On November 9, 2018, the Company filed a shelf registration statement (as amended on January 18, 2019) which registered up to $125 million of the Company’s securities for potential future issuance and such registration statement was effective on February 7, 2019.

In connection with the Company’s Annual Meetings of Stockholders during 2018, 2019 and 2020, the Company’s stockholders approved, among other matters, amendments to the Company’s Certificate of Incorporation to increase the number of authorized shares of Common Stock in 2018 from 75,000,000 to 125,000,000, in 2019 from125,000,000 to 175,000,000, and in 2020 from 175,000,000 to 235,000,000.

On November 4, 2020, the Board of Directors authorized the repurchase of up to $25 million of the Company's shares of Common Stock. The timing and amount of any shares purchased on the open market will be determined based on the Company's evaluation of market conditions, share price and other factors. The Company plans to utilize existing cash on hand to fund the share repurchase program.

During the year ended December 31, 2020, a cumulative total of 47,503 shares, priced at $4.28 for a value of $0.2 million were repurchased and recorded as Treasury Stock in the consolidated balance sheet.

The Company had authorized 5,000,000 “blank check” shares of $.001 par value convertible preferred stock. In the event of the Company’s liquidation, dissolution or winding up, holders of the Series A Preferred will receive a payment equal to $0.001 per share of Series A Preferred before any proceeds are distributed to the holders of common stock. After the payment of this preferential amount, and subject to the rights of holders of any class or series of capital stock hereafter created specifically ranking by its terms senior to the Series A Preferred, the holders of Series A Preferred will participate ratably in the distribution of any remaining assets with the common stock and any other class or series of our capital stock hereafter created that participates with the common stock in such distributions.

During the year ended December 31, 2020, 2,093,155 shares of Series A were converted on a one-for-one basis into shares of Common Stock. At December 31, 2020, no shares of Series A Preferred are outstanding and 2,285,700 shares of “blank check” preferred stock remain authorized but undesignated. There were no conversions of Series A Preferred during the years ended December 31, 2019 or 2018.

In May of 2018, the Company closed on the sale of an aggregate of 5,000 shares of the Company’s authorized preferred stock that the Board of Directors of the Company has designated as Series B Non-Voting Convertible Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”) at a purchase price of $10,000 per share.

Each share of Series B Preferred Stock is convertible into a number of shares of the Company’s common stock at a conversion price of $1.80 per share (subject to adjustment for stock splits and stock dividends as provided in the Certificate of Designation). At the time of closing the then outstanding shares of Series B Preferred Stock were convertible into an aggregate 27,777,778 shares of Common Stock. The Series B Preferred Stock does not contain any price-based anti-dilution protection. The Series B Preferred Stock is convertible at any time at the option of the holder, subject to certain limitations related to beneficial ownership.

The Company has the right to deliver a notice to the holders of the Series B Preferred Stock to require conversion of the Series B Preferred Stock into Common Stock. Following an initial forced conversion of the Series B Preferred Stock, every ninety (90) days thereafter, the Company has the right to require the forced conversion of the still outstanding shares of Series B Preferred Stock, subject to certain limitations related to beneficial ownership.

During the year ended December 31, 2020, a cumulative total of 175 shares of Series B Preferred Stock from various holders were converted into 972,222 shares of Common Stock. As of December 31, 2020, 443 shares of Series B Preferred Stock are outstanding.

The Series B Preferred Stock issued in May 2018 contained a contingent beneficial conversion feature (“BCF”) that was recognized during the year ending December 31, 2018 upon the August 2018 stockholder approval, which eliminated the contingency. The Company evaluated its convertible preferred stock in accordance with provisions of ASC 815, Derivatives and Hedging, including consideration of embedded derivatives requiring bifurcation. The issuance of the Series B Preferred Stock generated a BCF, which arises when a debt or equity security is issued with an embedded conversion option that is beneficial to the investor or in the money at inception because the conversion option has an effective strike price that is less than the market price of the underlying stock at the commitment date. As a result, the intrinsic value of the conversion option, totaling $12.5 million, was recorded as an increase to additional paid-in capital, increasing net loss attributable to the Company Common stockholders.

On April 15, 2019 the Company completed an underwritten public offering by the Company and a selling stockholder of 12,000,000 shares of common stock at a public offering price of $5.00 per share. The gross proceeds from the Company’s portion of the offering (10,000,000 shares), before deducting the underwriter discounts and commission and other offering expenses, was $50.0 million. The net proceeds were $47.6 million. The gross proceeds to the selling stockholder were approximately $19.0 million, which includes shares sold pursuant to the underwriters’ exercise of their option to purchase an additional 1,800,000 shares of common stock at the public offering price.

During the 2018 Annual Meeting of Stockholders, shareholders approved an amendment to the Company’s 2011 Equity Incentive Plan (the "2011 EIP"), to increase the number of shares of common stock authorized for issuance under the plan by 7,100,000 shares from 11,050,000 to 18,150,000.

Additionally, during the 2019 Annual Meeting of Stockholders, shareholders approved the Company’s 2019 Stock Option and Incentive Plan (the “2019 Plan”), which reserves 14,000,000 shares of stock for issuance under the 2019 Plan.

An additional 2,919,424 shares of Common Stock underlying options previously granted under the 2011 EIP, remain outstanding and exercisable as of December 31, 2020. The 2011 Plan expired in July 2019 and no new securities may be issued thereunder.

