	5.62


	Number of Option Shares			Weighted Average Grant-Date Fair Value
Non-vested at December 31, 2023		773,517		$	1.61
Granted		1,100,000		$	0.99
Vested		(583,412	)	$	1.56
Forfeitures		(430,105	)	$	1.32
Non-vested at December 31, 2024		860,000		$	1.00

Options outstanding and exercisable at December 31, 2024 had a weighted average contractual life of 4.59 years and 3.97 years, respectively.

As of December 31, 2024 and 2023, the total intrinsic value of options outstanding was $0.5 million and $0, respectively. Total intrinsic value of options exercisable was $25,840 and $0 as of December 31, 2024 and 2023, respectively. Total fair value of options vested was $0.9 million and $0.9 million for the years ended December 31, 2024 and 2023, respectively.

The estimated fair value of each stock option award was determined on the date of grant using the Black-Scholes option valuation model with the following weighted-average assumptions for stock option grants:


	Year Ended December 31,
	2024			2023
Stock Options
Risk-free interest rate		4.38	%		3.83	%
Expected volatility of common stock		72.25	%		75.28	%
Dividend yield		0.00	%		0.00	%
Expected option term (in years)		4.62			4.68

The risk-free interest rate assumption is based upon observed interest rates appropriate for the expected term of employee stock options. The expected volatility is based on the historical volatility of the Company’s common stock. The Company has not paid nor does the Company anticipate paying dividends on its common stock in the foreseeable future. The expected term of employee stock options is based on the simplified method as provided by the authoritative guidance on stock compensation, as the historical stock option exercise experience does not provide a reasonable basis to estimate the expected term.

The weighted-average fair value of each stock option granted during the years ended December 31, 2024 and 2023, estimated as of the grant date using the Black-Scholes option valuation model, was $0.99 per option and $1.59 per option, respectively.

Stock-based compensation expense for stock option awards are reflected in total operating expenses for each respective year. The following table summarizes stock-based compensation expense for the years ended December 31, 2024 and 2023:


	December 31,
	2024		2023
Research, development and patents	$	443,564	$	240,268
General and administrative		748,176		470,442
Total stock-based compensation expense	$	1,191,740	$	710,710

As of December 31, 2024, there was $0.1 million of unamortized compensation cost related to unvested stock option awards which is expected to be recognized over a remaining weighted-average vesting period of 0.12 years, on a straight-line basis.