Quarterly report pursuant to Section 13 or 15(d)

Equity Incentive Plan

v3.8.0.1
Equity Incentive Plan
 9 Months Ended
Sep. 30, 2017
Share Based Compensation Option And Incentive Plan [Abstract]  
Shareholders' Equity and Share-based Payments [Text Block]
8. Equity Incentive Plan
 
In 2005, the Company approved the 2005 Equity Incentive Plan (the “2005 Plan”). The 2005 Plan provides for the granting of options, restricted stock or other stock-based awards to employees, officers, directors, consultants and advisors. During 2010, the maximum number of shares of Common Stock that may be issued pursuant to the 2005 Plan was increased to 891,222 shares. The Board of Directors (the “Board”) is responsible for administration of the 2005 Plan. The Company’s Board determines the term of each option, the option exercise price, the number of shares for which each option is granted and the rate at which each option is exercisable. Incentive stock options may be granted to any officer or employee at an exercise price per share of not less than the fair value per common share on the date of the grant (not less than 110% of fair value in the case of holders of more than 10% of the Company’s voting stock) and with a term not to exceed ten years from the date of the grant (five years for incentive stock options granted to holders of more than 10% of the Company’s voting stock). Nonqualified stock options may be granted to any officer, employee, consultant or director at an exercise price per share of not less than the par value per share.  Following adoption of the 2014 Equity Incentive Plan (the “2014 Plan”), no further grants were made under the 2005 Plan.
 
The Company’s Board adopted the 2014 Plan and the Employee Stock Purchase Plan (the “ESPP”), and the Company’s Stockholders approved the 2014 Plan and the ESPP Plan in February 2015. As of September 30, 2017, the maximum number of shares of Common Stock that may be issued pursuant to the 2014 Plan and the ESPP is 1,690,123 and 170,567 shares, respectively. 
 
In January 2017, the number of shares of common stock issuable under the 2014 Plan automatically increased by 405,235 shares pursuant to the terms of the 2014 Plan. Additionally, in June 2017, the number of shares of common stock issuable under the 2014 Plan was increased by 250,000 shares and issuable under the ESPP was increased by 100,000 shares, as approved by the Company’s Stockholders. These additional shares are included in the total of 1,690,123 shares issuable under the 2014 Plan and 170,567 shares issuable under the ESPP.
 
The following is a summary of stock option activity for the nine months ended September 30, 2017 and 2016:  
 
 
 
 
 
 
 
Weighted-Average
 
 
 
Number of
 
Weighted- Average
 
Contractual Life
 
 
 
Options
 
Exercise Price
 
(In Years)
 
Outstanding at December 31, 2016
 
 
1,509,711
 
$
2.85
 
 
5.04
 
Granted
 
 
482,950
 
 
1.44
 
 
9.60
 
Exercised
 
 
(61,078)
 
 
0.67
 
 
 
 
Expired
 
 
(73,283)
 
 
2.19
 
 
 
 
Outstanding at September 30, 2017
 
 
1,858,300
 
$
2.62
 
 
5.61
 
Exercisable at September 30, 2017
 
 
1,188,317
 
$
2.68
 
 
4.56
 
Vested and Expected to Vest at September 30, 2017
 
 
1,188,317
 
$
2.68
 
 
4.56
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding at December 31, 2015
 
 
1,277,367
 
$
2.75
 
 
4.94
 
Granted
 
 
355,071
 
 
2.81
 
 
9.50
 
Exercised
 
 
(86,765)
 
 
0.65
 
 
 
 
Forfeited
 
 
(12,362)
 
 
3.93
 
 
 
