XML 27 R14.htm IDEA: XBRL DOCUMENT v3.21.2
SHARE-BASED COMPENSATION
9 Months Ended
Sep. 30, 2021
Share-based Payment Arrangement [Abstract]  
SHARE-BASED COMPENSATION SHARE-BASED COMPENSATION
 
The Company has two stock option plans in existence: the 2012 Omnibus Incentive Plan, as amended (the “Omnibus Plan”) and the Innovate 2015 Stock Incentive Plan (the “Private Innovate Plan”). In addition, the Company assumed 1,014,173 options in accordance with the terms of the RDD Merger Agreement. The Company’s stock options typically vest over a period of three or four years and typically have a maximum term of ten years.

The shares reserved for issuance under the Omnibus Plan automatically increase on the first day of each calendar year beginning in 2019 and ending in 2022 by an amount equal to the lesser of (i) five percent of the number of shares of common stock outstanding as of December 31st of the immediately preceding calendar year or (ii) such lesser number of shares of common stock as determined by the Board (the “Evergreen Provision”). On January 1, 2020, the number of shares of common stock available under the Omnibus Plan automatically increased by 1,973,883, pursuant to the Evergreen Provision. Additionally, on June 30, 2020, stockholders approved an amendment to the Omnibus Plan to increase the aggregate number of shares of common stock available under the Omnibus Plan by 15,000,000 shares. The board of directors elected to forgo the increase from the Evergreen Provision that would have increased the option pool by 5% of the shares of common stock outstanding on January 1, 2021.

Private Innovate Plan

As of September 30, 2021, there were 5,700,518 stock options outstanding under the Private Innovate Plan. Since 2018, the Company has not issued, and does not intend to issue, any additional awards from the Private Innovate Plan.
 
The following table summarizes stock option activity under the Private Innovate Plan:
 Number of
Shares
Weighted-Average
Exercise Price
Aggregate
Intrinsic
Value
Weighted-Average
Remaining
Contractual Life
(in years)
Outstanding at December 31, 20206,028,781 $1.53 $1,080,474 3.2
Options granted— — 
Options forfeited(5,652)2.08 
Options exercised(322,611)0.43 
Outstanding at September 30, 20215,700,518 1.59 1,634,033 2.8
Exercisable at September 30, 20215,700,518 1.59 1,634,033 2.8
Vested and expected to vest at September 30, 20215,700,518 $1.59 $1,634,033 2.8
 
There were no options granted under the Private Innovate Plan during the nine months ended September 30, 2021 and 2020.

The total fair value of stock option awards vested during the nine months ended September 30, 2021 under the Private Innovate Plan was approximately $49,000. As of September 30, 2021, there was no unrecognized compensation cost related
to unvested stock-based compensation arrangements under the Private Innovate Plan as all of the outstanding options are fully vested as of September 30, 2021.

The Private Innovate Plan provides for accelerated vesting under certain change-of-control transactions, if approved by the Company’s board of directors. On April 23, 2021, the Company’s Board approved the extension of the exercise periods of certain option holders’ vested options for an additional twelve months. Pursuant to the Board’s approval, options to purchase 1,708,270 shares of the Company’s common stock were extended and the Company recognized an additional $0.3 million in non-cash stock compensation expense related to the modification during the nine months ended September 30, 2021. All other terms of the options remain unchanged.

Omnibus Plan

As of September 30, 2021, there were options to purchase 14,475,442 shares of the Company’s common stock outstanding under the Omnibus Plan and 5,611,787 shares available for future grants under the Omnibus Plan.  

The range of assumptions used in estimating the fair value of the options granted under the Omnibus Plan using the Black-Scholes option pricing model for the periods presented were as follows:
 Three Months Ended
September 30,
Nine Months Ended
September 30,
 2021202020212020
Expected dividend yield0%0%0%0%
Expected stock-price volatility
 77%
72% - 85%
68% - 85%
72% - 85%
Risk-free interest rate
0.8% - 0.9%
0.2% - 0.7%
0.1% - 1.1%
0.2% - 0.7%
Expected term of options (in years)
6.1 years
5 - 10 years
2.3 - 6.1 years
5 - 10 years
 
