Stock Option Plans, Shares Reserved and Warrants

9 Months Ended

Sep. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Option Plans, Shares Reserved and Warrants

Note 10: Stock Option Plans, Shares Reserved and Warrants

During the quarter ended September 30, 2017, the Company granted options to purchase 285,000 shares of common stock to the new hires of the Company under the 2009 Equity Incentive Plan with exercise prices ranging from $4.50 to $5.65 per share. These options will vest with respect to the one-sixth of the option shares on the date that is six months after the vesting commencement date and one thirty-sixth of the option shares thereafter on each subsequent monthly anniversary of the vesting commencement date, so that the option is exercisable in full over a period of three years. These options were valued using the Black-Scholes option pricing model, the expected volatility was approximately 58%, the term was six years, the dividend rate was 0.0 % and the risk-free interest rate was approximately 2.1%, which resulted in a calculated fair value of $815,000.

The following table summarizes the stock option activity for the nine months ended September 30, 2017:

	2009 Equity Incentive Plan			Weighted Average Exercise Price		Weighted Average Remaining Contract Life
Balance as of December 31, 2016		4,320,409		$	6.06		7.98 years
Options Granted		2,506,750			3.48		9.48 years
Options Exercised		(833	)		3.35		—
Options Canceled/Expired		(227,509	)		6.23		—
Balance as of September 30, 2017		6,598,817		$	5.08		8.33 years
Vested and Exercisable at September 30, 2017		3,373,829		$	5.54		7.30 years

The aggregate intrinsic value (the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money options) of the 6,598,817 and 4,320,409 stock options outstanding at September 30, 2017 and December 31, 2016 was approximately $6,205,000 and approximately $26,000, respectively. The aggregate intrinsic value of 3,373,829 and 2,319,963 stock options exercisable at September 30, 2017 and December 31, 2016 was approximately $2,106,000 and $1,000, respectively.

The following table summarizes warrants outstanding at September 30, 2017:  

	Warrant Shares			Exercise Price Per Share		Date Issued	Expiration Date
Old Adamis Warrants		58,824		$	8.50	November 15, 2007	November 15, 2017
2013 Investor Warrants		22,057		$	12.16	June 26, 2013	June 26, 2018
Underwriter Warrants		28,108		$	7.44	December 12, 2013	December 12, 2018
Underwriter Warrants		4,217		$	7.44	January 16, 2014	January 16, 2019
Preferred Stock Series A-1 Warrants		1,183,432		$	4.10	January 26, 2016	January 26, 2021
Bear State Bank, Collateral to Line of Credit		1,000,000	*	$	0.0001	March 28, 2016
Preferred Stock Series A-2 Warrants		192,414		$	2.90	July 11, 2016	July 11, 2021
2016 Private Placement		700,000		$	2.98	August 3, 2016	August 3, 2021
Total Warrants		3,189,052

*Exercisable upon default of Line of Credit at Bear State Bank, see Note 7.

At September 30, 2017, the Company has reserved shares of common stock for issuance upon exercise of outstanding options and warrants, and options and other awards that may be granted in the future under the 2009 Equity Incentive Plan, as follows:

Warrants	3,189,052
RSU	1,300,000
2009 Equity Incentive Plan	8,494,277
Total Shares Reserved	12,983,329