Quarterly report pursuant to Section 13 or 15(d)

STOCK-BASED COMPENSATION

v3.19.3
STOCK-BASED COMPENSATION
9 Months Ended
Sep. 30, 2019
STOCK-BASED COMPENSATION  
NOTE 11. STOCK-BASED COMPENSATION

2016 & 2018 Equity Incentive Plans

 

In the first quarter of 2016, the Company adopted the 2016 Equity Incentive Plan. In the fourth quarter of 2018, the Company adopted the 2018 Equity Incentive Plan. On June 20, 2019, the Company amended the number of shares reserved for issuance to 13,000,000. The following table contains information about the 2016 and the 2018 Equity Incentive Plans as of September 30, 2019:

 

 

Awards Reserved

for Issuance

 

Awards

Outstanding

 

Available for

Grant

 

2016 Equity incentive plan

 

2,000,000

 

1,461,064

 

538,936

 

2018 Equity incentive plan

 

13,000,000

 

9,844,666

 

3,155,334

 

Stock Options

 

The following table summarizes the Company’s stock option activity and related information for the three months ended September 30, 2019:

 

 

(in thousands)

 

Number of Shares

 

Weighted-Average Exercise Price Per Share

 

Weighted-Average Remaining Contractual Life

 

Aggregate Intrinsic Value of In-the-Money Options

 

Options outstanding as of January 1, 2019

 

8,400,629

 

$

1.56

 

Options granted

 

4,144,666

 

$

0.62

 

Options exercised

 

-

 

$

-

 

Options forfeited

 

(180,000

)

 

$

1.39

 

Options expired

 

-

 

$

-

 

Options outstanding as of September 30, 2019

 

12,365,295

 

$

1.24

 

9.2 years

 

$

-

 

Options exercisable as of September 30, 2019

 

4,181,129

 

$

1.61

 

8.8 years

 

$

-

 

The aggregate intrinsic value is calculated as the difference between the Company’s closing stock price of $0.36 on September 30, 2019, and the exercise price of options, multiplied by the number of options. As of September 30, 2019, there was $8.06 million total unrecognized stock-based compensation. Such costs are expected to be recognized over a weighted-average period of approximately 2.75 years.

 

The Company recognizes compensation expense for stock option awards on a straight-line basis over the applicable service period of the award. The service period is generally the vesting period. The following weighted-average assumptions were used to calculate stock-based compensation for issuances during the three months ended September 30, 2019:

 

 

September 30,

 

September 30,

 

2019

 

2018

 

Expected term (years)

 

5.9 Years

 

6.5 Years

 

Volatility

 

115.5

%

 

124.4-128.0

%

Risk-free interest rate

 

1.8

%

 

2.5-2.9

%

Dividend yield

 

0

%

 

0

%

  

The Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. Hence, the Company uses the “simplified method” described in Staff Accounting Bulletin 107 to estimate the expected term of share option grants.

 

The expected stock price volatility assumption was determined by examining the historical volatilities for the Company’s common stock. The Company will continue to analyze the historical stock price volatility and expected term assumptions as more historical data for the Company’s common stock becomes available.

 

The risk-free interest rate assumption is based on the U.S. treasury instruments whose term was consistent with the expected term of the Company’s stock options.

 

The expected dividend assumption is based on the Company’s history and expectation of dividend payouts. The Company has never paid dividends on its common stock and does not anticipate paying dividends on its common stock in the foreseeable future. Accordingly, the Company has assumed no dividend yield for purposes of estimating the fair value of the Company stock-based compensation.

 

The Company estimates the forfeiture rate at the time of grant and revisions, if necessary, were estimated based on management’s expectation through industry knowledge and historical data.

 

Stock-Based Compensation Expense

 

The following table sets forth the total stock-based compensation expense resulting from stock options and restricted grants of common stock to employees, directors and non-employee consultants in the consolidated statement of operations which are included in selling, general and administrative expenses:

 

 

(in thousands except for shares / options)

 

For the Three Months Ended

 

September 30, 2019

 

September 30, 2018

 

Type of Award

 

Number of

Shares or

Options

Granted

 

Stock-Based Compensation Expense

 

Number of

Shares or

Options

Granted

 

Stock-Based Compensation Expense

 

Stock options

 

143,848

 

$

1,078

 

945,000

 

$

691

 

Stock grants:

 

Employees (common stock)

 

91,465

 

38

 

14,748

 

37

 

Directors (common stock)

 

173,610

 

102

 

49,500

 

100

 

Non employee consultants (common stock)

 

-

 

-

*

 

5,700

 

10

 

Total stock based compensation expense

 

$

1,218

 

$

839

 

* Excludes adjustments for shares cancelled.

  

 

For the Nine Months Ended

 

September 30, 2019

 

September 30, 2018

 

Type of Award

 

Number of Shares or Options Granted

 

Stock-Based Compensation Expense

 

Number of Shares or Options Granted

 

Stock-Based Compensation Expense

 

Stock options

 

4,144,666

 

$

3,314

 

1,811,667

 

$

1,645

 

Stock grants:

 

Employees (common stock)

 

564,799

 

428

 

188,142

 

590

 

Directors (common stock)

 

173,610

 

102

 

49,500

 

100

 

Non employee consultants (common stock)

 

66,376

 

59

 

49,982

 

134

 

Total stock based compensation expense

 

$

3,904

 

$

2,470