NOTE 7 – STOCK OPTIONS

Stock Options Issued, Vested and Cancelled

During the twelve months ended December 31, 2024, the Company issued 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. Additionally, during the twelve months ended December 31, 2024, the Company experienced forfeitures of 21,399 stock options and stock options to purchase an aggregate of 63,331 shares of Common Stock, subject to time-based milestone vesting conditions, vested.

During the twelve months ended December 31, 2025, the Company issued stock options under the 2023 Plan to employees and Board members to purchase an aggregate of 1,534,525 shares of Common Stock with a strike price equal to $0.715 per share and a term of ten years. The stock options granted 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 $862,000, as calculated using the Black-Scholes pricing model with the following assumptions: volatility of 105.36%, discount rate of 3.61%, expected term of 5.0 years, and an exercise price of $0.715. Additionally, during the twelve months ended December 31, 2025, the Company experienced forfeitures of 30,716 stock options, and stock options to purchase an aggregate of 40,079 shares of Common Stock, subject to time-based milestone vesting conditions, vested.

Stock-Based Compensation

Total stock-based compensation related to the Company’s stock options was approximately $296,000 and $648,000 for the twelve months ended December 31, 2025, and 2024, respectively. For the twelve months ended December 31, 2025, the Company recognized approximately $287,000 of stock-based compensation related to its stock options within general and administrative expense, and approximately $9,000 within research and development expense on the consolidated statements of operations and comprehensive loss. For the twelve months ended December 31, 2024, the Company recognized approximately $490,000 of stock-based compensation related to its stock options within general and administrative expense, and approximately $158,000 within research and development expense on the consolidated statements of operations and comprehensive loss.

Stock option activity for the years ended December 31, 2025, and 2024 was as follows:

As of December 31, 2025, remaining unamortized stock-based compensation expense related to the stock options was $860,000.

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, 2025, and 2024 was $0.56 per option and $6.29 per option, respectively.