Stockholders' Equity

Common Stock

During the nine months ended September 30, 2019, the Company issued 229,261 shares of Common Stock as a result of employee stock option exercises presented in the tables below, and received net cash proceeds of approximately $1.7 million.

Stock Options

On September 8, 2017, the Company held its Annual Meeting of Stockholders (the “Annual Meeting”), at which time the 2017 Long-Term Incentive Plan ("2017 Plan") was approved by stockholder vote. The 2017 Plan allows the Company to grant both incentive stock options (“ISOs”) and non-qualified stock options (“NSOs”) to purchase a maximum of 400,000 shares of the Company's Common Stock. Under the terms of the 2017 Plan, ISOs may only be granted to Company employees and directors, while NSOs may be granted to employees, directors, advisors, and consultants. The Board has the authority to determine to whom options will be granted, the number of options, the term, and the exercise price. Options are to be granted at an exercise price not less than fair value for an ISO or an NSO. The vesting period is normally over a period of four years from the vesting date. The contractual term of an option is no longer than ten years.

As provided in the 2017 Plan, on January 1, 2019 the number of options available for issuance was increased by 4% of the outstanding stock as of December 31, 2018, which represents an increase of 153,814 options.

Prior to adopting the 2017 Plan, the Company did not have a formal long-term incentive stock plan. Prior to the implementation of the 2017 Plan, the Company had discretion to provide designated employees of the Company and its affiliates, certain consultants, and advisors who perform services for the Company and its affiliates, and non-employee members of the Board and its affiliates with the opportunity to receive grants of non-qualified stock options (the "Pre-2017 Non-Qualified Stock Options"). All of the Pre-2017 Non-Qualified Stock Option Grants were intended to qualify as non-qualified stock options. There were no Pre-2017 Non-Qualified Stock Option Grants that were intended to qualify as incentive stock options.

Pre-2017 Non-Qualified Stock Options

As of December 31, 2018, the Company had outstanding Pre-2017 Non-Qualified Stock Options to purchase, in the aggregate, 2,885,500 shares of the Company's Common Stock. During the nine months ended September 30, 2019, the Company did not grant any Pre-2017 Non-Qualified Stock Options.

Stock option activity for the Pre-2017 Non-Qualified Stock Options for the nine months ended September 30, 2019 is presented in the table below:



	Number of Shares		Weighted- average Exercise Price		Weighted- average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Outstanding at December 31, 2018	2,885,500		$	7.30	6.04	$	20,633,100
Exercised	(290,139	)	8.87
Forfeited	(10,143	)	10.00
Outstanding at September 30, 2019	2,585,218		$	7.12	5.37	$	20,509,476
Exercisable at September 30, 2019	2,522,440		$	7.06	5.40	$	20,164,667

A summary of the status of the Company’s non-vested Pre-2017 Non-Qualified Stock Options as of September 30, 2019 is presented below:

During the nine months ended September 30, 2019 and 2018, the Company recognized approximately $127 thousand and $751 thousand, respectively, of non-cash expense related to Pre-2017 Non-Qualified Stock Options granted in prior periods. As of September 30, 2019, there was approximately $26 thousand of unrecognized compensation costs related to non-vested Pre-2017 Non-Qualified Stock Options.

The 2017 Plan

During 2019, the Company granted options to a number of employees to purchase 184,700 shares of the Company’s Common Stock at exercise prices from $11.26 to $14.62 per share, which represents the closing price of the Company’s Common Stock on the date of the grants. These options were issued under the Company’s 2017 Plan and have ten-year terms. The options contain various vesting schedules as follows: one year from date of grant; 25% on the one year anniversary of the grant date and then 1/48th of the options shares vest on such date every month thereafter through the fourth anniversary of the grant date. The Company valued these options using the Black-Scholes option pricing model and estimated the aggregate fair value on the dates of grant to be $2.2 million.

The assumptions used in the valuation of options granted under the 2017 Plan during the nine months ended September 30, 2019 are as follows:



	For the Nine Months Ended September 30, 2019
Market value of stock on measurement date	$11.26 to $14.62
Risk-free interest rate	1.73% to 2.57%
Dividend yield	—
Volatility factor	105% to 121%
Term	5.50 to 6.25 Years

Stock option activity for options granted under the 2017 Plan during the nine months ended September 30, 2019 is presented in the table below:



	Number of Options Outstanding		Weighted-average Exercise Price		Weighted-average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Balance at December 31, 2018	343,550		$	28.97	8.95	$	840
Annual additional options authorized	—		—
Granted	184,700		$	13.88
Exercised	—		—
Forfeited	(19,812	)	$	18.72
Balance at September 30, 2019	508,438		$	23.89	8.68	$	208,166

A summary of the status of the Company’s non-vested options granted under the 2017 Plan as of September 30, 2019 is presented in the following table:



	Number of Shares		Weighted Average Grant Date Fair Value Per Share
Balance at September 30, 2019	508,438		$	24.29
Vested	(170,858	)	27.90
Non-vested at September 30, 2019	337,580		$	20.56

During the nine months ended September 30, 2019 and 2018, the Company recognized approximately $2.4 million and $3.9 million of non-cash expense related to options granted under the 2017 Plan. As of September 30, 2019, there was approximately $3.1 million of unrecognized compensation costs related to non-vested stock options that were granted under the 2017 Plan.

Restricted Stock Units

During the three months ended September 30, 2019, the Company issued 27,000 shares of restricted stock units, and the related activity is presented in the following table.

During the nine months ended September 30, 2019, the Company recognized approximately $17 thousand of non-cash expense related to restricted stock awarded under the 2017 Plan. As of September 30, 2019 there was approximately $375 thousand of unrecognized compensation costs related to the restricted stock units. The cost is expected to be recognized over a weighted average period of 3.92 years.

Warrants

During the nine months ended September 30, 2019, the Company did not issue any warrants.

Warrant activity for the nine months ended September 30, 2019 is presented in the table below:



	Number of Shares	Weighted- average Exercise Price		Weighted- average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Outstanding at December 31, 2018	353,610	$	9.78	3.85	$	1,863,331
Exercised	—	$	—
Outstanding at September 30, 2019	353,610	$	9.78	3.85	$	1,863,331
Exercisable at September 30, 2019	353,610	$	9.78	3.85	$	1,863,331

Number of Options

Weighted Average Grant Date Fair Value

Non-vested at September 30, 2019