3. STOCK BASED COMPENSATION

The Company maintains stock equity incentive plans under which the Company grants incentive stock options, non-qualified stock options, stock appreciation rights, stock awards, performance awards, or stock units to employees, directors and consultants.

Stock Option Compensation Expense

The compensation cost for service-based stock options granted to employees and directors is measured at the grant date, based on the fair value of the award using the Black-Scholes pricing model, and is expensed on a straight-line basis over the requisite service period (the vesting period of the stock option) which is one to four years. We recorded stock-based compensation expense related to service-based stock options granted to employees and directors of approximately $881,000 and $1,055,000 during the three months ended April 30, 2021 and 2020, respectively, and approximately $1,756,000 and $2,019,000 during the six months ended April 30, 2021 and 2020, respectively.

For stock options granted to employees and directors that vest based on market conditions, such as the trading price of the Company’s common stock exceeding certain price targets, we use a Monte Carlo Simulation in estimating the fair value at grant date and recognize compensation cost over the implied service period (median time to vest). On May 8, 2018, we issued market condition options to purchase 1,500,000 shares of common stock, to our Chairman, President and Chief Executive Officer, vesting at target trading prices of $5.00 to $8.00 per share before May 31, 2021, with implied service periods of three to seven months. In October 2018, the first tranche of 500,000 shares of market condition options became exercisable upon achieving an average closing price above $5.00 per share for twenty consecutive trading days. The second and third tranches did not vest as of May 31, 2021. We did not record any market condition stock-based compensation expense during the six months ended April 30, 2021 and 2020.

The compensation cost for service-based stock options granted to consultants is measured at the grant date, based on the fair value of the award using the Black-Scholes pricing model, and is expensed on a straight-line basis over the requisite service period (the vesting period of the stock option) which is one to three years. We recorded stock-based consulting expense related to stock options granted to consultants of approximately $132,000 and $55,000 during the three months ended April 30, 2021 and 2020, respectively, and approximately $186,000 and $112,000 during the six months ended April 30, 2021 and 2020, respectively.

Stock Option Plans

During the six months ended April 30, 2021, we had two stock option plans: the Anixa Biosciences, Inc. 2010 Share Incentive Plan (the “2010 Share Plan”) and the Anixa Biosciences, Inc. 2018 Share Incentive Plan (the “2018 Share Plan”), which were adopted by our Board of Directors on July 14, 2010 and January 25, 2018, respectively. The 2018 Share Plan was approved by our shareholders on March 29, 2018. Further, we had an additional stock option plan: the Anixa Biosciences, Inc. 2003 Share Incentive Plan (the “2003 Share Plan”), under which all outstanding options expired during the six months ended April 30, 2020.

Stock Option Activity

During the three months ended April 30, 2021 and 2020, we granted options to purchase 250,000 shares and -0- shares of common stock, respectively, and during the six months ended April 30, 2021 and 2020, we granted options to purchase 1,380,000 shares and 800,000 shares of common stock, respectively, to employees and consultants, with exercise prices ranging from $2.83 to $5.30 per share, pursuant to the 2018 Share Plan. During the three months ended April 30, 2021 and 2020, stock options to purchase 77,571 shares, net of 7,937 shares withheld on a cashless exercise, and 25,000 shares of common stock, respectively, were exercised with aggregate proceeds of approximately $189,000 and $75,000, respectively. During the six months ended April 30, 2021 and 2020, stock options to purchase 107,451 shares, net of 7,937 shares withheld on a cashless exercise, and 43,900 shares of common stock, respectively, were exercised with aggregate proceeds of approximately $294,000 and $104,000, respectively.

2003 Share Plan

The 2003 Share Plan provided for the grant of nonqualified stock options, stock appreciation rights, stock awards, performance awards and stock units to employees, directors and consultants. In accordance with the provisions of the 2003 Share Plan, the plan terminated with respect to the ability to grant future awards on April 21, 2013.

Information regarding the 2003 Plan for the six months ended April 30, 2020 is as follows:

2010 Share Plan

The 2010 Share Plan provided for the grant of nonqualified stock options, stock appreciation rights, stock awards, performance awards and stock units to employees, directors and consultants. In accordance with the provisions of the 2010 Share Plan, the plan terminated with respect to the ability to grant future awards on July 14, 2020.

