10. Stock-based Compensation

The Company sponsors the Pulmatrix, Inc. Amended and Restated 2013 Employee, Director and Consultant Equity Incentive Plan (the “Incentive Plan”). As of December 31, 2022, the Incentive Plan provided for the grant of up to 454,363 shares of the Company’s common stock, of which 145,735 shares remained available for future grant.

In addition, the Company sponsors two legacy plans under which no additional awards may be granted. As of December 31, 2022, the two legacy plans have a total of 33 options outstanding all of which are fully vested and for which common stock will be delivered upon exercise.

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

Summary of Stock Option Activity

During the years ended December 31, 2022 and 2021, the Company used the Black-Scholes option-pricing model to estimate the fair value of stock option grants and to determine the related compensation expense. The assumptions used in calculating the fair value of stock-based payment awards represent management’s best estimates. The weighted-average fair value of options granted was $5.41 and $33.00 for the years ended December 31, 2022 and 2021, respectively. The weighted-average assumptions used in determining fair value of the stock options for the years ended December 2022 and 2021, are as follows:

Schedule of Calculation of Fair Value Assumptions

The expected life of the Company’s options was determined using the simplified method as a result of limited historical data regarding the Company’s activity. The risk-free interest rate was obtained from U.S. Treasury rates for the expected life of the stock options. The Company’s expected volatility was based upon the weighted average of historical volatility for industry peers and its own volatility. The dividend yield considers that the Company has not historically paid dividends and does not expect to pay dividends in the foreseeable future.

As of December 31, 2022, there was $1.6 million of unrecognized stock-based compensation expense related to unvested stock options granted under the Company’s stock award plans. This expense is expected to be recognized over a weighted-average period of approximately 2.0 years.

The following table presents total stock-based compensation expense for the years ended December 31, 2022 and 2021, respectively:

Schedule of Stock-based Compensation Expenses