9.STOCK-BASED COMPENSATION

In 2007, the Company’s Board of Directors adopted, and the Company’s shareholders subsequently approved, the 2007 Employee, Director and Consultant Stock Plan (the “2007 Plan”). The 2007 Plan provided that the Company’s Board of Directors (or committees and/or executive officers delegated by the Board of Directors) could grant incentive and nonqualified stock options to the Company’s employees, officers, directors, consultants and advisors.

On October 26, 2010, the Company’s Board of Directors adopted, and the Company’s shareholders subsequently approved, the 2010 Equity Incentive Plan (as subsequently amended, the “2010 Plan”). The 2010 Plan provided for grants of incentive stock options to employees, and nonqualified stock options and restricted Common Stock to employees, consultants, and non-employee directors of the Company.

In April 2015, the Company’s Board of Directors adopted, and the Company’s shareholders subsequently approved, the 2015 Equity Incentive Plan (the “2015 Plan”). The 2015 Plan provides for grants of incentive stock options to employees, and nonqualified stock options, restricted Common Stock, restricted stock units (“RSUs”), and stock appreciation rights to employees, consultants, and non-employee directors of the Company.

Upon approval of the 2015 Plan by the Company’s shareholders on June 16, 2015, the 2010 Plan was terminated and no additional shares or share awards have been subsequently granted under the 2010 Plan. As of September 30, 2019, the total number of shares available to be issued under the 2015 Plan was 2,046 shares, consisting of 160,000 shares initially authorized under the 2015 Plan shares plus the shares that remained available for grant under the 2010 Plan at the time of its termination adjusted for cumulative cancellations, forfeitures and issuances from the 2010 Plan and 2015 Plan.

Options issued under the 2007 Plan, 2010 Plan, and 2015 Plan (collectively, the “Plans”) are exercisable for up to 10 years from the date of issuance.

In March 2015, the Company’s Board of Directors adopted, and the Company’s shareholders subsequently approved, the ESPP. The ESPP allows employees to buy company stock twice per year through after-tax payroll deductions at a discount from market. The Company’s Board of Directors initially authorized 7,500 shares for issuance under the ESPP. Commencing on the first day of the year ended December 31, 2016 and on the first day of each year thereafter during the term of the ESPP, the number of shares of Common Stock reserved for issuance shall be increased by the lesser of (i) 1% of the Company’s outstanding shares of Common Stock on such date, (ii) 2,000 shares, or (iii) a lesser amount determined by the Board of Directors. Under the terms of the ESPP, in no event shall the aggregate number of shares reserved for issuance during the term of the ESPP exceed 50,000 shares. As of both September 30, 2019 and December 31, 2018, there were 7,923 shares reserved for issuance under the ESPP.

In January 2019, 1,065 shares that were purchased in the offering period commencing on July 1, 2018 and ending on December 31, 2018 were issued under the ESPP. The ESPP is considered a compensatory plan with the related compensation cost recognized over each 6 month offering period. None of the Company’s employees participated in the ESPP plan in the current offering period and consequently no compensation expense was recorded in each of three and nine months periods ended September 30, 2019. The compensation expense related to the ESPP for each of the three and nine month periods ended September 30, 2018 was $1 thousand and was included in share-based compensation expense.

Stock-based compensation

For the three month periods ended September 30, 2019 and 2018, the Company recorded stock-based compensation expense of $68 thousand and $85 thousand, respectively, inclusive of the expense related to the ESPP.

For the nine month periods ended September 30, 2019 and 2018, the Company recorded stock-based compensation expense of $203 thousand and $541 thousand, respectively, inclusive of the expense related to the ESPP

The Company estimates the fair value of each option award on the date of grant using the Black-Scholes option pricing model. The expected term of options granted under the Plans, all of which qualify as “plain vanilla,” is based on the average of the contractual term (10 years) and the vesting period (generally, 48 months). For non-employee options, the expected term is the contractual term. The risk-free rate is based on the yield of a U.S. Treasury security with a term consistent with the option.

The assumptions used principally in determining the fair value of options granted were as follows:


	September 30,	December 31,
	2019	2018
Risk-free interest rate	2.55%	2.45 - 2.88%
Expected dividend yield	0%	0%
Expected term (employee grants)	6 Years	5.62 Years
Expected volatility	105%	104%

The Company grants RSUs and restricted stock awards (“RSAs”), collectively referred to as restricted securities under its the 2015 Equity Incentive Plan. These restricted securities, generally vest over a three-year period, contingent on the recipient’s continued employment. Prior to vesting, all RSAs have the right to vote and receive dividends under the 2015 Equity Incentive Plan; however, the Company’s form of Restricted Stock Agreement provides that the payment of dividends on unvested RSAs shall be deferred until such time as the shares vest. The grant date fair value of these awards is based on the fair market value of our common stock on the date of grant.

Stock options

A summary of option activity as of September 30, 2019 and changes for the nine-month period then ended are presented below:


				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
		Exercise		Contractual	Intrinsic
Options	Shares	Price		Term in Years	Value
Outstanding at December 31, 2018	54,849	$	100.83	7.32	$	—
Granted	90,000	$	1.53
Expired	(2,500)	$	231.00
Cancelled/Forfeited	(17,459)	$	40.12
Outstanding at September 30, 2019	124,890	$	35.15	8.42	$	—
Vested and Exercisable at September 30, 2019	28,283	$	134.22	5.82	$	—

The weighted average grant-date fair value of options granted during the nine months ended September 30, 2019 was $1.25 per share. The total fair value of options that vested in the three months ended September 30, 2019 was $34 thousand. The total fair value of options that vested in the nine months ended September 30, 2019 was $103 thousand. For the three month period ended September 30, 2019, the Company recorded stock-based compensation expense of $42 thousand related to stock options. For the nine month period ended September 30, 2019, the Company recorded stock-based compensation expense of $126 thousand related to stock options. As of September 30, 2019, total unrecognized compensation expense related to non-vested share-based option compensation arrangements amounted to $219 thousand and is estimated to be recognized over a period of 1.80 years.

Restricted Securities

The following table summarizes the restricted securities activity under the 2015 Plan during the nine month period ended September 30, 2019:


Restricted Stock Awards		Weighted-Average
and Restricted Stock Units	Number of Grants	Grant Date Fair Value
Unvested balance at December 31, 2018	10,250	$	23.13
Granted	206,500	$	0.52
Vested	(2,750)	$	26.20
Unvested balance at September 30, 2019	214,000	$	1.27

For the three month period ended September 30, 2019, the Company recorded stock-based compensation expense of $26 thousand related to the time-based restricted securities. For the nine-month period ended September 30, 2019, the Company recorded stock-based compensation expense of $77 thousand related to the time-based restricted securities. As of September 30, 2019, total unrecognized compensation expense related to non-vested restricted securities amounted to $253 thousand which the Company expects to recognize over a remaining weighted-average of 2.54 years.