Company: IOBT
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0000950170-25-047744
Chunk: 270

Company: IO Biotech, Inc.
Filing Date: 2025-03-31
Form: 10-K
Item: Item 1B
Chunk 270
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 protocol or scope of work to be performed, we modify our estimates of accrued expenses accordingly on a prospective basis. 

Equity-based Compensation 

We issued stock-based compensation awards through the granting of warrants and stock options, which generally vest over a four-year period. For the years ended December 31, 2024 and 2023, we issued 3,087,382 and 2,171,841 stock options, respectively, with a weighted average exercise price of $1.60 and $2.02, respectively, to certain employees, board members and advisors from the 2021 Equity Incentive Plan.  For the years ended December 31, 2024 and 2023, we issued 310,000 and 348,153 stock options, respectively, with a weighted average exercise price of $1.58 and $1.86, respectively, from the 2023 Inducement Plan. 

We account for equity-based compensation in accordance with ASC 718, Compensation-Stock Compensation (“ASC 718”). In accordance with ASC 718, compensation cost is measured at estimated fair value and is included as compensation expense over the vesting period during which service is provided in exchange for the award on a straight-line basis. Vesting of the awards depend solely on service conditions required of the employee. The Company reverses any previously recognized compensation cost associated with forfeited awards in the period of the forfeiture occurs.

We use a Black-Scholes option pricing model to determine fair value of our warrants and options. The Black-Scholes option pricing model includes various assumptions, including the fair value of common shares, expected life of warrants and options, the expected volatility and the expected risk-free interest rate. These assumptions reflect our best estimates, but they involve inherent uncertainties based on market conditions generally outside our control. As a result, if other assumptions had been used, equity-based compensation cost could have been materially impacted. Furthermore, if we use different assumptions for future grants, share-based compensation cost could be materially impacted in future periods.

We will continue to use judgment in evaluating the assumptions utilized for our equity-based compensation expense calculations on a prospective basis. In addition to the assumptions used in the Black-Scholes model, the amount of equity-based compensation expense we recognize in our financial statements includes warrant forfeitures as they occurred. 

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Income Taxes 

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating losses