Information regarding the 2010 Share Plan for the six months ended April 30, 2021 is as follows:

The following table summarizes information about stock options outstanding and exercisable under the 2010 Share Plan as of April 30, 2021:

Information regarding the 2010 Share Plan for the six months ended April 30, 2020 is as follows:

The following table summarizes information about stock options outstanding and exercisable under the 2010 Share Plan as of April 30, 2020:

2018 Share Plan

The 2018 Share Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, stock awards, performance awards and stock units to employees, directors and consultants. As of April 30, 2021, the 2018 Share Plan had 1,757,937 shares available for future grants.

Information regarding the 2018 Share Plan for the six months ended April 30, 2021 is as follows:

The following table summarizes information about stock options outstanding and exercisable under the 2018 Share Plan as of April 30, 2021:

Information regarding the 2018 Share Plan for the six months ended April 30, 2020 is as follows:

The following table summarizes information about stock options outstanding and exercisable under the 2018 Share Plan as of April 30, 2020:

Non-Plan Options

In addition to options granted under stock option plans, during the years ended October 31, 2012 and 2013, the Board of Directors approved the grant of stock options to certain employees and directors (the “Non-Plan Options”).

Information regarding Non-Plan Options for the six months ended April; 30, 2021 is as follows:

The following table summarizes information about Non-Plan Options outstanding and exercisable as of April 30, 2021:

Information regarding Non-Plan Options for the six months ended April 30, 2020 is as follows:

The following table summarizes information about Non-Plan Options outstanding and exercisable as of April 30, 2020: 

On June 1, 2021, stock options to purchase 2,990,000 shares were granted under the 2018 Share Plan. Each of our non-employee directors was awarded options for 30,000 shares that vest over one year. Our Lead Independent Director, our Chairman, President and Chief Executive Officer and our Chief Operating Officer and Chief Financial Officer were awarded options for 200,000 shares, 500,000 shares and 100,000 shares, respectively, that vest over three years. Further, our Chairman, President and Chief Executive Officer and our Chief Operating Officer and Chief Financial Officer were awarded options for 2,000,000 shares and 100,000 shares, respectively, that vest in four equal installments upon the Company’s share price achieving targets ranging from $5.00 to $8.00 per share.

Stock Awards

On May 8, 2018, a restricted stock award of 1,500,000 shares of common stock was granted under the 2018 Share Plan to our Chairman, President and Chief Executive Officer. The restricted stock award was to vest in its entirety upon achievement of a target trading price of $11.00 per share of the Company’s common stock before May 31, 2021. The restricted stock award did not vest as of May 31, 2021. For restricted stock awards vesting upon achievement of a price target of our common stock we use a Monte Carlo Simulation in estimating the fair value at grant date and recognize compensation cost over the implied service period (median time to vest). We did not record any compensation expense related to the restricted stock award during the six months ended April 30, 2021 and 2020.

Employee Stock Purchase Plan

The Company maintains the Anixa Biosciences, Inc. Employee Stock Purchase Plan (the “ESPP”) which permits eligible employees to purchase shares at not less than 85% of the market value of the Company’s common stock on the offering date or the purchase date of the applicable offering period, whichever is lower. The plan was adopted by our Board of Directors on August 13, 2018 and approved by our shareholders on September 27, 2018. During the six months ended April 30, 2021 and 2020, employees purchased 1,634 and 9,618 shares, respectively, with aggregate proceeds of approximately $3,000 and $15,000, respectively.

Warrants

On October 30, 2020 we issued a warrant, expiring on October 30, 2025, to purchase 60,000 shares of common stock at $2.06 per share, vesting over five months, to a consultant for investor relations services. We recorded consulting expense of approximately $38,000 and $96,000, respectively, during the three and six months ended April 30, 2021, based on the fair value of the warrant on the date of grant recognized on a straight-line basis over the vesting period. We did not record any consulting expense related to warrants during the three and six months ended April 30, 2020.

As discussed in Note 2, in connection with the March 25, 2021 public offering we issued to certain designees of the underwriter, as compensation, warrants to purchase 300,000 shares of common stock at $6.5625 per share, expiring on March 22, 2026. No warrants were issued during the six-month period ended April 30, 2020.

As of April 30, 2021, we also had warrants outstanding to purchase 500,000 shares of common stock at $5.03 per share, issued during fiscal year 2017 and expiring on November 30, 2021.