Note 4 - Stock Incentive Plan

In April 2016, the Company’s Board of Directors and stockholders representing a majority of the Company’s outstanding stock at that time, approved the 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-based awards in the form of stock options, restricted stock units, stock appreciation rights and other stock-based awards to employees, non-employee directors and consultants. In October 2017, the Company’s Board of Directors voted to increase the stock award pool to 1,600,000 shares of common stock, which subsequently was approved by the Company’s stockholders. In April 2020, the Company’s Board of Directors voted to increase the stock award pool to 3,100,000 (an increase of 1,500,000 shares of common stock), which was approved by the Company’s stockholders in June 2020. In April 2021, the Company’s Board of Directors voted to approve an amendment to the 2016 Stock Incentive Plan to remove certain individual award limits and other provisions related to I.R.C. Section 162(m) and to update the limit on Incentive Stock Options to no more that 100% of the maximum aggregate number of shares which may be granted under the plan, which was approved by the Company’s stockholders in June 2021.

During the three months ended September 30, 2021, the Company’s Plan Administrator Committee (with regards to non-officer employees and consultants) and the Company’s Compensation Committee, as ratified by the Board of Directors (in the case of executive officers and non-employee directors), granted to one executive officer and one non-officer employee aggregate stock options for the purchase of 99,000 shares of the Company’s common stock with exercise prices ranging from $4.90 to $5.59 which vest over four years. All stock option grants have a 10-year term.

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 the Company’s closing price on Nasdaq. Stock options generally expire after 10 years.

Stock option activity under the Plan was as follows:

A summary of options outstanding as of September 30, 2021, is shown below:

Restricted stock unit activity under the Plan was as follows:

During the three months ended September 30, 2021, and 2020, the Company recognized $140,501 and $163,807 of employee and non-employee director stock-based compensation expense as general and administrative expenses, respectively, and $241,263 and $102,346 as research and development expenses, respectively. During the nine months ended September 30, 2021, and 2020, the Company recognized $422,360 and $633,462, respectively, of employee and non-employee director stock-based compensation expense as general and administrative expenses and $664,630 and $303,415, respectively, as research and development expenses. The stock-based compensation expense is allocated on a departmental basis, based on the classification of the stock-based award 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, recorded as research and development expense for the three months ended September 30, 2021, and 2020, was $10,300 and $17,560, respectively, and for the nine months ended September 30, 2021, and 2020, was $30,900 and $52,691, respectively.

The fair value of options granted from inception to September 30, 2021, 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, 0.4% to 2.9% risk free interest rate and zero dividends. The expected term for options granted to-date was estimated using the simplified method.

Stock option grants and fair values under the Plan was as follows:

At September 30, 2021, the aggregate intrinsic value of outstanding vested stock options was approximately $2.7 million (unvested stock options had zero intrinsic value), and the weighted-average exercise price in aggregate was $4.86 which includes $3.88 for fully vested stock options and $7.40 for stock options expected to vest. At September 30, 2021, unamortized unvested balance of stock-based compensation was $2.9 million, to be amortized over 2.7 years.