 
Outstanding at September 30, 2016
 
 
1,533,311
 
$
2.91
 
 
6.44
 
Exercisable at September 30, 2016
 
 
907,445
 
$
2.84
 
 
4.09
 
Vested and Expected to Vest at September 30, 2016
 
 
907,445
 
$
2.84
 
 
4.09
 
  
On January 31, 2017, the Board approved the grant of options to purchase 36,000 shares of its Common Stock to three consultants of the Company. On February 6, 2017, the Board approved the grant of options to purchase 15,450 shares of its Common Stock to three employees. On May 18, 2017, the Board approved the grant of options to purchase 63,000 shares of its Common Stock to two employees and four consultants of the Company. On June 21, 2017, the Board approved the grant of options to purchase 350,000 shares of its Common Stock to six members of the Board, six employees, and one consultant of the Company. On June 30, 2017, the Board approved the grant of options to purchase 1,500 shares of its Common Stock to three employees of the Company. On September 28, 2017, the Board approved the grant of options to purchase 17,000 shares of its Common Stock to two employees of the Company.
 
On February 6, 2017, the Board approved the grant of 104,000 shares of restricted stock to eight employees. These vest 33.33% on the one-year anniversary of the grant date, and the remainder ratably over the 24-month period following the one-year anniversary. As of September 30, 2017, none of these shares were vested.
 
On January 25, 2016, the Board approved the grant of options to purchase 48,300 shares of its Common Stock to two executives and seven members of the Board. On March 7, 2016, in connection with the Jade Acquisition, the Board approved the grant of options to purchase 47,786 shares of its Common Stock to two executives. On March 29, 2016, the Board approved the grant of options to purchase 114,438 shares of its Common Stock. On April 25, 2016, the Board approved the grant of options to purchase 41,732 shares of its Common Stock. In the third quarter of 2016, the Board approved the grant of options to purchase 102,815 shares of its Common Stock.
 
All grants were issued pursuant to the 2014 Plan. In general, grants under the 2014 Plan vest 33.33% on the one-year anniversary of the grant date, and the remainder ratably over the 24-month period following the one-year anniversary.
 
For the nine months ended September 30, 2017 and 2016, the fair value of each option grant has been estimated on the date of grant using the Black-Scholes Option Pricing Model with the following weighted-average assumptions:
 
 
 
2017
 
2016
 
Risk-Free Interest Rate
 
1.82%
 
1.82%
 
Expected Life
 
7.28 years
 
7.00 years
 
Expected Volatility
 
171%
 
65%
 
Expected Dividend Yield
 
0%
 
0%
 
 
Using the Black-Scholes Option Pricing Model, the estimated weighted average fair value of an option to purchase one share of common stock granted during the nine months ended September 30, 2017 and 2016 was $1.46 and $2.94, respectively.
 
The total stock-based compensation expense for employees and non-employees is included in the accompanying Condensed Consolidated Statements of Operations and as follows:  
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
 
September 30,
 
September 30,
 
 
 
2017
 
2016
 
2017
 
2016
 
Research and Development
 
$
57,544
 
$
17,092
 
$
165,538
 
$
35,692
 
General and Administrative
 
 
131,148
 
 
135,973
 
 
535,295
 
 
354,777
 
 
 
$
188,692
 
$
153,065
 
$
700,833
 
$
390,469
 
 
The fair value of options granted for the nine months ended September 30, 2017 and September 30, 2016 was approximately $550,000 and $720,000, respectively. The fair value of restricted stock granted for the nine months ended September 30, 2017 and September 30, 2016 was approximately $158,000 and $0, respectively. As of September 30, 2017 and September 30, 2016, there is approximately $1,113,000 and $1,209,000 of total unrecognized compensation expense related to unvested stock-based compensation arrangements granted, which cost is expected to be recognized over a weighted-average period of 2.12 and 2.35 years, respectively. The aggregate intrinsic value of stock options outstanding and exercisable at September 30, 2017 and September 30, 2016 is approximately $242,000 and $597,000, respectively. The intrinsic value of stock options exercised during the nine months ended September 30, 2017 and September 30, 2016 was approximately $78,000 and $207,000, respectively.
 
At September 30, 2017, there were 170,416 options available under the 2014 Plan.