12. Stock-Based Compensation

The Company recognized total stock-based compensation expense during the three and nine months ended September 30, 2019 and 2018 as follows:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Service based awards:
Restricted stock awards	$	-	$	20,222	$	-	$	1,292,125
Restricted stock units		502,080		166,417		1,273,903		166,417
Stock option awards		596,657		427,944		1,795,819		967,377
		1,098,737		614,583		3,069,722		2,425,919
Performance based awards:
Restricted stock units		(332,389)		-		468,814		-
Stock option awards		110,065		-		356,505		-
		(222,324)		-		825,319		-
Total	$	876,413	$	614,583	$	3,895,041	$	2,425,919

The decrease in stock-based compensation associated with performance based awards for restricted stock units is the result of a change in vesting criteria from probable to improbable based on the CMS Final Rule as described in Note 17 below. This change resulted in a reduction of stock-based compensation expense of $0.7 million for the three and nine months ended September 30, 2019.

Restricted Stock

A summary of the Company’s restricted stock awards during the nine months ended September 30, 2019 is as follows:


			Weighted Average
			Grant-Date
	Number of Shares		Fair Value
Unvested at December 31, 2018	146,800	$	5.70
Unvested at September 30, 2019	146,800	$	5.70

A summary of the Company’s restricted stock awards during the nine months ended September 30, 2018 is as follows:


			Weighted Average
			Grant-Date
	Number of Shares		Fair Value
Unvested at December 31, 2017	480,000	$	7.27
Forfeited	(333,200)		5.70
Unvested at September 30, 2018	146,800	$	5.70

The fair value of restricted stock awards are measured based on their fair value on the date of grant and amortized over the vesting period of 20 months. As of September 30, 2019 unvested restricted stock awards of 146,800 were related to performance based awards.

Service Based Restricted Stock Units

A summary of the Company’s service based restricted stock units during the nine months ended September 30, 2019 is as follows:


			Weighted Average
			Grant-Date
	Number of Shares		Fair Value
Unvested at December 31, 2018	472,959	$	4.32
Granted	222,497		4.26
Forfeited	(4,950)		4.81
Vested	(96,542)		4.70
Unvested at September 30, 2019	593,964	$	4.23

The fair value of service based restricted stock units are measured based on their fair value on the date of grant and amortized over the vesting period. The vesting periods range from 1-3 years. Stock-based compensation expense of $0.5 million and $1.3 million was recognized during the three and nine months ended September 30, 2019. Stock-based compensation expense of $0.2 million was recognized for each of three and nine months ended September 30, 2018. As of September 30, 2019, the unrecognized stock-based compensation expense was $1.3 million.

Performance Based Restricted Stock Units

A summary of the Company’s performance based restricted stock units during the nine months ended September 30, 2019 is as follows:


			Weighted Average
			Grant-Date
	Number of Shares		Fair Value
Unvested at December 31, 2018	988,958	$	4.48
Unvested at September 30, 2019	988,958	$	4.48

Stock-based compensation expense recognized for performance based restricted stock units was ($0.3) million and $0.5 million during the three and nine months ended September 30, 2019. The Company did not record stock-based compensation expenses related to the performance-based grants as of September 30, 2018. As of September 30, 2019, the unrecognized stock-based compensation expense related to performance based restricted stock units was $1.0 million. The performance based restricted stock unit compensation was reduced by $0.7 million for the three and nine months ended September 30, 2019 due to a change in vesting criteria from probable to improbable for certain performance based awards. The Company will continue to review this performance award criteria and recognize compensation costs as it relates to the probability of vesting.

Service Based Stock Options

The fair value of the service based stock options granted for the nine months ended September 30, 2019 were based on the following assumptions:


	Nine Months Ended September 30,
	2019	2018
Exercise price	$2.39 - $6.21	$4.52 - $5.75
Expected stock price volatility	67.5% - 70.3%	67.5%
Risk-free interest rate	1.4% - 2.6%	2.7% - 2.9%
Term (years)	5.25 - 6.5	5.0 - 6.5

A summary of the Company’s service based stock option activity for the nine months ended September 30, 2019 is as follows:


				Weighted
			Weighted	Average
	Shares		Average	Remaining		Aggregate
	Underlying		Exercise	Contractual		Intrinsic
	Options		Price	Term		Value
Outstanding at December 31, 2018	7,856,480	$	7.50	5.2	$	-
Granted	576,477		4.17	9.2		12,074
Exercised	(30,000)		4.93	-		-
Forfeited	(620,700)		6.34	-		-
Outstanding at September 30, 2019	7,782,257	$	7.35	5.1	$	12,074

Exercisable at September 30, 2019	6,340,901	$	8.07	4.2	$	-

A summary of the Company’s service based stock option activity for the nine months ended September 30, 2018 is as follows:


				Weighted
			Weighted	Average
	Shares		Average	Remaining		Aggregate
	Underlying		Exercise	Contractual		Intrinsic
	Options		Price	Term		Value
Outstanding at December 31, 2017	6,906,001	$	7.92	5.0	$	976,335
Granted	1,337,271		4.96	9.4
Exercised	(5,000)		6.59	-
Forfeited	(190,167)		6.59	-
Outstanding at September 30, 2018	8,048,105	$	7.46	5.2	$	365,135

Exercisable at September 30, 2018	6,248,160	$	7.90	4.1	$	365,135

The aggregate intrinsic value in the table above is calculated as the difference between the closing price of our common stock and the exercise price of the stock options that had strike prices below the closing price.

During the nine months ended September 30, 2019, the Company granted to certain employees stock options to purchase up to 576,477 shares of common stock. During the nine months ended September 30, 2019, forfeitures were 620,700. Forfeitures are recorded in the period of occurrence; compensation expense is adjusted accordingly.

Stock-based compensation expense recognized for service based stock options was $0.6 million and $1.8 million for the three and nine months ended September 30, 2019 and $0.4 million and $1.0 million for the three and nine months ended September 30, 2018. As of September 30, 2019, total stock-based compensation expense related to unvested options not yet recognized totaled approximately $2.1 million.

Performance Based Stock Options

A summary of the performance based stock options for the nine months ended September 30, 2019, is as follows:


			Weighted Average
			Exercise
	Number of Shares		Price
Outstanding at December 31, 2018	388,125	$	4.70
Outstanding at September 30, 2019	388,125	$	4.70

Exercisable at September 30, 2019	-	$	-

Stock-based compensation expense recognized for performance based stock options was $0.1 million and $0.4 million during the three and nine months ended September 30, 2019. Stock-based compensation expense recognized for performance based stock options was $51,000 for each of the three and nine months ended September 30, 2018. As of September 30, 2019, the unrecognized stock-based compensation expense related to performance based stock options was $0.6 million.