6. Common stock

(a) Stock option plan

On January 27, 2014, the stockholders of Aquinox USA approved a 2014 Equity Incentive Plan (“2014 Plan”). The 2014 Plan became effective on the date of the prospectus for the IPO, March 6, 2014. The 2014 Plan is the successor to and continuation of the 2006 Plan. After the 2014 Plan became effective, no further grants will be made under the 2006 Plan. The 2014 Plan provides for the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance stock awards, performance cash awards, and other forms of equity awards to employees, directors, and consultants.

The maximum number of shares of common stock that may be issued the under the 2014 Plan is 1,423,416, which number includes a number of shares of common stock equal to (i) 756,279 new shares, plus (ii) the number of shares reserved for issuance under the 2006 Plan at the time the 2014 Plan becomes effective, plus (iii) any shares subject to stock options or other stock awards granted under the 2006 Plan that would have otherwise returned to the 2006 Plan, such as upon the expiration or termination of a stock award prior to vesting. Additionally, the number of shares of common stock reserved for issuance under the 2014 Plan will automatically increase on January 1 of each year for a period of up to 10 years, beginning on January 1, 2015 and ending on and including January 1, 2024, by 4% of the total number of shares of capital outstanding on December 31 of the preceding calendar year, or a lesser number of shares determined by the board of directors.

(b) Stock-based compensation

On March 6, 2014, four of the non-employee directors were granted options to purchase a total of 33,332 shares of common stock; the exercise price per share for these grants was $11.00, which was the offering price of the common stock in the IPO.

The fair value of stock options granted is estimated using the Black-Scholes option pricing model with the following weighted average assumptions:


	THREE MONTHS ENDED MARCH 31, 2014			THREE MONTHS ENDED MARCH 31, 2013		DECEMBER 26, 2003 (INCEPTION) TO MARCH 31, 2014
Expected volatility		108	%		NA		88	%
Expected dividends		0	%		NA		0	%
Expected terms (years)		6.00			NA		6.24
Risk free rate		1.52	%		NA		2.96	%
Weighted average grant-date fair value of stock options	$	9.05			NA	$	4.23

The Company amortizes the fair value of the stock options on a straight-line basis over the applicable requisite service periods of the awards, which is generally the vesting period. The weighted average grant date fair value of stock options granted for the three months ended March 31, 2014 and 2013 were $9.05 and $0, respectively. There were no stock options granted during the three months ended March 31, 2013.

Stock-based compensation expense charged to income for the plans was $137,654 and $54,674 for the three months ended March 31, 2014 and 2013, respectively. Total unrecognized compensation cost for all stock-based compensation plans was $1,485,971 as of March 31, 2014, which is expected to be recognized over a weighted-average period of 1.47 years.