|3 Months Ended|
Mar. 31, 2020
9. Stockholders’ Equity
Common Stock and Warrant Offering
On January 21, 2020, the Company closed on a public offering consisting of 20,000,000 shares of common stock together with Warrants to purchase 10,000,000 shares of common stock. The gross proceeds to the Company from this offering were approximately $7,000,000, before deducting underwriting discounts, commissions, and other offering expenses.
The Company has accounted for the warrants as liabilities and recorded them at fair value in our consolidated balance sheets (see Note 3).
Common Stock Warrants
During the three months ended March 31, 2020, 9,960,000 January 2020 warrants were exercised, and 3,291,666 warrants were exchanged for a total of 9,708,332 shares of common stock. As of March 31, 2020, the Company has outstanding warrants to purchase 5,779,064 shares of common stock issuable at a weighted-average exercise price of $2.03 per share.
The following table summarizes the warrant activity of the Company’s common stock warrants.
Equity Compensation Plans
The Company maintains various equity compensation plans with substantially similar provisions under which it may award employees, directors and consultants incentive and non-qualified stock options, restricted stock, stock appreciation rights and other stock based awards with terms established by the Compensation Committee of the Board of Directors which has been appointed by the Board of Directors to administer the plans. In July 2019, the Company’s shareholders approved an increase of 4,000,000 shares in the number of shares available for grant. At the 2020 Special Meeting of Stockholders, the stockholders approved an amendment to the Plan to increase the number of shares by 4,000,000. As of March 31, 2020, there were 2,307,760 shares remaining available for grant under these plans.
Accounting for Stock-Based Compensation:
Stock Compensation Expense - For the three months ended March 31, 2020 and 2019, the Company recorded $948,192, and $2,060,304 of stock-based compensation expense, respectively. No compensation expense of employees with stock awards was capitalized during the three months ended March 31, 2020 and 2019.
Stock Options - Under the Plan, the Company has issued stock options. A stock option granted gives the holder the right, but not the obligation to purchase a certain number of shares at a predetermined price for a specific period of time. The Company typically issues options that vest over four years in equal installments beginning on the first anniversary of the date of grant. Under the terms of the Plan, the contractual life of the option grants may not exceed ten years. During the three months ended March 31, 2020 and 2019, the Company issued options that expire ten years from the date of grant.
Fair Value Determination – The Company has used the Black-Scholes-Merton option pricing model to determine fair value of our stock option awards on the date of grant. The Company will reconsider the use of the Black-Scholes-Merton model if additional information becomes available in the future that indicates another model would be more appropriate or if grants issued in future periods have characteristics that cannot be reasonably estimated under this model.
The following weighted-average assumptions were used for option grants during the three months ended March 31, 2020 and 2019:
The following table summarizes weighted-average assumptions used in our calculations of fair value for the three months ended March 31, 2020 and 2019:
Stock Option Activity - The weighted-average fair value of options granted during the three months ended March 31, 2020 and 2019, as determined under the Black-Scholes valuation model, was $0.42 and $0.80, respectively.
The following is a summary of the stock option activity for the three months ended March 31, 2020:
Unrecognized compensation expense related to unvested stock options was $2.4 million as of March 31, 2020, which is expected to be recognized over a weighted-average period of 1.8 years and will be adjusted for forfeitures as they occur.
Restricted Stock - Under the Plan, the Company has issued restricted stock. A restricted stock award is an issuance of shares that cannot be sold or transferred by the recipient until the vesting period lapses. Restricted stock issued to members of our Board of Directors and Executives vest 50% on grant date, 30% on the first anniversary and 10% each anniversary thereafter. The grant date fair value of the restricted stock is equal to the closing market price of our common stock on the date of grant.
The following is a summary of restricted stock award activity for the three months ended March 31, 2020:
Restricted Stock Units - Under the Plan, the Company issued time-based RSUs. RSUs are not actual shares, but rather a right to receive shares in the future. The shares are not issued and the employee cannot sell or transfer shares prior to vesting and has no voting rights until the RSUs vest. The employees' time-based RSUs will result in the delivery of shares in one-fourth increments commencing on the award date. The grant date fair value of the RSUs is equal to the closing market price of our common stock on the grant date. The Company recognizes the grant date fair value of RSUs of shares the Company expects to issue as compensation expense ratably over the requisite service period.
The following is a summary of stock unit activity for the three months ended March 31, 2020:
The entire disclosure for share-based payment arrangement.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef