8. 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,
		2021		2020
Research and development	$	—	$	14
General and administrative		187		145
Total stock-based compensation	$	187	$	159

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 2019 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 2019 Merger were assumed by the Company upon the 2019 Merger and became options to purchase the Company’s common stock, as adjusted by the exchange ratio in effect for the 2019 Merger. The 2018 Plan and the 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, 2021 and 2020:


	Three Months Ended
	March 31,
	2021	2020
Outstanding on January 1	920,355	633,277
Granted	—	360,000
Exercised	—	(84,589)
Forfeited/Cancelled	(270,287)	—
Outstanding on March 31	650,068	908,688

During the three month period ended March 31, 2020, 360,000 stock options were granted to non-employee directors. The options granted during the first quarter of 2020 vest over a three year period. The weighted average fair value per share of options granted during the three month periods ended March 31, 2020 was $5.59. No options were granted during the three month period ended March 31, 2021.

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,
	2021			2020

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

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 of directors. 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, 2021, 786,847 shares were added to the 2019 Plan as a result of the evergreen provision.

During the three month periods ended March 31, 2021 and 2020, 25,000 and 42,862 stock options vested, respectively. During the three month periods ended March 31, 2021 and 2020, 270,287 and zero stock options were forfeited, respectively.

As of March 31, 2021, 5,172,646 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 $1.0 million as of March 31, 2021. The unrecognized stock‑based expense is expected to be recognized over a weighted average period of 1.8 years.