During the years ended December 31, 2020, 2019 and 2018, Company employees, directors and affiliates exercised approximately 1,400,000, 800,000 and 400,000 stock options, respectively, with net proceeds to the Company of approximately $3.4 million, $2.3 million and $0.7 million, respectively. The intrinsic value of options exercised during the years ended December 31, 2020, 2019 and 2018 was approximately $3.5 million, $1.9 million and $0.3 million, respectively.


	Number of Shares	Weighted Average Exercise Price Per Share		Aggregate Intrinsic Value
Outstanding at January 1, 2018	2,712,954	$	2.98	$	1,190
Granted in 2018:
Officers and Directors	1,249,817	$	2.49
Others	1,299,360	2.60
Exercised	(350,441)	2.00
Forfeitures	(505,686)	3.48
Outstanding at December 31, 2018	4,406,004	$	3.19	$	4,172
Granted in 2019:
Officers and Directors	1,228,109	$	4.08
Others	1,160,643	4.51
Exercised	(799,800)	2.90
Forfeitures	(497,985)	2.03
Outstanding at December 31, 2019	5,496,971	$	3.64	$	15,455
Granted in 2020:
Officers and Directors	2,270,801	$	4.88
Others	1,254,711	5.58
Exercised	(1,400,003)	2.40
Forfeitures	(561,514)	4.65
Outstanding at December 31, 2020	7,060,966	$	4.55	$	2,831


Range of Exercise Prices	Number Outstanding	Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price		Aggregate Intrinsic Value
$1.00 – 5.00	4,553,296	8.13	$	3.66
$5.01 – 10.00	2,449,845	8.60	$	5.96
$10.01 – 15.00	30,325	4.14	$	13.09
$15.01 – 20.00	27,500	3.74	$	16.16
	7,060,966				$	2,831


Range of Exercise Prices	Number Outstanding	Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price		Aggregate Intrinsic Value
$1.00 – 5.00	2,233,552	7.47	$	3.57
$5.01 – 10.00	724,389	7.4	$	6.22
$10.01 – 15.00	30,325	4.14	$	13.09
$15.01 – 20.00	27,500	3.74	$	16.16
	3,015,766				$	1,570

The weighted average grant date fair value of options granted during the years ended December 31, 2020, 2019 and 2018 was $5.13, $4.29 and $1.57, respectively. There were no options granted during the years ended December 31, 2020, 2019 or 2018 whose exercise price was lower than the estimated market price of the stock at the grant date.


Nonvested Shares	Shares	Weighted Average Grant Date Fair Value		Intrinsic Value
Nonvested at January 1, 2019	3,873,247
Granted	3,525,512
Vested	(2,892,808)
Forfeited	(460,751)
Nonvested at December 31, 2020	4,045,200	$	4.45	$	1,261

As of December 31, 2020, there was approximately $7.9 million of unrecognized compensation cost related to unvested share-based compensation awards granted. These costs will be expensed over the next three years.

During the year ended December 31, 2020, a total of 3,525,512 options to purchase Common Stock, with an aggregate fair market value of approximately $18.1 million, were granted to Company employees and directors. The options granted have a term of 10 years from the grant date and vest ratably between a one and three-year period. The fair value of each option is amortized as compensation expense evenly through the vesting period.

During the year ended December 31, 2020, 462,404 RSUs were issued under the 2019 Plan to members of the Company’s executive officers, board of directors and certain employees, with a fair market value of approximately $2.1 million, which vest in equal installments over three years. The fair value of restricted units is determined using quoted market prices of the Common Stock and the number of shares expected to vest.


	Number of Restricted Shares	Weighted Average Fair Market Value Per RSU
Outstanding at January 1, 2020	1,648,559	$	3.86
Granted:
Officers and Directors	449,949	$	4.56
Employees	12,455	$	5.50
Vested	(762,987)	$	4.02
Forfeitures	(407,217)	$	4.31
Outstanding at December 31, 2020	940,759	$	3.71

In December 2012, the Company’s Board of Directors (the “Board”) approved the BDSI Performance Long Term Incentive Plan (“LTIP”). The LTIP was designed as an incentive for the Company’s senior management to generate revenue for the Company. The LTIP consisted of RSUs (which are referred to in this context as Performance RSUs) which are rights to acquire shares of Common Stock. All Performance RSUs granted under the LTIP were granted under the Company’s 2011 Equity Incentive Plan (as the same may be amended, supplemented or superseded from time to time) as “Performance Compensation Awards” under such plan. The participants in the LTIP are either named executive officers or senior officers of the Company.

The term of the LTIP began with the Company’s fiscal year ended December 31, 2012 and ended during the fiscal year ending December 31, 2019. The total number of Performance RSUs covered by the LTIP was 1,078,000, of which 1,013,000 were awarded between in 2012 and 2015. No additional Performance RSUs were awarded between 2016 to 2019. The Performance RSUs under the LTIP vested each year over the 8-year term of the LTIP depending on the achievement of pre-defined annual revenue amounts by the Company, as reported in its Annual Report on Form 10-K. As of December 31, 2019, a cumulative total of 194,637 RSUs vested and a cumulative total of 818,363 unvested LTIP shares were returned back to the 2019 Plan pool. As a result, there were no LTIP RSUs that vested during the year ended December 31, 2020.

As of December 31, 2020, a cumulative total of 2,136,019 warrants to affiliates, with exercise prices ranging from $2.38 to $3.53, remain exercisable and outstanding. The warrants were valued using the Black-Scholes Model, which a cumulative fair value of approximately $6.1 million. There were no warrants granted or exercised during the years ended 2020, 2019 or 2018.