Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.10.0.1
Stock-Based Compensation
9 Months Ended
Sep. 30, 2018
Stock-based Compensation [Abstract]  
Stock-Based Compensation

8. Stock-Based Compensation


Stock Options


The following is a summary of the stock option activity for the nine months ended September 30, 2018:


 

 

Shares

 

 

Weighted

Average

Exercise

Price

 

Outstanding, December 31, 2017

 

 

266,884

 

 

$

19.57

 

Granted

 

 

216,336

 

 

 

3.62

 

Forfeited

 

 

(17,814

)

 

 

31.36

 

Outstanding, September 30, 2018

 

 

465,406

 

 

$

11.71

 


The weighted average grant-date fair value of stock options granted during the nine months ended September 30, 2018 was $2.67. The fair value of each stock option was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions for stock options granted during the nine months ended September 30, 2018:


Dividend yield

 

 

0.0

%

Expected volatility

 

 

91.38

%

Risk-free interest rate

 

 

2.44

%

Expected lives (years)

 

 

6.1

 


The risk-free interest rate is based on U.S. Treasury interest rates at the time of the grant whose term is consistent with the expected life of the stock options. The Company used an average historical stock price volatility based on an analysis of reported data for a peer group of comparable companies that have issued stock options with substantially similar terms, as the Company did not have sufficient trading history for its common stock. Expected term represents the period that the Company’s stock option grants are expected to be outstanding. The Company elected to utilize the “simplified” method to estimate the expected term. Under this approach, the weighted-average expected life is presumed to be the average of the vesting term and the contractual term of the option.


Expected dividend yield was considered to be 0% in the option pricing formula since the Company had not paid any dividends and had no plans to do so in the future. The forfeiture rate was considered to be none as the options vest on a monthly basis.


The Company recognized $112,730 and $122,657 in stock-based option compensation expense for the three months ended September 30, 2018 and 2017, respectively and $354,877 and $367,800 in stock-based option compensation expense for the nine months ended September 30, 2018 and 2017, respectively. The following table summarizes information about stock options outstanding at September 30, 2018:


Options Outstanding

 

 

Options Vested and Exercisable

 

9/30/2018

 

 

Weighted

Average

Remaining

Contractual

Life

(Years)

 

 

Weighted

Average

Exercise

Price

 

 

Balance

as of

9/30/2018

 

 

Weighted

Average

Remaining

Contractual

Life

(Years)

 

 

Weighted

Average

Exercise

Price

 

465,406

 

 

8.4

 

 

$11.71

 

 

180,274

 

 

7.3

 

 

$22.08

 


As of September 30, 2018, the unrecognized stock-based compensation expense related to unvested stock options was $1,475,129, which is expected to be recognized over a weighted average period of approximately 16 months.


Restricted Stock


The Company recognized $27,084 and $16,314 in stock-based compensation expense for employees related to restricted stock awards during the three months ended September 30, 2018 and 2017, respectively, and $292,312 and $152,521 in stock-based compensation expense for employees related to restricted stock awards during the nine months ended September 30, 2018 and 2017, respectively. The Company recognized $800 and $5,000 in share-based compensation expense related to issuance of shares of restricted stock to non-employees (i.e., consultants) in exchange for services during the three months ended September 30, 2018 and 2017, respectively and $5,557 and $26,000 in share-based compensation expense related to issuance of shares of restricted stock to non-employees (i.e., consultants) in exchange for services during the nine months ended September 30, 2018 and 2017, respectively. As of September 30, 2018, there were 61,144 restricted stock awards granted to employees and non-employees, all of which were unvested.


Total stock-based compensation expense, including restricted stock and stock options was $652,746 and $546,321 for the nine months ended September 30, 2018 and 2017, respectively.