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Note 9 - Stock-based Compensation
9 Months Ended
Sep. 30, 2019
Notes to Financial Statements  
Share-based Payment Arrangement [Text Block]
9
.
S
tock
-based
Compensation
 
2016
Omnibus Incentive Plan
 
The Sun BioPharma, Inc.
2016
Omnibus Incentive Plan (the
“2016
Plan”) was adopted by our Board of Directors in
March 2016
and approved by our stockholders in
May 2016.
The
2016
Plan permits the granting of incentive and non-statutory stock options, restricted stock, stock appreciation rights, performance units, performance shares and other stock awards to eligible employees, directors and consultants. We grant options to purchase shares of common stock under the
2016
Plan at
no
less than the fair market value of the underlying common stock as of the date of grant. Options granted under the
2016
Plan have a maximum term of
ten
years. Under the
2016
Plan, a total of
1,500,000
 shares of common stock were initially reserved for issuance. As of
September 30, 2019,
options to purchase
1,447,151
shares of common stock were outstanding under the
2016
Plan
52,849
shares remained available for future awards.
 
2011
Stock Option Plan
 
Our Board of Directors ceased making awards under the Sun BioPharma, Inc.
2011
Stock Option Plan (the
“2011
Plan”) upon the receipt of stockholder approval for the
2016
Plan. Awards outstanding under the
2011
Plan remain outstanding in accordance with and pursuant to the terms thereof. Options granted under the
2011
Plan have a maximum term of
ten
years and generally vest over
zero
to
two
years for employees. As of
September 30, 2019,
options to purchase
264,360
shares of common stock remained outstanding under the
2011
Plan.
 
Stock
-based Compensation
Expense
 
General and administrative (“G&A”) and research and development (“R&D”) expenses include non-cash stock-based compensation expense as a result of our issuance of stock options. The terms and vesting schedules for stock-based awards vary by type of grant and the employment status of the grantee. The awards granted through
September 30, 2019
vest based upon time-based and performance conditions. There was approximately
$0.6
million unamortized stock-based compensation expense related to options granted to employees and non-employees as of
September 30, 2019
which will be amortized over the next
eleven
quarters.
 
Stock-based compensation expense for each of the periods presented is as follows (in thousands):
 
   
Nine Months Ended September 30,
 
   
2019
   
2018
 
General and Administrative
  $
573
    $
1,404
 
Research and Development
   
385
     
892
 
    $
958
    $
2,296
 
 
A summary of stock option activity for the
nine
months ended
September 30, 2019
is as follows:
 
   
Shares
Available
for Grant
   
Shares
Underlying
Options
   
Weighted Average
Exercise Price
Per Share
   
Aggregate
Intrinsic Value
 
Balance at December 31, 2018
   
732,149
     
1,032,211
    $
8.90
    $
169,495
 
Granted
   
(700,100
)    
700,100
     
3.41
     
 
 
Exercised
   
-
     
-
     
-
     
 
 
Cancelled
   
-
     
-
     
-
     
 
 
Forfeitures
   
20,800
     
(20,800
)    
15.10
     
 
 
                                 
Balance at September 30, 2019
   
52,849
     
1,711,511
    $
6.58
    $
1,674,675
 
 
Information about stock options outstanding, vested and expected to vest as of
September 30, 2019,
is as follows:
 
       
Outstanding, Vested and Expected to Vest
   
Options Vested and Excercisable
 
Per Share Exercise Price
 
Shares
   
Weighted Average
Remaining Contractual Life
(Years)
   
Weighted Average
Exercise Price
   
Options
Excercisable
   
Weighted Average
Remaining Contractual Life
(Years)
 
                                             
$0.875
-
$1.10
   
26,360
     
3.25
    $
1.029
     
26,360
     
3.25
 
$2.275
-
$2.50
   
38,000
     
4.37
    $
2.464
     
38,000
     
4.37
 
$2.95
-
$3.175
   
740,800
     
8.50
    $
3.011
     
398,125
     
7.52
 
$4.50
-
$8.10
   
538,300
     
8.04
    $
6.742
     
506,500
     
8.18
 
$10.00
-
$10.10
   
54,000
     
7.80
    $
10.007
     
54,000
     
7.80
 
 
$15.10
 
   
314,051
     
6.66
    $
15.100
     
307,051
     
6.76
 
                                             
Totals
   
1,711,511
     
7.88
    $
6.581
     
1,330,036
     
7.43
 
 
Key assumptions
 
The estimated grant-date fair values of the stock options were calculated using the Black-Scholes valuation model, based on the following assumptions for the
three
months ended
September 30, 2019:
 
   
2019
Common stock fair value
 
 4.50
 -
5.00
Risk-free interest rate
 
 1.55%
-
1.57%
Expected dividend yield
 
 
0%
 
Expected Option life (years)  
5.0
-
5.5
Expected stock price volatility
 
 
72%