Stock-Based Compensation

12 Months Ended

Dec. 31, 2019

7.	Stock-Based Compensation

Summary of Stock-Based Compensation Plans

At December 31, 2019, the Company has a stock-based compensation plan where the Company’s common stock has been made available for equity-based incentive grants as part of the Company’s compensation programs. In December 2019, the Company adopted the 2019 Omnibus Equity Incentive Plan (the “2019 Plan”) which provided for the issuance of up to 4,000,000 shares of the Company’s common stock in the form of options, stock appreciation rights, restricted stock and other stock-based awards to employees, officers, directors, consultants and other eligible persons. At December 31, 2019, 4,000,000 shares were available for future grant under the 2019 Plan. Also, the Company previously had the 2009 Incentive Compensation Plan (the “2009 Plan”) which, after amendments, provided for issuance of up to 6,733,334 shares of the Company’s common stock in the form of options, stock appreciation rights, restricted stock and other stock-based awards to employees, officers, directors, consultants and other eligible persons. Provisions of the 2009 Plan stipulated that no grants could be made after February 2019; however, grants made prior to that date remain outstanding for their legal term.

In addition, the Company has awarded 1,477,379

non-plan

stock option grants to employees and

non-employees.

These

non-plan

grants have vesting periods and expiration dates similar to those options granted under the Incentive Plans. At December 31, 2019, 500,000

non-plan

grants were outstanding.

Stock-Based Compensation

Following is the stock-based compensation expense related to common stock options, restricted common stock and common stock warrants:


	Year Ended December 31,
	2019		2018
Research and development	$	318	$	1,944
General and administrative		1,365		2,501

Total stock-based compensation expense	$	1,683	$	4,445

The fair value of the options granted is determined using the Black-Scholes option-pricing model. The following weighted average assumptions were used:


	201 9			2018
Risk-free interest rate		2.68	%		2.47	%
Expected life of the options		6.0 years			5.7 years
Expected volatility of the underlying stock		103.7	%		103.5	%
Expected dividend rate		0	%		0	%

As noted above, the fair value of stock options is determined by using the Black-Scholes option pricing model. For all options granted since January 1, 2006 the Company has generally used option terms of between 5 to 10 years, generally with 5 to 6 years representing the estimated life of options granted to employees. The volatility of the common stock is estimated using historical volatility over a period equal to the expected life at the date of grant. The risk-free interest rate used in the Black-Scholes option pricing model is determined by reference to historical U.S. Treasury constant maturity rates with terms equal to the expected terms of the awards. An expected dividend yield of zero is used in the option valuation model, because the Company does not expect to pay any cash dividends on common stock in the foreseeable future. At December 31, 2019, the Company does not anticipate any option awards will be forfeited in the calculation of compensation expense due to the limited number of employees that receive stock option grants and the Company’s historical employee turnover.

The following table summarizes the stock option activity in the stock-based compensation plans:


	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding, December 31, 2017		5,155,263		$	4.11
Granted		1,011,875			5.01
Forfeited/Cancelled		(1,354,330	)		7.31
Exercised		(2,098,829	)		2.00

Outstanding, December 31, 2018		2,713,979		$	4.67
Granted		530,000			4.72
Forfeited/Cancelled		(92,730	)		2.91
Exercised		(150,993	)		1.83

Outstanding, December 31, 2019		3,000,256		$	4.88		6.22	$	705

Exercisable, December 31, 2019		2,592,756		$	4.90		5.78	$	705

The aggregate intrinsic value in the table above represents the total

pre-tax

amount, net of exercise price, which would have been received by option holders if all option holders had exercised all options with an exercise price lower than the market price on December 31, 2019, based on the closing price of the Company’s common stock of $2.86 on that date.

The weighted-average grant-date fair values of options granted during 2019 and 2018 were $3.83 and $3.98, respectively. As of December 31, 2019 and 2018, there were unvested options to purchase 407,500 and 54,865 shares of common stock, respectively. Total expected unrecognized compensation cost related to such unvested options is $517,000 at December 31, 2019, which is expected to be recognized over a weighted-average period of 0.91 years.

The aggregate intrinsic value of stock options exercised for the year ended December 31, 2019 and 2018 was $594,302 and $11,076,199, respectively.

During the years ended December 31, 2019 and 2018, 130,490 and 1,409,804 options became vested, respectively. The total grant date fair value of options vested during the years ended December 31, 2019 and 2018 was $491,000 and $4,519,000, respectively.

The following table summarizes additional information regarding outstanding and exercisable options under our stock-based compensation plans at December 31, 2019:


	Options Outstanding						Options Exercisable
Exercise Price (Range)	Number of Shares		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Number of Shares		Weighted Average Exercise Price
			(in years)
$0.87 – 1.00		190,500		6.95	$	0.88		190,500	$	0.88
$1.01 – 3.00		677,103		6.02		2.37		677,103		2.37
$3.01 – 5.00		1,071,678		8.19		4.36		664,178		4.13
$5.01 – 8.00		878,475		4.27		6.55		878,475		6.55
$8.01 – 13.38		182,500		4.06		13.38		182,500		13.38

		3,000,256		6.22	$	4.88		2,592,756	$	4.90

Restricted Stock Issuances

In January 2019, two directors elected to take restricted stock grants in lieu of cash retainers for 2019. A total of 19,068 shares of restricted stock valued at approximately $90,000 is being amortized to expense on a straight-line basis until January 16, 2020 when the stock vested in full.

In December 2017, two directors elected to take restricted stock grants in lieu of cash retainers for 2018. A total of 37,657 shares of restricted stock valued at approximately $90,000 was amortized to expense on a straight-line basis until December 14, 2018 when the stock vested in full.