Quarterly report pursuant to Section 13 or 15(d)


3 Months Ended
Mar. 31, 2019
Notes to Financial Statements  

2016 & 2018 Equity Incentive Plans


In the first quarter of 2016, the Company adopted the 2016 Equity Incentive Plan. In the fourth quarter of 2018, the Company adopted the 2018 Equity Incentive Plan. The following table contains information about the 2016 and the 2018 Equity Incentive Plans as of March 31, 2019:



Awards Reserved

for Issuance





Awards Available

for Grant

2016 Equity Incentive Plan     2,000,000       1,541,064       458,936  
2018 Equity Incentive Plan     6,600,000       5,100,000       1,500,000  


Stock Options


The following table summarizes the Company’s stock option activity and related information for the three months ended March 31, 2019:


    Number of
    Weighted-Average Exercise Price Per Share     Weighted-Average Remaining Contractual Life  

(in thousands)

Aggregate Intrinsic Value of In-the-Money Options

Options Outstanding as of January 1, 2019     8,400,629     $ 1.56            
Options Granted     442,292     $ 0.84            
Options Exercised     -     $ -            
Options Forfeited     (80,000 )   $ 2.09            
Options Expired     -     $ -            
Options Outstanding as of March 31, 2019     8,762,921     $ 1.52     9.4 years   $ 35.4  
Options Exercisable as of March 31, 2019     2,623,889     $ 1.77      9.0 years   $ 35.4  


The aggregate intrinsic value is calculated as the difference between the Company’s closing stock price of $0.92 on March 31, 2019, and the exercise price of options, multiplied by the number of options. As of March 31, 2019, there was $7.63 million total unrecognized stock-based compensation. Such costs are expected to be recognized over a weighted-average period of approximately 2.36 years.


The Company recognizes compensation expense for stock option awards on a straight-line basis over the applicable service period of the award. The service period is generally the vesting period. The following assumptions were used to calculate stock-based compensation for issuances during the three months ended March 31, 2019:


    March 31,  
Expected term (years)   5 Years  
Volatility     111.8 %
Risk-Free Interest Rate     2.4 %
Dividend Yield     0 %


The Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. Hence, the Company uses the “simplified method” described in Staff Accounting Bulletin 107 to estimate the expected term of share option grants.


The expected stock price volatility assumption was determined by examining the historical volatilities for the Company’s common stock. The Company will continue to analyze the historical stock price volatility and expected term assumptions as more historical data for the Company’s common stock becomes available.


The risk-free interest rate assumption is based on the U.S. treasury instruments whose term was consistent with the expected term of the Company’s stock options.


The expected dividend assumption is based on the Company’s history and expectation of dividend payouts. The Company has never paid dividends on its common stock and does not anticipate paying dividends on its common stock in the foreseeable future. Accordingly, the Company has assumed no dividend yield for purposes of estimating the fair value of the Company stock-based compensation.


The Company estimates the forfeiture rate at the time of grant and revisions, if necessary, were estimated based on management’s expectation through industry knowledge and historical data.


Stock-Based Compensation Expense


The following table sets forth the total stock-based compensation expense resulting from stock options and restricted grants of common stock to employees, directors and non-employee consultants in the consolidated statement of operations which are included in selling, general and administrative expenses:


    (in thousands except for shares / options)  
    For the Three Months Ended  
    March 31, 2019     March 31, 2018  
Type of Award  

Number of

Shares or

Options Granted

    Stock-Based Compensation Expense     Number of Shares or Options Granted     Stock-Based Compensation Expense  
Stock Options     442,292     $ 1,282       800,000     $ 474  
Stock Grants:                                
Employees (Common Stock)     385,536       315       81,506       288  
Non–Employee Consultants (Common Stock)     26,376       23 *     6,410       17  
Total Stock–Based Compensation Expense           $ 1,620             $ 779  


* Excludes adjustments for shares cancelled.