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Stock Plans and Share-Based Payments

9 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement [Abstract]

Note 13 – Stock Plans and Share-Based Payments

The fair value of stock options and restricted stock is recognized as stock-based compensation expense in the Company’s condensed consolidated statement of operations and comprehensive loss. The Company and its consolidated subsidiaries calculate stock-based compensation expense in accordance with ASC 718. The fair value of stock-based awards is amortized over the vesting period of the award. The Company’s consolidated subsidiary, SRP, maintains its own equity incentive compensation plan.

Stock Options

During the nine months ended September 30, 2019, the Company granted stock options to purchase 94,806 shares of common stock to employees, directors and a consultant. These stock options are being expensed over the respective vesting period, which is based on a service condition. The fair value of the stock options granted during the nine months ended September 30, 2019 was approximately $398,000.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. The below weighted average assumptions for the risk-free interest rates, expected dividend yield, expected lives and expected stock price volatility were utilized for the stock options granted during the nine months ended September 30, 2019.

Weighted Average Assumptions for Option Grants
Stock Price Volatility	90.5	%
Risk-Free Interest Rates	2.1	%
Expected Life (in years)	6.15
Expected Dividend Yield	-	%

During the three and nine months ended September 30, 2019, stock options to purchase 4,166 shares of the Company’s common stock were exercised by a member of management for proceeds of $21,000, resulting in the issuance of 4,166 shares of the Company’s common stock. During the nine months ended September 30, 2018, stock options to purchase 11,111 shares of the Company’s common stock were exercised in a cashless exercise, resulting in the issuance of 2,471 shares of the Company’s common stock.

Stock-based compensation expense related to stock options was approximately $348,000 and $120,000 for the three months ended September 30, 2019 and 2018, respectively. For the three months ended September 30, 2019, approximately $335,000 and $13,000 are included in selling, general and administrative expenses and research and development expenses, respectively, on the accompanying condensed consolidated statement of operations and comprehensive loss. For the three months ended September 30, 2018, approximately $118,000 and $2,000 are included in selling, general and administrative expenses and research and development expenses, respectively, on the accompanying condensed consolidated statement of operations and comprehensive loss.

Stock-based compensation expense related to stock options was approximately $623,000 and $373,000 for the nine months ended September 30, 2019 and 2018, respectively. For the nine months ended September 30, 2019, approximately $577,000 and $46,000 are included in selling, general and administrative expenses and research and development expenses, respectively, on the accompanying condensed consolidated statement of operations and comprehensive loss. For the nine months ended September 30, 2018, approximately $356,000 and $17,000 are included in selling, general and administrative expenses and research and development expenses, respectively, on the accompanying condensed consolidated statement of operations and comprehensive loss. During the nine months ended September 30, 2018, previously issued stock options were modified for an employee who is no longer employed with the Company. As a result of this modification, included in the approximately $17,000 of research and development expenses is approximately $12,000 of stock option modification expense on the accompanying condensed consolidated statement of operations and comprehensive loss for the nine months ended September 30, 2018.

There was no tax benefit related to expense recognized in the three months ended September 30, 2019 and 2018, as the Company is in a net operating loss position. As of September 30, 2019, there was approximately $966,000 of total unrecognized compensation expense related to unvested stock-based awards granted under the equity compensation plans. Unrecognized compensation expense of approximately $966,000 will be amortized over the weighted average remaining requisite service period of 2.0 years. Such amount does not include the effect of future grants of equity compensation, if any.

Restricted Stock

There was no stock-based compensation expense for restricted stock for the three months ended September 30, 2019 or 2018.

Total stock-based compensation expense for restricted stock was approximately $30,000 and $215,000 for the nine months ended September 30, 2019 and 2018, respectively. For the nine months ended September 30, 2019, approximately $28,000 and $2,000 are included in selling, general and administrative expenses and research and development expenses, respectively, on the accompanying condensed consolidated statement of operations and comprehensive loss. For the nine months ended September 30, 2018, approximately $190,000 and $25,000 are included in selling, general and administrative expenses and research and development expenses, respectively, on the accompanying condensed consolidated statement of operations and comprehensive loss.

As of September 30, 2019, all shares of restricted stock have vested.

SRP Equity Incentive Plan

SRP’s 2019 Equity Incentive Plan was approved on May 7, 2019 under which 150,000 shares of SRP’s common stock are reserved for the issuance of options and other awards. During the nine months ended September 30, 2019, SRP granted stock options to purchase 23,040 shares of common stock to its directors and one employee. These stock options are being expensed over the respective vesting period, which is based on a service condition. The fair value of the stock options granted during the nine months ended September 30, 2019 was approximately $88,000.

Weighted Average Assumptions for Option Grants
Stock Price Volatility	92.4	%
Risk-Free Interest Rates	2.3	%
Expected Life (in years)	6.10
Expected Dividend Yield	-	%

Stock-based compensation expense related to the SRP stock options was approximately $6,000 and $9,000 for the three and nine months ended September 30, 2019, respectively. For the three months ended September 30, 2019, approximately $2,000 and $4,000 are included in selling, general and administrative expenses and research and development expenses, respectively, on the accompanying condensed consolidated statement of operations and comprehensive loss. For the nine months ended September 30, 2019, approximately $3,000 and $6,000 are included in selling, general and administrative expenses and research and development expenses, respectively, on the accompanying condensed consolidated statement of operations and comprehensive loss. Stock-based compensation expense related to the SRP stock options is presented by the Company as noncontrolling interest on the condensed consolidated balance sheet as of September 30, 2019.