The following table summarizes stock option activity under the Amended Omnibus Plan:
 Number of
Shares
Weighted-Average
Exercise Price
Aggregate
Intrinsic
Value
Weighted-Average
Remaining
Contractual Life
(in years)
Outstanding at December 31, 202010,598,426 $1.01 $1,490,488 9.2
Options granted4,205,747 1.64 
Options forfeited(241,083)1.24 
Options exercised(87,648)0.78 
Outstanding at September 30, 202114,475,442 1.19 5,124,522 8.7
Exercisable at September 30, 20215,768,326 1.21 2,467,535 8.2
Vested and expected to vest at September 30, 202113,855,934 $1.18 $4,944,989 8.7
 
The weighted-average grant date fair value of options granted under the Omnibus Plan was $0.79 and $0.91 during the three and nine months ended September 30, 2021, respectively. The weighted-average grant date fair value of options granted under the Omnibus Plan was $0.34 and $0.37 during the three and nine months ended September 30, 2020, respectively. The total intrinsic value of options exercised was approximately $39,000 during the nine months ended September 30, 2021. There were no options exercised during the three and nine months ended September 30, 2020.

The total fair value of stock option awards vested under the Omnibus Plan was approximately $644,000 during the nine months ended September 30, 2021. As of September 30, 2021, there was approximately $5.6 million of total unrecognized compensation cost related to unvested stock-based compensation arrangements under the Omnibus Plan. This cost is expected to be recognized over a weighted average period of 3.2 years.
The Omnibus Plan provides for accelerated vesting, if approved by the Company’s Board. Upon expiration of the term of one of the Company’s now former board members, the Board approved the acceleration and extension of unvested options held by the board member. The Company recognized an additional $0.1 million in non-cash stock compensation expense related to the modification during the nine months ended September 30, 2021. Upon consummation of the RDD Merger on April 30, 2020, the Company’s Board approved the acceleration of certain options for employees, board members and key consultants. The Company recognized an additional $2.7 million in non-cash stock compensation expense related to the modification during the nine months ended September 30, 2020.

There were no RSUs granted during the nine months ended September 30, 2021. During the three and nine months ended September 30, 2020, the Board approved grants of 415,948 RSUs, which vested immediately on the date of grant. There were 203,667 RSUs unvested as of September 30, 2021 and December 31, 2020 with a weighted-average grant date fair value of $1.07 per share. The Company recognized share-based compensation expense for RSUs of approximately $56,000 during the three months ended September 30, 2021, and $160,000 and $255,000 during the nine months ended September 30, 2021 and 2020, respectively. There was no share-based compensation expense for RSUs during the three months ended September 30, 2020.

RDD Option Grants

Pursuant to the RDD Merger Agreement, the Company assumed 1,014,173 option grant agreements awarded to RDD employees upon consummation of the RDD Merger (the “RDD Options”) on April 30, 2020. There were 985,807 RDD Options outstanding as of September 30, 2021 at a weighted-average exercise price of $0.63 per share. All of the RDD Options are fully vested and there were no RDD Options vested during the three and nine months ended September 30, 2021 or the three months ended September 30, 2020. The total fair value of RDD Options vested during the nine months ended September 30, 2020 was approximately $471,000. The range of assumptions used in estimating the fair value of the RDD Options using the Black-Scholes option pricing model for the periods presented were as follows:

 Three and Nine Months Ended
September 30, 2020
Expected dividend yield— %
Expected stock-price volatility
72% - 74%
Risk-free interest rate
0.4% - 0.6%
Expected term of options (in years)
5.0 - 10.0

The following table summarizes stock option activity for the RDD Options:
 Number of
Shares
Weighted-Average
Exercise Price
Aggregate
Intrinsic
Value
Weighted-Average
Remaining
Contractual Life
(in years)
Outstanding at December 31, 20201,014,173 $0.63 $228,860 4.3
Options granted— — 
Options forfeited— — 
Options exercised(28,366)0.74 
Outstanding at September 30, 2021985,807 0.63 660,226 3.6
Exercisable at September 30, 2021985,807 0.63 660,226 3.6
Vested and expected to vest at September 30, 2021985,807 $0.63 $660,226 3.6

The total intrinsic value of RDD Options exercised was approximately $27,000 during the nine months ended September 30, 2021.
Share-based Compensation Expense

Total share-based compensation expense recognized in the accompanying condensed consolidated statements of operations and comprehensive loss was as follows:
 Three Months Ended
September 30,
Nine Months Ended
September 30,
 2021202020212020
Research and development$163,000 $109,000 $605,000 $1,697,550 
General and administrative362,000 93,000 1,279,000 2,801,450 
Total share-based compensation$525,000 $202,000 $1,884,000 $4,499,000