Stock-Based Compensation

6 Months Ended

Jun. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Note 6. Stock-Based Compensation

Warrant Activity 

We typically issue warrants to purchase shares of our common stock to investors as part of a financing transaction or in connection with services rendered by placement agents and consultants. Our outstanding warrants expire on varying dates through November 2021. A summary of warrant activity is as follows:

	Number of ‎ Shares			Weighted- ‎ Average ‎ Exercise ‎ Price/Share		Weighted- ‎ Average ‎ Remaining ‎ Contractual ‎ Term (Years)		Aggregate ‎ Intrinsic ‎ Value (1)
Outstanding — December 31, 2017		5,141,112		$	4.09
Issued		—			—
Exercised		(2,664,460	)		3.49
Expired		(13,061	)		57.52

Outstanding — June 30, 2018		2,463,591		$	4.10		1.8	$	29,049,400

Vested (exercisable) — June 30, 2018		2,463,591		$	4.10		1.8	$	29,049,400

Aggregate intrinsic value represents the difference between the exercise price of the warrant and the closing market price of our common stock on June 29, 2018, which was $15.78 per share.

The total intrinsic value of warrants exercised during the six months ended June 30, 2018 was $17.5 million.

Stock Options

We have five stock incentive plans: the 2002 Stock Incentive Plan (the “2002 Plan”), the 2009 Stock Incentive Plan (the “2009 Plan”), the 2011 Stock Incentive Plan (the “2011 Plan”), the 2015 Omnibus Equity Incentive Plan (the “2015 Plan”), and the 2018 Omnibus Equity Incentive Plan (the “2018 Plan”), (collectively, the “Plans”). The 2002 Plan, the 2009 Plan, the 2011 Plan and the 2015 Plan (the “Prior Plans”) have been superseded by the 2018 Plan. In May 2018, the stockholders approved the 2018 Plan

for issuance up to 3,730,179

shares. The Prior Plans will remain in effect until all awards granted under such Prior Plans have been exercised, forfeited, cancelled, or have otherwise expired or terminated in accordance with the terms of such awards, but no awards will be made pursuant to the Prior Plans after the effectiveness of the 2018 Plan. As of June 30, 2018, the Company

had 4,168,567 shares available for future awards under the 2018 Plan.

During the six months ended June 30, 2018, we granted stock options at exercise prices equal to or greater than the quoted market price of our common stock on the grant date. The fair value of each option grant was estimated on the date of grant using Black-Scholes with the following weighted average assumptions:

Expected life (years)	5.3 – 7.0
Risk-free interest rate	2.6% - 2.9%
Volatility	97.7% – 110%
Dividend yield	0%

The expected option life assumption is estimated based on the simplified method. Accordingly, the Company has utilized the average of the contractual term of the options and the weighted average vesting period for all options to calculate the expected option term. The risk-free interest rate assumption is based upon observed interest rates appropriate for the expected term of our employee stock options. The expected volatility is based on the historical volatility of our stock commensurate with the expected life of the stock-based award. We do not anticipate paying dividends on the common stock in the foreseeable future.

We recognize stock-based compensation expense over the vesting period using the straight-line single option method. Stock-based compensation expense is recognized only for those awards that vest. We account for the forfeitures of unvested awards as they occur.

Total stock-based compensation expense related to all of our share-based payment awards is comprised of the following:

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017

Cost of revenues	$	57,947	$	11,699	$	93,404	$	18,523
General and administrative		1,007,090		614,190		1,734,813		1,217,109
Sales and marketing		303,766		163,273		533,331		321,075
Engineering and development		76,926		5,397		133,691		8,294
	$	1,445,729	$	794,559	$	2,495,239	$	1,565,001

A summary of stock option activity is as follows:

	Number of ‎ Shares			Weighted- ‎ Average ‎ Exercise ‎ Price/Share		Weighted- ‎ Average ‎ Remaining ‎ Contractual ‎ Term (Years)		Aggregate ‎ Intrinsic ‎ Value (1)
Outstanding — December 31, 2017		5,322,858		$	4.16
Granted (weighted-average fair value of $ 7.31 per share)		937,900			8.87
Exercised		(227,495	)		3.35
Forfeited		(82,504	)		7.88

Outstanding — June 30, 2018		5,950,759		$	4.88		7.6	$	64,854,100

Vested (exercisable) — June 30, 2018		3,334,656		$	4.32		6.8	$	38,236,600

Expected to vest after June 30, 2018 (unexercisable)		2,616,103		$	5.61		8.6	$	26,617,500

(1)

Aggregate intrinsic value represents the difference between the exercise price of the option and the closing market price of our common stock on June 29, 2018, which was $15.78 per share.

As of June 30, 2018, there was unrecognized compensation expense of $11.2 million related to unvested stock options, which we expect to recognize over a weighted average period of 2.8 years.

The total intrinsic value of stock options exercised during the six months ended June 30, 2018 was $1.6 million.