In April 2016, the Company’s Board of Directors and the convertible preferred stockholders representing a majority of the Company’s outstanding stock, approved the Amended and Restated Monopar Therapeutics Inc. 2016 Stock Incentive Plan, as amended (the “Plan”), allowing the Company to grant up to an aggregate 700,000 shares of stock awards, stock options, stock appreciation rights and other stock-based awards to employees, non-employee directors and consultants. Concurrently, the Board of Directors granted to certain Board members and the Company’s then acting chief financial officer stock options to purchase up to an aggregate 273,000 shares of the Company’s common stock at an exercise price of $0.001 par value based upon a third-party valuation of the Company’s common stock.

In December 2016, the Board of Directors granted to the Company’s acting chief medical officer stock options to purchase up to 7,000 shares of the Company’s common stock at an exercise price of $0.001 par value based upon a third-party valuation of the Company’s common stock.

In February 2017, the Board of Directors granted to certain Board members and to the Company’s then acting chief financial officer stock options to purchase up to an aggregate 275,520 shares of the Company’s common stock at an exercise price of $0.001 par value based upon a third-party valuation of the Company’s common stock. In September 2017, the Board of Directors represented by the designated Plan Administrator, granted stock options to purchase up to 21,024 shares of common stock to each of the three new Board members and in November 2017, the Company granted stock options to purchase up to 40,000 shares of common stock to an employee. These Board and employee stock options have an exercise price of $6 per share based on the price per share at which common stock was sold in the Company’s most recent private offering.

In January 2018, the Company granted stock options to purchase up to 32,004 shares of common stock to its acting chief medical officer, at an exercise price of $6 per share based on the price per share at which common stock was sold in the Company’s most recent private offering. In May 2018 and August 2018, the Company granted stock options to two employees each to purchase up to 5,000 shares of common stock, at an exercise price of $6 per share based on the price per share at which common stock was sold in the Company’s most recent private offering. Also in August 2018, the Company granted stock options to all four of its non-employee Board members, the Company’s chief executive officer, chief scientific officer, and chief financial officer to purchase up to an aggregate 425,300 shares of the Company’s common stock at an exercise price of $6 per share based on the price per share at which common stock was sold in the Company’s most recent private offering; vesting of such stock options commenced on October 1, 2018.

In December 2018, the Company granted stock options to purchase up to 20,000 shares of common stock to its acting chief medical officer, at an exercise price of $6 per share based on the price per share at which common stock was sold in the Company’s most recent private offering. Vesting of such stock options commenced on January 1, 2019.

Under the Plan, the per share exercise price for the shares to be issued upon exercise of an option shall be determined by the Plan Administrator, except that the per share exercise price shall be no less than 100% of the fair market value per share on the grant date. Fair market value is established by the Company’s Board of Directors, using third party valuation reports and recent financings. Stock options generally expire after ten years.

Stock option activity under the Plan was as follows:

A summary of options outstanding as of September 30, 2019 is shown below:

During the three months ended September 30, 2019 and 2018, the Company recognized $154,906 and $29,383, respectively, of employee and non-employee director stock-based compensation expense as general and administrative expenses and $67,347 and $32,147, respectively, as research and development expenses. During the nine months ended September 30, 2019 and 2018, the Company recognized $470,232 and $81,896, respectively, of employee and non-employee director stock-based compensation expense as general and administrative expenses and $202,012 and $108,873, respectively, as research and development expenses. The stock-based compensation expense is allocated on a departmental basis, based on the classification of the option holder. No income tax benefits have been recognized in the condensed consolidated statements of operations and comprehensive loss for stock-based compensation arrangements.

The Company recognizes as an expense the fair value of options granted to persons (currently consultants) who are neither employees nor non-employee directors. Stock-based compensation expense for consultants which was recorded as research and development expense for the three and nine months ended September 30, 2019 was $20,704 and $62,121, respectively. Stock-based compensation expense for consultants which was recorded as research and development expense for the three and nine months ended September 30, 2018 was $31,714 and $105,571, respectively.

The fair value of options granted from inception to September 30, 2019 was based on the Black-Scholes option-pricing model assuming the following factors: 4.7 to 6.2 years expected term, 55% to 85% volatility, 1.2% to 2.9% risk free interest rate and zero dividends. The expected term for options granted to date was estimated using the simplified method. There were no stock option grants during the three and nine months ended September 30, 2019. For the three and nine months ended September 30, 2018 the weighted average grant date fair value was $4.34 per share and $4.25 per share, respectively. For the three months ended September 30, 2019 and 2018, the fair value of shares vested was $210,889 and $79,069, respectively. For the nine months ended September 30, 2019 and 2018, the fair value of shares vested was $639,365 and $316,263, respectively. At September 30, 2019, the aggregate intrinsic value of outstanding stock options was approximately $3.3 million of which approximately $2.7 million was vested and approximately $0.6 million is expected to vest and the weighted average exercise price in aggregate was $2.99 which includes $2.02 for fully vested stock options and $4.59 for stock options expected to vest. At September 30, 2019, the unamortized unvested balance of stock-based compensation was approximately $1.5 million to be amortized over 2.5 years.