Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

Stock-Based Compensation

9 Months Ended

Sep. 30, 2023

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 employees, directors, advisors and consultants. The Plan was amended at various dates by the Board of Directors to increase number of shares of common stock authorized to be issued

under the Plan to 3,838,750 as of September 30, 2023, and in June 2017 stockholders approved an amendment to extend the termination date of the Plan to January 1, 2026 and ratified and approved option grants issued after January 1, 2016 ("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 by the laws of descent and distribution. 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, 2023 was 191,193.

During the nine months ended September 30, 2023, we did not grant any options to purchase shares of common stock under the Amended Plan.

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 employees, directors, advisors and consultants. Under the 2022 Plan, 3,800,000 shares of our shares of our common stock are authorized 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. The number of shares remaining available for future issuance under the Plan as of September 30, 2023 was 3,025,000.

During the nine months ended September 30, 2023, we granted non-qualified options to purchase an aggregate of 575,000 shares of our common stock at exercise prices ranging between $0.88 - $1.10 per share to certain directors, officers and employees. These options have a vesting schedules of two or four years and expire in ten years. The fair value of the options issued in 2023 was $244,625. The weighted-average grant date fair value of stock options granted during 2023 was $0.43 per share.

Stock option activity for the nine months ended September 30, 2023 was as follows:


Common Stock Options	Number of Options	Exercise Price Per Share				Weighted Average Exercise Price		Weighted Average Remaining Life	Aggregate Intrinsic Value
Outstanding, December 31, 2022	3,204,297	$	0.71	$	10.33	$	1.61	7.30 years	$	882,074
Granted	575,000	$	0.88	$	1.10	$	0.93
Exercised	—
Canceled and forfeited	(44,800)					$	2.86
Outstanding, September 30, 2023	3,734,497	$	1.10	$	3.20	$	1.49	7.14 years	$	188,529
Exercisable, September 30, 2023	1,931,322					$	1.97		$	112,578
Vested and expected to vest, September 30, 2023	3,462,521	$	0.71	$	10.33	$	1.53		$	177,136

Consolidated stock-based compensation expense for the three and nine months ended September 30, 2023 and 2022 was $68,775 and $174,711 and $69,118 and $254,718, respectively. No tax benefit was recognized related to the stock-based compensation recorded during the period.

At September 30, 2023 the total compensation cost related to unvested stock option awards not yet recognized is $568,334 and this amount will be recognized over a weighted average period of 2.64 years