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 awards, stock options, 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 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 prior to such grant. 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 prior to such grant. Also in August 2018, the Company granted stock options to all four of its non-employee directors, 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 prior to such grant; 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 prior to such grant. 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, recent financings and the Company’s closing prices on Nasdaq since the Company’s listing on December 19, 2019. Stock options generally expire after ten years.

Stock option activity under the Plan was as follows:

A summary of options outstanding as of December 31, 2019 is shown below:

During the years ended December 31, 2019 and 2018, the Company recognized $653,997 and $232,625 of employee and non-employee director stock-based compensation expense as general and administrative expenses, respectively, and $274,345 and $171,238 as research and development expenses, respectively. 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 consolidated statements of operations and comprehensive loss for stock-based compensation awards.

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 for the years ended December 31, 2019 and 2018 was $82,828 and $125,469, respectively, which was recorded as research and development expenses.

The fair value of options granted from inception to December 31, 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 year ended December 31, 2019. For the year ended December 31, 2018, the weighted-average grant date fair value was $2.05 per share. For the years ended December 31, 2019 and 2018 the fair value of shares vested was $0.8 million and $0.4 million, respectively. At December 31, 2019, the aggregate intrinsic value of outstanding stock options was approximately $14.9 million of which approximately $10.7 million was vested and approximately $4.2 million is expected to vest (representing options to purchase up to 350,200 shares of the Company's common stock), and the weighted-average exercise price in aggregate was $2.94 which includes $2.13 for fully vested stock options and $4.62 for stock options expected to vest, representing 1,087,463 shares of common stock. At December 31, 2019, unamortized unvested balance of stock-based compensation was $1.3 million, to be amortized over 2.4 years.