Stock-Based Compensation

2015

Equity Plan

The Diffusion Pharmaceuticals Inc.

2015

Equity Incentive Plan, as amended (the

"2015

Equity Plan"), provides for increases to the number of shares reserved for issuance thereunder each

January 1

equal to

4.0%

of the total shares of the Company’s common stock outstanding as of the immediately preceding

December 31,

unless a lesser amount is stipulated by the Compensation Committee of the Company's board of directors. Accordingly,

1,339,215

shares were added to the reserve as of

January 1, 2020,

which shares

may

be issued in connection with the grant of stock-based awards, including stock options, restricted stock, restricted stock units, stock appreciation rights and other types of awards as deemed appropriate, in each case, in accordance with the terms of the

2015

Equity Plan. As of

December

31,

2019,

there were

19,740

shares of common stock available for future issuance under the

2015

Equity Incentive Plan. Generally, the options have a

ten

(

) year contractual term and vest in equal monthly installments over

three

(

) years.

The Company recorded stock-based compensation expense in the following expense categories of its consolidated statements of operations for the periods indicated:

	Year ended December 31,
	2019		2018
Research and development	$	54,155	$	62,161
General and administrative		461,607		1,159,430
Total stock-based compensation expense	$	515,762	$	1,221,591

The following table summarizes the activity related to all stock option:

	Number of Options			Weighted average exercise price per share		Weighted average remaining contractual life (in years)		Aggregate Intrinsic Value
Balance at January 1, 2018		170,461		$	109.74
Granted		44,005			15.37
Forfeited		(10,583	)		131.25
Expired		(147	)		256.50
Balance at January 1, 2019		203,736		$	88.14		6.70	$	143
Granted		117,270			2.62
Forfeited		(11,583	)		83.81
Expired		(147	)		276.00
Outstanding at December 31, 2019		309,276		$	55.78		6.98	$	—
Exercisable at December 31, 2019		235,415		$	71.75		6.34	$	—
Vested and expected to vest at December 31, 2019		309,276		$	55.78		6.98	$	—

The weighted average grant date fair value of stock option awards granted was

$2.16

and

$12.63

during the years ended

December

31,

2019

and

2018,

respectively. The total fair value of options vested during the years ended

December

31,

2019

and

2018

were

$0.6

million and

$1.2

million, respectively.

options were exercised during any of the periods presented. At

December

31,

2019,

there was

$0.3

million of unrecognized compensation cost related to unvested options that will be recognized as expense over a weighted-average period of

1.06

years.

The grant date fair value of employee stock options is determined using the Black-Scholes model. The following assumptions were used during the years ended

December

31,

2019

and

2018:

	2019						2018
Expected term (in years)		5.25		—	5.77			5.27		—	5.66
Risk-free interest rate		1.9	%	—	2.5	%		2.3	%	—	2.8	%
Expected volatility		112.4	%	—	114.4	%		113.6	%	—	115.0	%
Dividend yield		—		—	—			—		—	—