Note 6. Stockholders’ Equity

Capital Structure

On December 1, 2016, the Company filed a shelf registration statement with the SEC for the issuance of common stock, preferred stock, warrants, rights, debt securities and units up to an aggregate amount of $150.0 million, which the Company refers to as the 2016 Shelf Registration Statement. On December 16, 2016, the 2016 Shelf Registration Statement was declared effective by the SEC. The Company completed an offering of common stock in March 2017 utilizing the 2016 Shelf Registration Statement (see below). In the future, the Company may also periodically offer one or more of these securities in amounts, prices and terms to be announced when and if the securities are offered. At the time any of the securities covered by the 2016 Shelf Registration Statement are offered for sale, a prospectus supplement will be prepared and filed with the SEC containing specific information about the terms of any such offering.

In March 2017, the Company completed an underwritten public offering, whereby it sold 4,304,813 shares of common stock at a public offering price of $3.74 per share. The Company received gross proceeds of approximately $16.1 million and net proceeds of approximately $14.8 million, net of underwriting discounts and offering expenses.

The holders of shares of common stock are entitled to one vote for each share of common stock held at all meetings of stockholders and written actions in lieu of meetings. The holders of shares of common stock are entitled to receive dividends, if and when declared by the board of directors.

Equity Incentive Plans

Shares available for the issuance of stock options or other stock-based awards under the Company’s 2015 Omnibus Incentive Compensation Plan were 3,030,616 at June 30, 2017.

Stock Options

The following table sets forth the stock option activity for the six months ended June 30, 2017:


				Weighted
		Weighted		average	Aggregate
	Number	average		contractual	intrinsic
	of shares	exercise price		term	value
Outstanding at December 31, 2016	1,772,050	$	5.74
Granted	515,073		4.83
Exercised	(56,955)		3.86
Forfeited	(44,560)		7.05
Expired	(16,068)		8.35
Outstanding at June 30, 2017	2,169,540	$	5.52	8.4	$	2,289,662
Vested and expected to vest at June 30, 2017	2,163,371	$	5.54	8.4	$	2,263,752
Exercisable at June 30, 2017	1,095,905	$	4.41	7.8	$	1,994,814

The fair value of each stock option grant is estimated on the date of grant using the Black‑Scholes option pricing model. The Company periodically remeasures the fair value of stock‑based awards issued to non‑employees and records the expense over the requisite service period. The expected term of the Company’s stock options has been determined utilizing the “simplified” method as described in the SEC’s Staff Accounting Bulletin No. 107 relating to stock‑based compensation. The simplified method was chosen because the Company has limited historical option exercise experience due to its short operating history. The risk‑free interest rate is based on the U.S. Treasury yield in effect at the time of grant for a period approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. Expected volatility is based on historical volatilities of similar entities within the Company’s industry.

The weighted average valuation date fair value of options granted was $2.99 and $5.20 per option for the six months ended June 30, 2017 and 2016, respectively. As of June 30, 2017, there was $4.2 million of total unrecognized compensation cost related to non‑vested stock options which is expected to be recognized over a weighted average period of 2.8 years. These amounts do not include 6,169 options outstanding as of June 30, 2017, which are performance‑based and vest upon the achievement of certain corporate milestones. Stock‑based compensation will be measured and recorded if and when it is probable that the milestone will occur.

Stock‑based compensation expense recognized for the three and six months ended June 30, 2017 and 2016 was allocated as follows:


	Three months ended June 30,				Six months ended June 30,
	2017		2016		2017		2016

Research and development	$	140,802	$	227,194	$	280,755	$	767,941
General and administrative		342,829		254,839		866,491		370,284
Total	$	483,631	$	482,033	$	1,147,246	$	1,138,225

Performance‑Based Awards

The Company issued no performance-based awards during the six months ended June 30, 2017 and 2016. For awards granted to employees with performance conditions, no expense will be recognized, and no measurement date can occur, until the occurrence of the event is probable. For awards granted to non‑employees, the Company will recognize the lowest aggregate amount within the range of potential values as expense until the measurement date is established. For the six months ended June 30, 2017 and 2016, the Company recognized $45,286 and $534,723, respectively, as expense related to performance‑based awards.

Warrants

The following table summarizes warrant activity for the six months ended June 30, 2017:


		Weighted
		average
	Warrants	exercise price
Outstanding at December 31, 2016	337,696	$	3.06
Exercised	(87,899)		1.30
Outstanding at June 30, 2017	249,797	$	3.68