Stockholders' Equity

Common Stock

During the three months ended March 31, 2020, the Company issued 71,667 shares of Common Stock as a result of employee stock option exercises and warrant exercises, and received net cash proceeds of $0.7 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”) non-qualified stock options (“NSOs”), and restricted stock units ("RSUs") 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, 2020 the number of shares available for issuance was increased by 4% of the outstanding stock as of December 31, 2019, which represents an increase of 167,457 options. As of March 31, 2020, the Company has 223,181 shares available for future issuance under the 2017 Plan.

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, 2019, the Company had outstanding Pre-2017 Non-Qualified Stock Options to purchase, in the aggregate, 2,500,500 shares of the Company's Common Stock. During the three months ended March 31, 2020, 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 three months ended March 31, 2020 is presented in the table below:



	Number of Shares		Weighted- average Exercise Price		Weighted- average Remaining Contractual Term (years)	Aggregate Intrinsic Value (in Thousands)
Outstanding at December 31, 2019	2,500,500		$	7.03	5.05	$	18,426
Exercised	(20,000	)	9.50
Forfeited	(15,000	)	10.00
Outstanding at March 31, 2020	2,465,500		$	6.99	4.85	$	6,416

A summary of the status of the Company’s vested and non-vested Pre-2017 Non-Qualified Stock Options as of March 31, 2020 is presented below:

During the three months ended March 31, 2020 and 2019, the Company recognized approximately $1 thousand and $50 thousand respectively, of non-cash expense related to Pre-2017 Non-Qualified Stock Options granted in prior periods. As of March 31, 2020, there is no further compensation expense to be recognized for the Pre-2017 Non-Qualified Stock Options.

The 2017 Plan

During the three months ended March 31, 2020, the Company granted options to a number of employees and non-employees to purchase 100,100 shares of the Company’s Common Stock at exercise prices from $12.15 to $13.60 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. Options to existing employees vest as follows: 1/48^th of the option shares vest every month through the fourth anniversary of the grant date. Options issued to new employees vest as follows: 1/4^th of the option shares vest on the one year anniversary of the grant date, and then 1/48th of the option shares vest on such date every month thereafter through the fourth anniversary of the grant date. Options issued to non-employees vest 100% upon the one year anniversary from the grant date. The Company valued these options using the Black-Scholes option pricing model and estimated the fair value on the date of grant to be $1.1 million.

The assumptions used in the valuation of options granted under the 2017 Plan during the three months ended March 31, 2020 are as follows:



	For the Three Months Ended March 31, 2020
Market value of stock on measurement date	$12.15 to $13.60
Risk-free interest rate	1.14% to 1.68%
Dividend yield	—
Volatility factor	94.1% to 101.21%
Term	5.5 to 10 Years

Stock option activity for options granted under the 2017 Plan during the three months ended March 31, 2020 is presented in the table below:



	Number of Options Outstanding		Weighted-average Exercise Price		Weighted-average Remaining Contractual Term (years)	Aggregate Intrinsic Value (in Thousands)
Balance at December 31, 2019	491,950		$	24.08	8.43	$	82
Annual additional options authorized	—		—
Granted	100,100		$	13.17
Exercised	—		—
Forfeited	(32,129	)	$	16.64
Balance at March 31, 2020	559,921		$	22.61	8.40	$	—

A summary of the status of the Company’s vested and non-vested options granted under the 2017 Plan as of March 31, 2020 is presented in the following table:

During the three months ended March 31, 2020 and 2019, the Company recognized approximately $0.7 million and $1.0 million of non-cash expense related to options granted under the 2017 Plan. As of March 31, 2020, there was approximately $2.4 million of unrecognized compensation costs related to non-vested stock options that were granted under the 2017 Plan.

Restricted Stock Activity

The following summarizes the restricted stock activity under the Company's 2017 Plan during the three months ended March 31, 2020:



	Number of Shares		Weighted Average Issue Date Fair Value Per Share
Restricted stock outstanding and unvested at December 31, 2019	27,000		$	14.51
Restricted stock granted	26,100		$	13.60
Restricted stock forfeited	(13,500	)	$	14.51
Restricted stock outstanding and unvested at March 31, 2020	39,600		$	13.91

Twenty-five percent (25%) of the restricted stock units will vest on the one (1) year anniversary of the vesting commencement date, and twenty-five percent (25%) will vest annually thereafter on the same day as the vesting commencement date. During the three months ended March 31, 2020, the Company recognized approximately $38,000 of non-cash expense related to restricted stock units. As of March 31, 2020, there was $0.4 million of total unrecognized compensation cost related to restricted stock units.

Warrants

During the three months ended March 31, 2020, the Company did not issue any warrants.

Warrant activity for the three months ended March 31, 2020 is presented in the table below:



	Number of Shares		Weighted- average Exercise Price		Weighted- average Remaining Contractual Term (years)	Aggregate Intrinsic Value (in Thousands)
Outstanding at December 31, 2019	342,610		$	9.77	3.71	$	1,585
Exercised	(59,510	)	$	10.00
Forfeited	(4,300	)	$	10.00
Outstanding at March 31, 2020	278,800		$	9.72	4.26	$	61
Exercisable at March 31, 2020	278,800		$	9.72	4.26	$	61

Number of Options

Weighted Average Grant Date Fair Value

Vested at March 31, 2020

Non-vested at March 31, 2020