12.Stock Compensation

The Company’s stock-based compensation is in accordance with its 2015 Incentive Compensation Plan (the “Plan”), pursuant to which the Compensation Committee of the Company is authorized to grant up to 2,750,000 stock-based compensation awards to officers and employees of the Company, in the form of time or performance based options, stock-appreciation rights (SARs), restricted stock units (RSUs) or substitute awards. As of September 30, 2015, there were 1,045,384 shares available for grant under the Plan.

Total stock-based compensation recorded by the Company for the two months ended September 30, 2015 was $0.7 million.

The following table summarizes the components of stock-based compensation expense in the condensed consolidated statements of operations for the two months ended September 30, 2015:

(in thousands)
Research and development expenses	$	25
Selling, general, and administrative expenses	648

Total	$	673

As of September 30, 2015, the Company had unrecognized compensation costs for stock options and SARs totaling $4.5 million.

Time-Based Stock Options

A summary of the status of the Company’s time-based stock options (“Options”) as of September 30, 2015 is as follows:

	Number of Shares	Weighted-Average Exercise Price		Weighted- Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (In thousands)
Outstanding at August 1, 2015	—	$	—
Granted	1,106,875	12.00
Exercised	—	—
Forfeited or expired	—	—
Outstanding at September 30, 2015	1,106,875	$	12.00	9.93	$	—
Exercisable at September 30, 2015	—	—		—	$	—
Vested and expected to vest at September 30, 2015	1,106,875	$	12.00	9.93	$	—

For the two months ended September 30, 2015, the Company recorded stock-based compensation of $0.2 million relating to the Options. As of September 30, 2015, the Company had unrecognized compensation costs of $4.3 million related to the Options.

The Options granted during the two months ended September 30, 2015 vest over three year periods, one-third on each anniversary of each holder’s grant date, with the exception of Options granted to the Company’s Chief Executive Officer, which vest one-third on the first anniversary of the grant date and 1/24 each month for two years thereafter.

The fair value of each Option was estimated on the date of grant using the Hull-White option pricing model with the assumptions described below. For the periods indicated, since the Company has no historical volatility information available, the expected volatility was based on actual volatility for comparable public companies projected over the expected terms of Options. The Company did not apply a forfeiture rate to the options as there is not enough historical information available to estimate. The risk-free interest rate was based on the U.S. Treasury yield curve at the time of the grant over the expected term of the Options.

Risk-free interest rate		1.67%-1.70%
Expected life (years)		5.73-5.97
Estimated volatility factor		47.68%-47.95%
Expected dividends		None

Time-Based Stock Appreciation Rights

A summary of the Company’s time-based SARs for the two months ended September 30, 2015 is as follows:

	Number of Shares	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (In thousands)
Outstanding at August 1, 2015	—	—
Granted	116,875	$	12.00
Exercised	—	—
Forfeited or expired	—	—
Outstanding at September 30, 2015	116,875	$	12.00	9.93	$	—
Exercisable at September 30, 2015	—	—		—	$	—
Vested and expected to vest at September 30, 2015	116,875	$	12.00	9.93	$	—

For the two months ended September 30, 2015, the Company recorded stock-based compensation of less than $0.1 million relating to these SARs. As of September 30, 2015, the Company had unrecognized compensation costs of $0.3 million related to these SARs, based on their fair value as of September 30, 2015.

Upon vesting and exercise of these SARs prior to their expiry or forfeiture, holders are entitled under the terms of the Plan to receive cash payments calculated based on the excess of the Company’s stock price over the target price in their award; consequently, these awards are accounted for as liability-type awards and the Company measures compensation cost based on their estimated fair value at each reporting date and the number of options expected to vest, net of forfeitures.

The fair value of each SAR award is estimated using the Hull-White option pricing model with the assumptions described below. For the periods indicated, since the Company has no historical volatility information available, the expected volatility was based on actual volatility for comparable public companies projected over the expected terms of SAR awards. The Company did not apply a forfeiture rate to the options as there is not enough historical information available to estimate. The risk-free interest rate was based on the U.S. Treasury yield curve at the time of the grant over the expected term of the SAR grants.

At reporting date, September 30, 2015:

Risk-free interest rate	2.04	%
Expected life (years)	6.46
Estimated volatility factor	41.82	%
Expected dividends	None

Performance-based Restricted Stock Units

During the two months ended September 30, 2015, the Company’s compensation committee approved 597,741 performance-based RSUs to be granted to officers and employees of the Company, however, performance targets have yet to be established and accordingly these awards are not considered granted since a mutual understanding of the terms and conditions of the awards has not been established with the holders.

Performance-Based Phantom Stock Options

During the two months ended September 30, 2015, the Company’s compensation committee approved 99,589 phantom stock options (“Phantom Options”) to be awarded to officers and employees of the Company, however, performance targets have yet to be established and accordingly these awards are not considered granted since a mutual understanding of the terms and conditions of the awards has not yet been established with the holders.

Director Shares

On January 31, 2014, 20,125 founder shares were transferred to each of Boulevard’s three independent directors (“Director Shares”), adjusted for the effect of stock dividends in February 2014 (for a total of 60,375 founder shares). On March 13, 2014, the underwriters exercised a portion of the over-allotment option from the Public Offering, resulting in a portion of the Director Shares being forfeited. As a result, the Director Shares were adjusted ratably resulting in each director holding 18,375 Director Shares (for a total of 55,125 Director Shares) at September 30, 2015.

The Director Shares were effectively subject to achievement of two performance conditions — the Company completing its initial public offering (IPO) and a business combination within 21 months of the IPO. Additionally 25% (13,781 shares in the aggregate) are subject to forfeiture if the Company’s stock price does not trade at or above $13 for any 20 day period of a 30 day period commencing on the Closing date through July 31, 2020 (5 years).

The grant date fair value of the Director Shares was estimated as of their deemed grant date of January 31, 2014. The aggregate fair value of the Director Shares of $0.4 million was recognized as an expense upon consummation of the Business Combination, at which point the performance conditions had been achieved.

The fair value of the Director Shares was estimated using a Monte Carlo Simulation Model that used the following assumptions:

Risk-free interest rate	1.96	%
Expected life (years)	6.47
Estimated volatility factor	31.16	%
Expected dividends	None

The Company is recognizing the aggregate fair value of these Director Shares subject to market conditions over the estimated life of the awards.

For the two months ended September 30, 2015, the Company recorded stock-based compensation of $0.5 million relating to these Director Shares. As of September 30, 2015, the Company had unrecognized compensation costs of $0.1 million related to these Director Shares, based on their fair value as of September 30, 2015.