EQUITY-BASED COMPENSATION

6 Months Ended

Jun. 30, 2021

Share-based Payment Arrangement [Abstract]

Equity Incentive Plans

The Company has granted options to employees, directors, and consultants under the 2015 Equity Incentive Plan (the "2015 Plan"). On July 19, 2019, the Company completed a merger with Flex Pharma and Flex Pharma had fully vested options to purchase 90,279 common shares outstanding as of the date of the merger and 34,385 of these options continue to be exercisable as of June 30, 2021. The 2015 Plan provides for the grant of incentive stock options ("ISOs"), nonstatutory stock options, restricted stock awards, restricted stock units, stock appreciation rights, performance-based stock awards and other stock-based awards. Additionally, the 2015 Plan provides for the grant of performance-based cash awards. ISOs may be granted only to the Company's employees. All other awards may be granted to the Company's employees, including officers, and to non-employee directors and consultants. As of June 30, 2021, there were 1,037,190 shares remaining available for the grant of stock awards under the 2015 Plan.

During the six-month periods ended June 30, 2021 and 2020, the Company awarded 68,500 and 182,000, respectively, stock options to its employees and directors, pursuant to the plan described above. Stock options

generally vest over one to four years and have a contractual term of ten years. Stock options are valued using the Black-Scholes option pricing model and compensation cost is recognized based on the resulting value over the service period. Expected volatilities utilized in the model are based on implied volatilities from traded stocks of peer companies. Similarly, the dividend yield is based on historical experience and the estimate of future dividend yields. The risk-free interest rate is derived from the U.S. Treasury yield curve in effect at the time of grant. The expected term of the options is based on the average period the stock options are expected to remain outstanding. The fair value of the option grants awarded during each of the six month periods ended June 30, 2021 and 2020 was $0.1 million, which has been estimated with the following assumptions on the grant date.


	3/10/2021		6/16/2021		3/23/2020
Risk-free interest rate	1.00	%	1.09	%	0.48	%
Volatility	133.35	%	131.06	%	113.17	%
Expected life (years)	6.00		6.00		5.80
Expected dividend yield	0	%	0	%	0	%

The following table summarizes stock option activity for employees and non-employees for the six months ended June 30, 2021 and 2020:


	Shares	Weighted-Average Exercise Price	Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding at December 31, 2019	166,233	$34.42	6.53	$—
Granted	182,000	0.61
Exercised	—
Forfeited	(26,000)	—
Expired	—
Outstanding at June 30, 2020	322,233	$17.59	7.85
Exercisable at June 30, 2020	84,711	$59.61	3.00	$—

Outstanding at December 31, 2020	1,563,972	$2.78	9.47	$175,770
Granted	68,500	$1.13-$1.49
Exercised	—
Forfeited	(45,000)
Expired	—
Outstanding at June 30, 2021	1,587,472	$2.77	8.99	$307,100
Exercisable at June 30, 2021	156,519	$17.64	6.90	$33,750

As of June 30, 2021 and 2020, there was approximately $1.1 million and $0.4 million of total unrecognized compensation cost related to unvested stock options. Total unrecognized compensation cost will be adjusted for future changes in employee and non-employee forfeitures, if any. The Company expects to recognize that cost over a remaining weighted-average period of 2.7 years.