2. SHARE BASED COMPENSATION

The Company maintains 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 share-based compensation expense related to service-based stock options granted to employees and directors of approximately $941,000 and $1,066,000 during the three months ended July 31, 2022 and 2021, respectively, and approximately $2,546,000 and $2,822,000 during the nine months ended July 31, 2022 and 2021, 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 June 1, 2021, our Chairman and Chief Executive Officer and our President, Chief Operating Officer and Chief Financial Officer were awarded market condition stock options for 2,000,000 shares and 100,000 shares of common stock, respectively, that vest in four equal installments upon the Company’s share price achieving targets ranging from $5.00 to $8.00 per share, with implied service periods of three to fifteen months. We recorded market condition stock-based compensation expense during the three months ended July 31, 2022 and 2021 of approximately $388,000 and $1,981,000, respectively, and approximately $2,381,000 and $1,981,000 during the nine months ended July 31, 2022 and 2021, respectively.

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 $109,000 and $139,000 during the three months ended July 31, 2022 and 2021, respectively, and approximately $546,000 and $421,000 during the nine months ended July 31, 2022 and 2021, respectively.

Stock Option Plans

During the three months ended July 31, 2022, 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.

Stock Option Activity

During the three months ended July 31, 2022 and 2021, we granted options to purchase 0 shares and 120,000 shares of common stock, respectively, and during the nine months ended July 31, 2022 and 2021, we granted options to purchase 1,430,000 shares and 1,500,000 shares of common stock, respectively, to employees and consultants, with exercise prices ranging from $2.62 to $5.30 per share, pursuant to the 2018 Share Plan. During the three months ended July 31, 2022, stock options to purchase 1,001,388 shares of common stock, net of 505,340 shares withheld on a cashless exercise, were exercised with aggregate proceeds of $830,000. During the three months ended July 31, 2021, no stock options were exercised. During the nine months ended July 31, 2022 and 2021, stock options to purchase 1,101,388 shares of common stock, net of 558,431 shares withheld on a cashless exercise, and 115,388 shares of common stock, net of 7,937 shares withheld on a cashless exercise, respectively, were exercised with aggregate proceeds of $830,000 and $293,000, respectively.

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 nine months ended July 31, 2022 is as follows:

SCHEDULE OF OPTION ACTIVITY

The following table summarizes information about stock options outstanding and exercisable under the 2010 Share Plan as of July 31, 2022:

 SCHEDULE OF OUTSTANDING AND EXERCISABLE

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 July 31, 2022, the 2018 Share Plan had 600,000 shares available for future grants. Information regarding the 2018 Share Plan for the nine months ended July 31, 2022 is as follows:

SCHEDULE OF OPTION ACTIVITY 

The following table summarizes information about stock options outstanding and exercisable under the 2018 Share Plan as of July 31, 2022:

 SCHEDULE OF OUTSTANDING AND EXERCISABLE

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. Information regarding stock options that were granted outside of share plans for the nine months ended July 31, 2022 is as follows:

SCHEDULE OF OPTION ACTIVITY

The following table summarizes information about stock options outstanding and exercisable that were granted outside of share plans as of July 31, 2022:

 SCHEDULE OF OUTSTANDING AND EXERCISABLE

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 nine months ended July 31, 2022 and 2021, employees purchased 2,389 and 1,634 shares, respectively, with aggregate proceeds of approximately $7,000 and $3,000, 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 $0 and $96,000, respectively, during the three and nine months ended July 31, 2021, based on the fair value of the warrant on the date of grant recognized on a straight-line basis over the vesting period. On November 16, 2021, the warrant was exercised on a cashless basis and 25,484 shares were withheld as payment.

On November 1, 2021 we issued a warrant, expiring on October 30, 2026, to purchase 60,000 shares of common stock at $4.77 per share, vesting over five months, to a consultant for investor relations services. We recorded consulting expense of approximately $0 and $220,000, respectively, during the three and nine months ended July 31, 2022, based on the fair value of the warrant on the date of grant recognized on a straight-line basis over the vesting period. The warrant terminated in May 2022 upon termination of the consulting agreement.

As of July 31, 2022, we also had warrants outstanding to purchase 300,000 shares of common stock at $6.56 per share, issued during fiscal year 2021 and expiring on March 22, 2026.