Note 8. Stock Option Plans and Warrants to Purchase Common Stock

Stock Option Plans

The Amended and Restated 2005 Equity Incentive Plan (“2005 Plan”) was replaced by the 2015 Plan, which was approved in June 2015. No securities are available for future issuance under the 2005 Plan. As of December 31, 2024, there are 5,770,122 shares currently available for grants under the 2015 Plan. The plan is divided into four separate equity programs:

1)the Discretionary Option Grant Program, under which eligible persons may, at the discretion of the Plan Administrator, be granted options to purchase shares of common stock,
2)the Salary Investment Option Grant Program, under which eligible employees may elect to have a portion of their base salary invested each year in options to purchase shares of common stock,
3)the Automatic Option Grant Program, under which eligible nonemployee Board members will automatically receive options at periodic intervals to purchase shares of common stock, and
4)the Director Fee Option Grant Program, under which non-employee Board members may elect to have all, or any portion, of their annual retainer fee otherwise payable in cash applied to a special option grant.

Shares available for grant under the 2015 Plan were as follows:

Shares available for grant at January 1, 2024

    

5,943,590

Options granted

 

(173,740)

Options forfeited

 

272

Options exercised

Shares available for grant at December 31, 2024

 

5,770,122

Activity under the 2005 Plan and the 2015 Plan for the years ended December 31, 2024 and 2023:

    

    

    

Weighted

Average

Exercise

    

Options

    

Price

Balance outstanding at December 31, 2022

 

11,946

$

435.32

Granted

 

45,715

 

10.45

Forfeited

 

(1,052)

 

533.80

Cancelled

Exercised

Balance outstanding at December 31, 2023

 

56,609

$

90.58

Granted

 

173,740

 

3.35

Forfeited

 

(430)

 

1,549.28

Cancelled

Exercised

 

 

Balance outstanding at December 31, 2024

 

229,919

$

21.94

As of December 31, 2024, there were 72,985 options exercisable with a weighted average exercise price of $59.19 and a weighted average remaining contractual term of 8.92 years. As of December 31, 2024, there were 229,919 options outstanding with a weighted average remaining term of 9.54 years. Options outstanding as of December 31, 2024 had no intrinsic value.

The Company awarded 173,740 and 45,715 stock options during the years ended December 31, 2024 and 2023, respectively, which had a weighted average grant date fair value per share of $2.90 and $8.05, respectively. The weighted-average exercise price, by price range, for outstanding options to purchase common stock at December 31, 2024 was:

    

Weighted

    

    

    

    

Average

Remaining

Contractual

Outstanding

Exercisable

Price Range

    

Life in Years

    

Options

    

Options

$3.31 - $10.78

 

9.74

 

218,268

 

61,868

$129.60 - $640.80

 

5.83

 

11,382

 

10,848

$1,776.00- $3,624.00

1.05

269

269

Total

 

9.54

 

229,919

 

72,985

The Company’s share-based compensation expense for the years ended December 31, 2024 and 2023 was recognized as follows:

Share-based compensation

    

2024

    

2023

Research and development

$

131,917

$

150,466

General and administrative

 

197,898

 

219,716

Total

$

329,815

$

370,182

At December 31, 2024, the total compensation cost for stock options not yet recognized was approximately $596,000 and will be expensed over the next three years.

Warrants to Purchase Common Stock

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

    

    

    

Weighted

Average

Exercise

    

Warrants

    

Price

Balance at December 31, 2022

 

42

$

468.00

Granted

 

673,455

 

14.56

Exercised

 

(264,815)

 

0.002

Expired

 

(42)

 

468.00

Balance at December 31, 2023

 

408,640

$

24.00

Granted (1)

 

2,334,382

 

2.73

Exercised

 

(1,275,441)

 

3.71

Expired

 

 

Balance at December 31, 2024

1,467,581

$

11.01

(1)Excludes pre-funded warrants issued in connection with public offerings.

The remaining life, by grant date, for outstanding warrants at December 31, 2024 was:

    

    

    

Remaining

    

    

    

    

Exercise

Contractual

Outstanding

Exercisable

Grant Date

    

Price

    

Life in Years

    

Warrants

    

Warrants

May 09, 2023

$

24.00

 

3.36

 

408,640

 

408,640

April 22, 2024

6.40

4.31

4,253

4,253

July 10, 2024

6.00

4.53

1,054,688

1,054,688

Total

 

1,467,581

 

1,467,581

Historical Timeline

Fiscal YearFiled
2024Mar 21, 2025Showing above
2020Mar 30, 2021

About Stock Compensation Disclosures

Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.

Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.