Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

Stock-Based Compensation

9 Months Ended

Sep. 30, 2022

We adopted a 2006 Stock Option and Incentive Plan, or the Plan, under which the Board of Directors may grant incentive or non-qualified stock options and stock grants to key employees, directors, advisors and consultants. The Plan was amended at various dates by the Board of Directors to increase the reserved shares of common stock issuable under the Amended Plan to 3,838,750 as of September 30, 2022, and in June 2017 stockholders approved an amendment to extend the termination date of the Plan to January 1, 2026 and ratified all of our option grants issued after January 1, 2016 (the "Amended Plan").

Stock options vest based upon the terms within the individual option grants, with an acceleration of the unvested portion of such options upon a change in control event, as defined in the Amended Plan. The options are not transferable except by will or domestic relations order. The option price per share under the Amended Plan cannot be less than the fair market value of the underlying shares on the date of the grant. The number of shares remaining available for future issuance under the Amended Plan as of September 30, 2022 was 210,793.

During the nine months ended September 30, 2022, we granted nonqualified options to purchase an aggregate of 761,650 shares of common stock at a weighted-average price of $1.11 per share to certain officers and employees. These options have a vesting schedule of two years and expire in ten years. The fair value of the options issued in 2022 was $321,910. The weighted-average grant date fair value of stock options granted during 2022 was $0.42 per share.

We adopted the 2022 Stock Incentive Plan (the "2022 Plan"), under which the Board of Directors may grant incentive or non-qualified stock options and stock grants to key employees, directors, advisors and consultants. We have reserved 3,800,000 shares of our common stock for issuance pursuant to awards under the 2022 Plan. The adoption of the 2022 Plan was approved by our shareholders on June 9, 2022.

Under the 2022 Plan, stock options vest based upon the terms within the individual option grants, with an acceleration of the unvested portion of such options upon a change in control event, as defined in the 2022 Plan. The options are not transferable except by will or domestic relations order. The option price per share under the 2022 Plan cannot be less than the fair market value of the underlying shares on the date of the grant.

During the nine months ended September 30, 2022, we granted nonqualified options to purchase an aggregate of 175,000 shares of common stock at a weighted-average price of $1.14 per share to certain directors and a consultant. These options have a vesting schedule of four years and expire in ten years. The fair value of the options issued in 2022 was $84,600. The weighted-average grant date fair value of stock options granted during 2022 was $0.48 per share. The number of shares remaining available for future issuance under the 2022 Plan as of September 30, 2022 was 3,650,000.

Stock option activity for the nine months ended September 30, 2022 was as follows:


Common Stock Options	Number of Options	Exercise Price Per Share	Weighted Average Exercise Price		Weighted Average Remaining Life	Aggregate Intrinsic Value
December 31, 2021	2,386,842	$0.71-$10.33	$	1.81	7.56 years	$	697,935
Granted	936,650	$1.10-$1.20	$	1.11
Exercised	—
Canceled and forfeited	(242,795)	$0.71-$6.74	$	1.37
Outstanding, September 30, 2022	3,080,697	$0.71-$10.33	$	1.63	7.44 years	$	310,073
Exercisable, September 30, 2022	1,366,947		$	2.36		$	157,123
Vested and expected to vest, September 30, 2022	2,823,635		$	1.68		$	287,131

Consolidated stock-based compensation expense for the three and nine months ended September 30, 2022 and 2021 was $69,118 and $254,718, and $56,889 and $150,655, respectively. No tax benefit was recognized related to the stock-based compensation recorded during the period.

At September 30, 2022 the total compensation cost related to unvested stock option awards not yet recognized is $529,087 and this amount will be recognized over a weighted average period of 1.61 years