NOTE

13.

Equity Incentive Plans

Prior to the Merger, Private Vaxart issued equity awards for compensation purposes to employees, directors and consultants under the Company’s

2007

Equity Incentive Plan (the

“2007

Plan”). The

2007

Plan expired in

July 2017

and

further awards

may

be made under the

2007

Plan. Each outstanding stock option to acquire shares of Private Vaxart stock, whether vested or unvested, was assumed in the Merger after adjustment for the impact of the Conversion and the Reverse Stock Split.

November 2016,

Aviragen’s stockholders approved the

2016

Equity Incentive Plan (

“2016

Equity Plan”), under which all outstanding awards under their previous plans became available for issuance under the

2016

Equity Plan if such awards are forfeited or otherwise terminated. Under the

2016

Equity Plan, the Company was authorized to issue incentive stock options (“ISOs”), non-qualified stock options (“NQSOs”), restricted stock (“RSAs”) and restricted stock units (“RSUs”). Awards that expired or were canceled generally became available for issuance again under the

2016

Equity Plan. Awards have a maximum term of

ten

years from the grant date and vest over varying periods, as specified by the Company’s Board of Directors for each grant. Following stockholder approval of the

2019

Equity Incentive Plan (the

“2019

Plan”),

further awards are available for grant under the

2016

Plan.

April 23, 2019,

the Company’s stockholders approved the adoption of the

2019

Plan, under which the Company is authorized to issue ISOs, NQSOs, stock appreciation rights, RSAs, RSUs, other stock awards and performance awards that

may

be settled in cash, stock, or other property. The

2019

Plan is designed to secure and retain the services of employees, directors and consultants, provide incentives for the Company’s employees, directors and consultants to exert maximum efforts for the success of the Company and its affiliates, and provide a means by which employees, directors and consultants

may

be given an opportunity to benefit from increases in the value of the Company’s common stock.

The aggregate number of shares of common stock that

may

be issued under the

2019

Plan will

not

exceed

1,600,000

shares, which can only be increased by stockholder approval, except that all awards are subject to adjustment in the event of a stock split, stock dividend or other extraordinary dividend, or other similar change in the Company’s common stock or capital structure. Awards that expire or are canceled generally become available for issuance again under the

2019

Plan. Awards have a maximum term of

ten

years from the grant date and

may

vest over varying periods, as specified by the Company’s board of directors for each grant.

A summary of stock option transactions in each of the

two

years ended

December 31, 2019

, is as follows:

							Weighted
	Shares			Number of			Average
	Available			Options			Exercise
	For Grant			Outstanding			Price

Balance at January 1, 2018		—			304,850		$	9.50
Assumed on consummation of Merger		291,102			627,106		$	26.33
Granted		(431,100	)		431,100		$	5.17
Exercised		—			(2,013	)	$	6.49
Forfeited		71,500			(89,903	)	$	5.90
Canceled		269,148			(405,977	)	$	34.64

Balance at December 31, 2018		200,650			865,163		$	8.13

Authorized under 2019 Plan		1,600,000			—		$	—
Removed from 2016 Plan		(223,389	)		—		$	—
Granted		(1,791,030	)		1,791,030		$	0.67
Forfeited		483,849			(592,528	)	$	1.57
Canceled		25,100			(252,013	)	$	9.25

Balance at December 31, 2019		295,180			1,811,652		$	2.74

As of

December 31, 2019

, there were

1,811,652

options outstanding with a weighted average exercise price of

$2.74,

a weighted average remaining term of

8.09

years and an aggregate intrinsic value of

$14,000.

Of these options,

582,085

were vested, with a weighted average exercise price of

$6.18,

a weighted average remaining term of

5.38

years and an aggregate intrinsic value of

$3,000.

The aggregate intrinsic value represents the total pre-tax value (i.e., the difference between the Company’s stock price and the exercise price) of stock options outstanding as of

December 31, 2019

, based on our common stock closing price of

$0.35,

which would have been received by the option holders had all their in-the-money options been exercised as of that date.

The grant date fair value of options vested in the years ended

December 31, 2019

and

2018

, was

$774,000

and

$332,000,

respectively. There were

options exercised in the year ended

December 31, 2019

. The intrinsic value of options exercised in the year ended

December 31, 2018

, was zero.

The weighted average grant date fair value of options awarded in the years ended

December 31, 2019

and

2018

, was

$0.48

and

$3.59,

respectively. Fair values were estimated using the following assumptions:

	Year Ended December 31,
	2019			2018

Risk-free interest rate		1.68% - 2.31%			2.79% - 2.80%
Expected term (in years)	5.39 - 10.00 Years			5.84 - 6.05 Years
Expected volatility		83% - 85%			78% - 80%
Dividend yield		—	%		—	%

Total stock-based compensation recognized for options was as follows:

	Year Ended December 31,
	2019		2018
	(in thousands)
Research and development	$	253	$	254
General and administrative		374		285
Total stock-based compensation	$	627	$	539

As of

December 31, 2019

, the unrecognized stock-based compensation cost related to outstanding stock options that are expected to vest was

$0.7

million, which the Company expects to recognize over an estimated weighted average period of

2.43

years.