Note 9. Stock Options

The Company has two stock incentive plans (the “Stock Option Plans”), each of which provides for the grant of both incentive stock options and nonqualified stock options. Under the terms of the Stock Option Plans, the maximum number of shares of Common Stock for which incentive and/or nonqualified options may be issued is 434,750 shares. This number is comprised of 134,750 options already issued and outstanding (non-expired) from the Lipella Pharmaceuticals Inc. 2008 Stock Incentive Plan, and 300,000 options as the maximum issuable under the Amended and Restated Lipella Pharmaceuticals Inc. 2020 Stock Incentive Plan. Incentive stock options are granted with an exercise price determined by the Board of Directors of the Company (the “Board”). Unless otherwise provided for in an associated board consent, vesting terminates once the optionee is no longer affiliated with the Company. These options generally expire 10 years from the date of the grant. Stock options are granted with an exercise price not less than the fair market value of the underlying Common Stock on the date of the grant. Unless otherwise specified by the Board, all grants vest fully over a three-year period, provided that the employee continues to be employed. Vesting terminates once the optionee is no longer an employee. If an employee leaves the Company prior to fully vesting their option awards, the remaining unvested portion is considered forfeited, and the earlier recognition of the unvested shares is reversed during the period of forfeiture. As of September 30, 2025, and December 31, 2024, there were no unrecognized compensation costs related to non-vested share-based compensation arrangements granted to be recognized over the remaining vesting period of less than one year.

The Company recognized $0 and $379,726 of compensation costs related to stock option vesting for the three months ended September 30, 2025 and 2024, respectively. During the nine months ended September 30, 2025 and 2024, the Company recognized $0 and $688,730, respectively, of compensation costs related to stock option vesting.

The following is an analysis of options to purchase shares of Common Stock issued and outstanding as of September 30, 2025 and December 31, 2024:

A summary of the status of the Company’s non-vested stock options (exercisable for shares of Common Stock on a one-to-one basis) as of, and changes during, the nine months ended September 30, 2025 and 2024, is presented below:

There were no stock options granted in the three and nine months ended September 30, 2025. In the nine months ended September 30, 2024, the Company granted options as described below.

Stock Option Grants - On March 15, 2024, the Company granted 55,000 stock options at a $6.16 strike price, vesting as follows: one third of such grant vested on April 1, 2024, one third of such grant vested on July 1, 2024, and one third of such grant vested on October 1, 2024.

The weighted-average fair value of stock options on the date of grant and the assumptions used to estimate the fair value of stock options granted during the three months ended September 30, 2025 and September 30, 2024 using the Black-Scholes option-pricing model are as follows: