NOTE 7 – STOCK OPTIONS

Stock Options Issued, Vested and Cancelled

During the year ended December 31, 2024, the Company granted stock options under the 2023 Plan to employees, to purchase an aggregate of 104,433 shares of Common Stock with a strike price equal to $8.13 per share and a term of ten years. Of the stock options granted, stock options to purchase an aggregate of 37,433 shares of Common Stock were fully vested at issuance and the remaining stock options are subject to time-based vesting over a term ranging between one to three years. These stock options had a total fair value of approximately $849,000, as calculated using the Black-Scholes pricing model with the following assumptions: volatility of 88.41%, discount rate of 4.20%, expected term of 6.5 years, and an exercise price of $8.13. 

During the year ended December 31, 2024, stock options to purchase an aggregate of 16,500 shares of Common Stock with a strike price of $9.82 per share under our 2021 Plan were cancelled, and stock options to purchase an aggregate of 4,899 shares of Common Stock with a strike price of $8.13 per share under our 2023 Plan were cancelled.

During the year ended December 31, 2024, stock options to purchase an aggregate of 44,667 shares of Common Stock, subject to time-based milestone vesting conditions, vested.

During the year ended December 31, 2023, the Company issued stock options under the 2021 Plan to employees to purchase an aggregate of 44,000 shares of Common Stock with a strike price of $9.82 per share and a term of ten years. One-third of these options vest within one year of the issuance date and then the remaining stock options vest in equal quarterly installments over the remaining two years. These options had a total fair value of approximately $288,000, as calculated using the Black-Scholes model.

During the year ended December 31, 2023, stock options to purchase an aggregate of 10,000 shares of Common Stock under our 2021 Plan were cancelled with a strike price of $19.20 per share.

During the year ended December 31, 2023, stock options to purchase an aggregate of 44,667 shares of Common Stock, subject to time-based milestone vesting conditions, vested.

Stock-Based Compensation

For the years ended December 31, 2024 and 2023, total stock-based compensation expense related to the Company’s stock options was approximately $648,000 and approximately $520,000, respectively. For the year ended December 31, 2024, the Company recognized approximately $490,000 of stock-based compensation related to its options within general and administrative expense, and approximately $158,000 within research and development expense. For the year ended December 31, 2023, the Company recognized approximately $398,000 of stock-based compensation related to its options within general and administrative expense, and approximately $122,000 within research and development expense.

Stock option activity for the years ended December 31, 2024 and 2023 was as follows:

As of December 31, 2024, remaining unamortized stock-based compensation expense related to the stock options was $310,000.

The Company estimates the fair value of each stock option on the date of grant using the Black-Scholes option pricing model, which requires various assumptions including fair value of the underlying share, volatility, expected option life, risk-free interest rate and expected dividends. The fair value of the underlying share was based on the fair value on the grant date. The expected term was based on the expected exercise behavior of grantees. Expected volatility was calculated based on the volatilities of a peer group of companies. The risk-free rate of the option is based on the U.S. Treasury rate for the expected term of the option. The following weighted-average assumptions were used in the Black-Scholes calculations:

The weighted average grant date fair value of options granted during the years ended December 31, 2024 and 2023 was $6.29 per option and $6.67 per option, respectively.