NOTE 7 – STOCK OPTIONS

Stock Options Issued, Vested and Cancelled

During the three months ended September 30, 2023, no stock options were issued. During the three months ended September 30, 2023, stock options to purchase an aggregate of 279,167 shares of Common Stock, subject to time-based milestone vesting conditions, vested.

During the nine months ended September 30, 2023, the Company issued stock options under the 2021 Plan to employees, to purchase an aggregate of 880,000 shares of Common Stock with a strike price equal to $0.491 per share and a term of ten years. One-third of these options vest on the one-year anniversary of the employee hire 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 pricing model with a volatility assumption of 68.64%.

During the nine months ended September 30, 2023, stock options to purchase an aggregate of 629,168 shares of Common Stock, subject to time-based milestone vesting conditions, vested. During the nine months ended September 30, 2023, stock options to purchase an aggregate of 200,000 shares of Common Stock were cancelled.

Stock-Based Compensation

For the three months ended September 30, 2023 and 2022, total stock-based compensation expense related to the Company’s stock options was approximately $102,000 and approximately $111,000, respectively. For the three months ended September 30, 2023, the Company recognized approximately $81,000 of stock-based compensation related to its options within selling, general and administrative expense, and approximately $21,000 within research and development expense. For the three months ended September 30, 2022, all stock-based compensation expense was recorded within selling, general and administrative expense.

For the nine months ended September 30, 2023 and 2022, total stock-based compensation expense related to the Company’s stock options was approximately $451,000 and approximately $307,000, respectively. For the nine months ended September 30, 2023, the Company recognized approximately $349,000 of stock-based compensation related to its options within selling, general and administrative expense, and approximately $102,000 within research and development expense. For the nine months ended September 30, 2022, all stock-based compensation expense was recorded within selling, general and administrative expense.

The following table summarizes the activity related to the Company’s stock options for the nine months ended September 30, 2023:

As of September 30, 2023, the remaining unamortized stock-based compensation expense related to the stock options was approximately $479,000.