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 $1,155,000 and $875,000 during the three months ended April 30, 2023 and 2022, respectively, and approximately $2,112,000 and $1,605,000 during the six months ended April 30, 2023 and 2022, 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 April 30, 2023 and 2022 of $0 and approximately $587,000, respectively, and $0 and approximately $1,993,000 during the six months ended April 30, 2023 and 2022, 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 $47,000 and $109,000 during the three months ended April 30, 2023 and 2022, respectively, and approximately $128,000 and $218,000 during the six months ended April 30, 2023 and 2022, respectively.

Stock Option Plans

During the three months ended April 30, 2023, 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 April 30, 2023 and 2022, we granted options to purchase 0 shares and 1,400,000 shares of common stock, respectively, and during the six months ended April 30, 2023 and 2022, we granted options to purchase 1,505,000 shares and 1,430,000 shares of common stock, respectively, to employees and consultants, with exercise prices ranging from $4.19 to $4.81 per share, pursuant to the 2018 Share Plan. During the three months ended April 30, 2023 and 2022, stock options to purchase 27,818 and 0 shares of common stock, respectively, were exercised with aggregate proceeds of $75,000 and $0, respectively. During the six months ended April 30, 2023 and 2022, stock options to purchase 29,382 shares of common stock, net of 808 shares withheld on a cashless exercise and 46,909 shares of common stock, net of 53,091 shares withheld on a cashless exercise, respectively, were exercised with aggregate proceeds of $78,000 and $0, respectively.

On January 30, 2023, we granted an option, expiring on January 30, 2028, to purchase 200,000 shares of common stock at $4.35 per share, to a consultant for investor relations services. The option vests based on certain performance conditions related to Company common stock trading activity. As of April 30, 2023, the performance conditions have not been achieved and it does not appear likely that they will be achieved. Accordingly, we have recorded no consulting expense for this option during the three and six months ended April 30, 2023.

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, 2023 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 April 30, 2023:

 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 April 30, 2023, the 2018 Share Plan had 825,000 shares available for future grants. Information regarding the 2018 Share Plan for the six months ended April 30, 2023 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 April 30, 2023:

 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 three and six months ended April 30, 2023 and 2022, employees purchased 1,903 and 2,389 shares, respectively, with aggregate proceeds of approximately $7,000 and $7,000, 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. 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 $110,000 and $220,000, respectively, during the three and six months ended April 30, 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 April 30, 2023, 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.

Information regarding the Company’s warrants for the six months ended April 30, 2023 is as follows:

 SCHEDULE OF WARRANTS ACTIVITY  

The following table summarizes information about the Company’s outstanding and exercisable warrants as of April 30, 2023:

 SCHEDULE OF OUTSTANDING AND EXERCISABLE