STOCK-BASED COMPENSATION

The 2015 Employee, Director and Consultant Equity Incentive Plan

In connection with the business combination transaction in July 2017 between the Company and Daré Bioscience Operations, Inc., a privately held Delaware corporation, or Private Daré, the Company assumed the Private Daré 2015 Employee, Director and Consultant Equity Incentive Plan, or the 2015 Private Daré Plan and each then outstanding award granted thereunder, which consisted of options and restricted stock. Based on the exchange ratio for the business combination transaction and after giving effect to the reverse stock split effected in connection with the closing of that transaction, the outstanding options and restricted stock awards granted under the 2015 Private Daré Plan were replaced with options to purchase 10,149 shares of the Company’s common stock with a correspondingly adjusted exercise price and 223,295 shares of the Company’s common stock. All of the options that were assumed were exercised as of March 31, 2020. No awards may be granted under the 2015 Private Daré Plan following the closing of the business combination transaction.

2014 Employee Stock Purchase Plan

The Company’s 2014 Employee Stock Purchase Plan, or the ESPP, became effective in April 2014, but no offering period has been initiated thereunder since January 2017 and there was no stock-based compensation related to the ESPP for the three months ended March 31, 2020 or March 31, 2019.

Amended and Restated 2014 Stock Incentive Plan

The Company maintains the Amended and Restated 2014 Plan, or the Amended 2014 Plan, which provides for the grant of options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards to employees, officers and directors, and consultants and advisors. There were 2,046,885 shares of common stock authorized for issuance under the Amended 2014 Plan when it was approved by the Company's stockholders in July 2018. The number of authorized shares increases annually on the first day of each fiscal year until, and including, the fiscal year ending December 31, 2024 by the least of (i) 2,000,000, (ii) 4% of the number of outstanding shares of common stock on such date, or (iii) an amount determined by the Company’s board of directors. On January 1, 2020, the number of authorized shares increased by 787,336 to 1,411,481, which increase represented 4% of the number of outstanding shares of common stock on such date.

Summary of Stock Option Activity

The table below summarizes stock option activity under the Amended 2014 Plan, and related information for the three months ended March 31, 2020. The exercise price of all options granted during the three months ended March 31, 2020 was equal to the market value of the Company’s common stock on the date of grant. As of March 31, 2020, unamortized stock-based compensation expense of $1,686,903 will be amortized over a weighted average period of 2.9 years. At March 31, 2020, 704,481 shares of common stock were reserved for future awards granted under the Amended 2014 Plan.



	Number of Shares		Weighted Average Exercise Price
Outstanding at December 31, 2019	1,889,775		$	1.21
Granted	707,000		1.06
Exercised	(10,149	)	0.01
Canceled/forfeited	—		—
Expired	—		—
Outstanding at March 31, 2020	2,586,626		$	1.17
Exercisable at March 31, 2020	568,118		$	1.86

Compensation Expense

Total stock-based compensation expense related to stock options granted to employees and directors recognized in the consolidated statement of operations is as follows:



	Three Months Ended March 31,
	2020		2019
Research and development	$	46,380	$	24,703
General and administrative	114,461		73,265
Total	$	160,841	$	97,968

The assumptions used in the Black-Scholes option-pricing model for stock options granted to employees and to directors in respect of board services during the three months ended March 31, 2020 are as follows:



		Three Months Ended March 31, 2020
Expected life in years		10.0
Risk-free interest rate		0.86%
Expected volatility		121%
Forfeiture rate		0.0%
Dividend yield		0.0%
Weighted-average fair value of options granted		$1.00