|9 Months Ended|
Sep. 30, 2021
9. Stockholders’ Equity
Underwritten Registered Offering
On January 21, 2020, the Company closed on a public offering consisting of 2,857,142 shares of common stock together with warrants to purchase 1,428,571 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).
From January 1, 2021 to September 30, 2021 the Company sold 2,106,027 shares of common stock under the Common Stock Sales Agreement, and the Amended and Restated Common Stock Sales Agreement, at an average price of approximately $12.18 per share, raising aggregate net proceeds of $25,646,099 after deducting a commission up to 3%.
Common Stock Warrants
As of September 30, 2021, the Company has outstanding warrants to purchase 747,383 shares of common stock issuable at a weighted-average exercise price of $11.06 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 addition, at its 2021 Annual Meeting for Stockholders, the stockholders approved the Company’s 2021 Subsidiaries Stock Incentive Plan (the “SSIP”) which allows for the grant of equity interests in subsidiaries of the Company including Skunkworx Bio, Inc. (“SkunkWorx”), Scorpion Biological Services, Inc. (“Scorpion”), Abacus Biotech, Inc. (“Abacus”), Blackhawk Bio, Inc. (“Blackhawk”) and other newly formed
subsidiaries of the Company that adopt the SSIP by resolution of their Board of Directors. On August 2, 2021 the Board of Directors, the Compensation Committee and the Board of Directors of Skunkworx, Scorpion, Abacus and Blackhawk granted to Jeff Wolf an option under the SSIP to purchase 10,526, 10,638, 10,526 and 10,526 shares of common stock of Skunkworx, Scorpion, Abacus and Blackhawk, respectively, representing beneficial ownership of approximately 5.0% of theshares of common stock of each of Skunkworx, Scorpion, Abacus and , respectively.
Accounting for Stock-Based Compensation:
Stock Compensation Expense - For the three and nine months ended September 30, 2021, the Company recorded $0.9 million and $4.4 million of stock-based compensation expense, respectively. For the three and nine months ended September 30, 2020, the Company recorded $4.7 million and $6.1 million of stock-based compensation expense, respectively. No compensation expense of employees with stock awards was capitalized during the three and nine months ended September 30, 2021 and 2020.
Stock Options - Under the Plan, the Company has issued stock options. A stock option grant 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 nine months ended September 30, 2021 and 2020, the Company issued options that expire ten years from the date of grant.
Fair Value Determination – The Company has used the Black-Scholes 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 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 and nine months ended September 30, 2021 and 2020:
The following table summarizes weighted-average assumptions used in our calculations of fair value for the nine months ended September 30, 2021 and 2020:
Stock Option Activity - The weighted-average fair value of options granted during the nine months ended September 30, 2021 and 2020, as determined under the Black-Scholes valuation model, was $4.41 and $6.30 per share, respectively.
The following is a summary of the stock option activity for the nine months ended September 30, 2021:
Unrecognized compensation expense related to unvested stock options was $2.9 million as of September 30, 2021, which is expected to be recognized over a weighted-average period of 1.4 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. 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 nine months ended September 30, 2021:
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 vest 25% on the award date and 25% each anniversary thereafter. 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 nine months ended September 30, 2021:
The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef