4. STOCKHOLDERS’ EQUITY

2019 Offering

On June 26, 2019, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with William Blair & Company, L.L.C., as the sole underwriter (the “Underwriter”), in connection with an underwritten public offering of 18,750,000 shares of the Company’s common stock, par value $0.001 per share.

Pursuant to the Underwriting Agreement, the Company agreed to issue and sell an aggregate of 18,750,000 shares of Vermillion common stock offered by the Underwriter in a public offering at a price of $0.80 per share (the “Offering”). The Offering closed on June 28, 2019 and resulted in net proceeds to the Company, of approximately $13,521,000 after deducting expenses of approximately $1,500,000.

Under the Underwriting Agreement, the Company granted the Underwriter an option to purchase up to an additional 2,812,500 shares of Vermillion common stock at the public offering price, less underwriting discounts and commissions. On July 2, 2019, the Underwriter exercised its option to purchase 2,812,500 shares of Vermillion common stock at a price of $0.80 per share and resulted in proceeds to the Company of $2,092,000, after deducting underwriting discounts, commissions and other expenses related to the offering.

2010 Stock Incentive Plan

The Company’s employees, directors, and consultants were eligible to receive awards under the Vermillion, Inc. Second Amended and Restated 2010 Stock Incentive Plan, which was replaced by the 2019 Plan (as defined below) with respect to future equity grants. As of March 31, 2020, a total of 5,860,377 shares of Vermillion common stock were reserved with respect to outstanding stock options and unvested restricted stock awards.

2019 Stock Incentive Plan

At the Company’s annual meeting of stockholders on June 18, 2019, the Company’s stockholders approved the Vermillion, Inc. 2019 Stock Incentive Plan (the “2019 Plan”). The purposes of the 2019 Plan are (i) to align the interests of the Company’s stockholders and recipients of awards under the 2019 Plan by increasing the proprietary interest of such recipients in the Company’s growth and success; (ii) to advance the interests of the Company by attracting and retaining non-employee directors, officers, other employees, consultants, independent contractors and agents; and (iii) to motivate such persons to act in the long-term best interests of the Company and its stockholders. The 2019 Plan allows the Company to grant stock options, stock appreciation rights, restricted stock, restricted stock units and performance awards to participants.

Subject to the terms and conditions of the 2019 Plan, the initial number of shares authorized for grants under the 2019 Plan is 10,492,283. To the extent an equity award granted under the 2019 Plan expires or otherwise terminates without having been exercised or paid in full, or is settled in cash, the shares of common stock subject to such award will become available for future grant under the 2019 Plan. As of March 31, 2020, a total of 10,492,283 shares of common stock had been reserved for issuance under the 2019 Plan, of which 3,515,708 shares of common stock are subject to outstanding stock options.

Stock-Based Compensation

During the three months ended March 31, 2020, the Company awarded the Company’s non-employee directors an aggregate of 356,940 shares of restricted stock under the 2019 Plan, having a grant date of March 19, 2020 and a grant date fair value of approximately $243,000. The vesting of these shares of restricted stock is as follows: 25% on April 1, 2020; 25% on June 1, 2020; 25% on September 1, 2020; and 25% on December 1, 2020. During the three months ended March 31, 2020, the Company also granted the Company’s non-employee directors options to purchase an aggregate of 498,768 shares of Vermillion common stock with an exercise price of $0.68 per share.

During the three months ended March 31, 2020, the Company granted certain consultants options to purchase 50,000 shares of Vermillion common stock under the 2019 Plan. with an exercise price of $0.82 per share. These stock options have performance-based vesting conditions based on certain metrics through March 31, 2021. The Company also granted certain consultants options to purchase an aggregate of 41,000 shares of Vermillion common stock with an exercise price of $0.68 per share.

During the three months ended March 31, 2020, the Company granted certain officers and employees options to purchase an aggregate of 850,000 shares of Vermillion common stock with an exercise price of $0.82 per share. These stock options were granted under the 2019 Plan and have performance-based vesting conditions based on certain metrics through March 31, 2021.

During the three months ended March 31, 2020, the Company granted certain officers and employees options to purchase an aggregate of 24,000 shares of Vermillion common stock with an exercise price of $0.77 per share and 1,500,000 shares of Vermillion common stock with an exercise price of $0.68 per share. These stock options were granted under the 2019 Plan and vest 25% on each of the four anniversaries of the vesting commencement date for each such stock option.

The allocation of employee stock-based compensation expense by functional area for the three months ended March 31, 2020 and 2019 was as follows:


	Three Months Ended
	March 31,
(in thousands)	2020		2019
Cost of revenue	$	23	$	12
Research and development		—		2
Sales and marketing		37		20
General and administrative		201		143
Total	$	261	$	177