Note 17.

Share-Based Compensation

The Company provides certain employees, non-employee directors and consultants with performance incentives under the Aquestive Therapeutics, Inc. Equity Incentive Plan (the Plan), adopted by the Board of Directors on June 15, 2018. Under this Plan, the Company may grant restricted stock units, stock options, or other stock-based awards in order to align the long-term financial interests of selected participants with those of its stockholders, strengthen the commitment of such persons to the Company, and attract and retain competent and dedicated persons whose efforts will enhance long-term growth, profitability and share value.

Restricted stock units and options that have been awarded are subject to graded vesting over a service period, which is typically three years. Compensation cost is recognized for these awards on a pro-rata basis over the requisite service period for each award granted.

At December 31, 2020, there were approximately 0.7 million shares available for grant.

The Company recognized share-based compensation in its Consolidated Statements of Operations during the periods presented as follows:

Expense classification:	Year Ended December 31, 2020		Year Ended December 31, 2019
Manufacture and supply	$	275	$	231
Research and development		729		720
Selling, general and administrative		5,577		6,120
Total share-based compensation expenses	$	6,581	$	7,071
Share-based compensation from:
Restricted Stock Units (A)		806		1,863
Stock Options (B)		5,751		5,173
Employee Stock Purchase Plan (C)		24		35
Total share-based compensation expenses	$	6,581	$	7,071

(A)	Restricted Stock Units

The following table summarizes the Company’s awards of restricted stock units for the year ended December 31, 2019 and 2020:

	Number of Units			Weighted Average Grant Date Fair Value Per Share
	(In thousands)
Unvested, December 31, 2018		205		$	14.77
Granted		—			—
Forfeited		(6	)		—
Vested		(125	)		14.94
Unvested, December 31, 2019		74		$	14.64
Granted		4			7.54
Forfeited		—			—
Vested		(64	)		14.88
Unvested, December 31, 2020		14		$	11.38

The total grant date fair market value of shares vested in 2020 and 2019 was $958 and $1,863, respectively.

As of December 31, 2020, there was approximately $122 of unrecognized compensation costs related to restricted stock units awarded and is expected to be recognized during 2021. The RSUs granted to employees are subject to a three-year graduated vesting schedule. These RSUs are not subject to performance-based criteria other than continued employment.

(B) Stock option awards

The following table summarizes the Company’s stock option activity for the period from December 31, 2018 through December 31, 2020:

(in 000s, except share price data)	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term in Years		Aggregate Intrinsic Value
Outstanding at December 31, 2018		1,033		$	14.72		9.55	$	—
Granted		1,258		$	6.66
Forfeited		(60	)	$	5.78
Exercised		—
Outstanding at December 31, 2019		2,231		$	10.42		8.94	$	689
Granted		1,168			3.32
Forfeited		(140	)	$	4.36
Exercised		—						$	—
Outstanding at December 31, 2020		3,259		$	8.14		8.42	$	2,978
Vested and expected to vest at December 31, 2020		3,035		$	8.14		8.42	$	2,758
Exercisable at December 31, 2020		1,235		$	11.26		7.89	$	403

The weighted average grant date fair value of stock options granted during 2020 and 2019 was $2.61 and $4.95, respectively. The fair values of stock options granted were estimated using the Black-Scholes model based on the following assumptions:

	Year Ended December 31,
	2020		2019
Expected dividend yield		0%		0%
Expected volatility		100%		85% — 106%
Expected term (years)		5.50 — 6.10		5.50 — 6.10
Risk-free interest rate		0.33% — 1.69%		1.5% — 2.6%
Exercise prices	$	1.54 — 7.86	$	3.36 — 8.05

We anticipate reinvesting earnings for the foreseeable future in product development and other avenues of share-value growth and therefore used a dividend yield of zero. The estimate of volatility was determined based on the historical trading data of comparable public companies at the time of grant given the lack of sufficient history for our own publicly-traded common stock. The expected term of the award was calculated using the simplified method and weighted average was utilized taking into account the vesting periods and contractual life. The risk-free interest rates are derived from the U.S. Treasury yield curve in effect on the date of grant for instruments with a remaining term similar to the expected term of the options.

As of December 31, 2020, $5,653 of total unrecognized compensation expenses related to non-vested stock options is expected to be recognized over a weighted average period of 1.3 years from the date of grant. These option grants provided a maximum contract term of 10 years from grant date, with a weighted average remaining contract life of 8.0 years. Options granted to senior management and key employees are subject to a three-year graded vesting schedule while options granted to the board of directors are subject to a one year cliff vesting schedule. These stock options are not subject to performance-based criteria other than continued employment.

(C)	Employee Stock Purchase Plan

The Company’s Board of Directors adopted the Aquestive Therapeutics, Inc. Employee Stock Purchase Plan (ESPP) in June 2018, plan rollout began in late 2018, and initial employee purchases were made in 2019.

The purpose of the ESPP is to help retain and motivate current employees, to attract new talent, and to provide eligible employees of the Company a convenient manner of purchasing shares of common stock at a discounted price at periodic intervals by means of accumulated payroll deductions. The Company may offer common stock purchase rights biannually under offerings that allow for the purchase of common stock at the lower of 85% of the fair value of shares on either the first or last day of the offering period. The offerings may, or may not, also provide tax advantages. Purchases made via a tax-advantaged offering are intended to qualify as purchases made within the meaning of Section 423 of the Internal Revenue Code. Offerings may run concurrently, or serially, and each offering will be treated as separate and distinct. Under the ESPP, a total of 250,000 shares of common stock were initially reserved for issuance. During 2020 and 2019, employees purchased 32,986 and 56,378 shares, respectively, through this plan.