In 2017, the Company adopted the 2017 Equity Incentive Plan (the “2017 Plan”).

On November 10, 2021, the 2017 Plan terminated and was replaced by the 2021 Plan (defined below), and future issuances of incentive instruments will be governed by the 2021 Plan. To the extent that outstanding awards under the 2017 Plan are forfeited or lapse unexercised, the shares of common stock subject to such awards will no longer be available for future issuance.

In 2021, the Company adopted the 2021 Equity Incentive Plan (the “2021 Plan”). Options granted under the 2021 Plan may be Incentive Stock Options or Non-statutory Stock Options, as determined by the Compensation Committee of the Company’s board of directors, who is responsible for administering the 2021 Plan. Stock Purchase Rights may also be granted under the 2021 Plan. The term shall be no more than ten years from the date of grant thereof. In the case of an Incentive Stock Option granted to an optionee who, at the time the option is granted, owns stock representing more than 10% of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the option shall be five years from the date of grant or such shorter term as may be provided in the option Agreement. To the extent outstanding awards under the 2021 Plan are forfeited or lapse unexercised, the shares of common stock subject to such awards will be available for future issuance under the 2021 Plan. The 2021 Plan provides that additional shares will automatically be added to the shares authorized for issuance under the 2021 Plan on January 1 of each year. The number of shares added each year will be equal to the lesser of: (i) 5.0% of the outstanding shares of the Company’s common stock on December 31st of the preceding calendar year or (ii) such number of shares determined by the board of directors, in its discretion. On January 1, 2022, 485,761 shares were automatically added to the number of shares authorized for issuance under 2021 Plan (an increase equal to 5% of the number of the outstanding shares of Company common stock as of December 31, 2021). Subsequent to the year ended December 31, 2022, on January 1, 2023, 483,887 shares were automatically added to the number of shares authorized for issuance under 2021 Plan (an increase equal to 5% of the number of the outstanding shares of Company common stock as of December 31, 2022).

In the case of an Incentive Stock Option, (i) granted to an employee who, at the time of grant of such option, owns stock representing more than 10% of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant; (ii) granted to any other employee, the per share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant. In the case of a Non-statutory Stock Option, the per share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant. Notwithstanding the foregoing, options may be granted with a per share exercise price other than as required above pursuant to a merger or other corporate transaction.

The options may include provisions permitting exercise of the option prior to full vesting. Any unvested shares upon termination shall be subject to repurchase by the Company at the original exercise price of the option. Stock options granted under the Company’s equity incentive plans generally vest over four years from the date of grant.

As of December 31, 2022, there were 456,381 shares of common stock available for issuance under the 2021 Plan.

The following table summarizes the option activity for the years ended December 31, 2022 and 2021:


							Options Outstanding
											Weighted-
	Shares						Weighted		Weighted-		Average		Aggregate
	Available						Average		Average		Remaining		Intrinsic
	For			Number of			Exercise		Grant Date		Contractual Life		Value
	Grant			Options			Price		Fair Value		(in years)		(in thousands)
Balances, January 1, 2021		157,321			799,470		$	0.41	$	0.18		7.88	$	505
Shares reserved for issuance		937,500			—
Reserved shares cancelled		(182,842	)		—
Options granted		(280,250	)		280,250		$	4.06	$	1.95
Options forfeited / cancelled		25,784			(25,784	)	$	0.40	$	0.18
Options expired		49,737			(49,737	)	$	0.71	$	0.31
Options exercised		—			(396,979	)	$	0.15	$	0.07
Balances, December 31, 2021		707,250			607,220		$	2.23	$	1.06		8.56	$	1,163
Shares reserved for issuance		485,761			—
Reserved shares cancelled		—			—
Options granted		(736,630	)		736,630		$	1.71	$	1.01
Options forfeited / cancelled		—			(18,750	)	$	1.00	$	0.44
Options expired		—			—		$	—	$	—
Options exercised		—			(56,250	)	$	1.00	$	0.44
Balances, December 31, 2022		456,381			1,268,850		$	2.00	$	1.06		7.77	$	62

At December 31, 2022
Vested and exercisable					357,215		$	1.73		0.80		7.08	$	62

The weighted-average grant date fair value per share of stock options granted in 2022 and 2021 was $1.01 and $1.95, respectively. The aggregate intrinsic value of options vested and exercisable as of December 31, 2022 is calculated based on the difference between the exercise price and the current fair value of our common stock. The intrinsic value of options exercised in 2022 and 2021 was $52 thousand and $523 thousand, respectively.

The fair value of restricted stock awards vested during the years ended December 31, 2022 and 2021 was $11 thousand and $17 thousand, respectively.

Options generally vest over four years whereby 25% vest upon the first anniversary of the issuance date and 1/36th per month thereafter. Stock-based compensation expense recognized during the years ended December 31, 2022 and 2021 was $398 thousand and $57 thousand, respectively. As of December 31, 2022, there were total unrecognized compensation costs of $894 thousand related to share-based payment awards which is expected to be recognized over a weighted-average amortization period of 2.98 years.

Prior to the IPO, the grant date fair market value of the shares of common stock underlying stock options had historically been determined by the Company’s Board of Directors. Because there had been no public market for the Company’s common stock, the Board of Directors exercised reasonable judgment and considered a number of objective and subjective factors to determine the best estimate of the fair market value, which included valuations performed by an independent third-party, important developments in the Company's operations, sales of the Company’s convertible preferred stock, actual operating results, financial performance, the conditions in the life sciences industry, the economy in general, the stock price performance and volatility of comparable public companies, and the lack of liquidity of the Company's common stock. For 2022, the Company has used a comparative peer group for determining the expected volatility rate used in the calculation of fair value. Since the Company's stock has not been publicly traded for a sufficiently long period of time, the expected volatility rate is based on a review of the historical volatilities, over a period of time equivalent to the expected life of the instrument being valued, of similarly positioned public companies within the Company's industry.

The Company estimated the fair value of share-based payment awards using the Black-Scholes options valuation model. The fair value of share-based payment awards is being amortized on a straight-line basis over the requisite service period of the awards. The fair value of share-based payment awards was estimated on the date of grant using the following assumptions:

Expected Term: The Company uses the simplified method to calculate expected term described in the Securities and Exchange Commission’s Staff Accounting Bulletin No. 107, which takes into account vesting term and expiration date of the options.

Volatility: Volatility is based on an average of the historical volatilities of comparable publicly traded companies for the expected term.

Risk Free Interest Rate: The risk-free rate is based on the U.S. Treasury yields in effect at the time of grant for periods corresponding with the expected term of the option.

Dividend Yield: The Company has never declared or paid any cash dividends and does not plan to pay cash dividends in the foreseeable future, and therefore, used an expected dividend yield of zero in the valuation model.

No income tax benefits have been recognized relating to stock-based compensation expenses and no tax benefits have been realized from exercised stock options.