9. Stock-based Compensation

Stock-based compensation expense was included in general and administrative and research and development costs as follows in the accompanying statements of comprehensive loss (in thousands):


	Three Months Ended
	March 31,
		2020		2019
Research and development	$	14	$	39
General and administrative		145		21
Total stock-based compensation	$	159	$	60

Stock Options

2019 and 2018 Stock Plans

In December 2018, Private NeuroBo adopted the NeuroBo Pharmaceuticals, Inc. 2018 Stock Plan (the "2018 Plan") and in December 2019 in connection with the Merger, the Company adopted the 2019 Equity Incentive Plan (the “2019 Plan”). 2018 Plan options to purchase Private NeuroBo common stock outstanding as of immediately prior to the Merger were assumed by the Company upon the Merger and became options to purchase the Company’s common stock, as adjusted by the Exchange Ratio. The 2018 Plan and 2019 Plan provide for the grant of stock options, restricted stock and other equity awards of the Company's common stock to employees, officers, consultants, and directors. Options expire within a period of not more than ten years from the date of grant.

The following table summarizes the Company’s activity related to its stock options for the three months ended March 31, 2020 and 2019:


	Three Months Ended
	March 31,
	2020	2019
Outstanding on January 1	633,277	—
Granted	360,000	960,204
Exercised	(84,589)	—
Forfeited/Cancelled	—	—
Outstanding on March 31	908,688	960,204

During the three month periods ended March 31, 2020 and 2019, 360,000 and 960,204 stock options were granted, respectively, to employees and non-employee consultants with both service and performance conditions. The options granted with service conditions vest quarterly over a period between one year and fifteen months. The total number of stock options outstanding as of March 31, 2020 and December 31, 2019 was 908,688 and 633,277, respectively.

The weighted average fair value per share of options granted during the three month periods ended March 31, 2020 and 2019, was $5.59 and $0.50, respectively.

The Company measures the fair value of stock options with service‑based and performance‑based vesting criteria to employees, consultants and directors on the date of grant using the Black‑Scholes option pricing model. The Company does not have history to support a calculation of volatility and expected term. As such, the Company has used a weighted‑average volatility considering the volatilities of several guideline companies.

For purposes of identifying similar entities, the Company considered characteristics such as industry, length of trading history, and stage of life cycle. The assumed dividend yield was based on the Company’s expectation of not paying dividends in the foreseeable future. The average expected life of the options was determined based on the mid‑point between the vesting date and the end of the contractual term according to the “simplified method” as described in Staff Accounting Bulletin 110. The risk‑free interest rate is determined by reference to implied yields available from U.S. Treasury securities with a remaining term equal to the expected life assumed at the date of grant. The Company records forfeitures when they occur.

The weighted‑average assumptions used in the Black‑Scholes option‑pricing model are as follows:


	Three Months Ended
	March 31,
	2020			2019

Expected stock price volatility		77.5	%		75.0	%
Expected life of options (years)		5.8			10.0
Expected dividend yield		0	%		0	%
Risk free interest rate		1.71	%		2.75	%

Evergreen provision

Under the 2019 Plan, the shares reserved automatically increase on January 1st of each year, for a period of not more than ten years commencing on January 1, 2020 and ending on (and including) January 1, 2029, to an amount equal to the lesser of 4% of the common shares outstanding as of January 1st , or a lesser amount as determined by the Board. The aggregate maximum number of shares of common stock that may be issued pursuant to the 2019 Plan under the evergreen provision is 6,680,000 shares of common stock. On January 1, 2020, 623,708 shares were added to the 2019 Plan as a result of the evergreen provision.

During the three month periods ended March 31, 2020 and 2019, 42,862 and 120,026 stock options vested, respectively. The weighted average fair value per share of options vesting during the three month periods ended March 31, 2020 and 2019 was $2.87 and $0.50, respectively. During the three month periods ended March 31, 2020 and 2019, no stock options were forfeited. As of March 31, 2020, 4,127,179 shares in the aggregate were available for future issuance under the 2019 Plan and 2018 Plan.

Unrecognized stock‑based compensation cost for the stock options issued under the both the Company’s 2019 Plan and 2018 Plan was $1.9 million as of March 31, 2020. The unrecognized stock‑based expense is expected to be recognized over a weighted average period of 2.8 years.