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Stock Award Plan and Stock-Based Compensation
3 Months Ended
Mar. 31, 2018
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Stock Award Plan and Stock-Based Compensation

NOTE 8 — STOCK AWARD PLAN AND STOCK-BASED COMPENSATION

In December 2013, the Company adopted the 2013 Equity Incentive Plan (as subsequently amended and restated, the “Plan”), which provides for the issuance of options, stock appreciation rights, stock awards and stock units. On January 1, 2018, in accordance with the terms of the Plan, the total shares authorized for issuance under the plan increased by 750,000 to 6,531,333.  This increase represents the lesser of 750,000 shares or 4% of the total shares outstanding calculated as of the end of the most recent fiscal year. The exercise price per share shall not be less than the fair value of the Company’s underlying common stock on the grant date and no option may have a term in excess of ten years. Further, pursuant to Nasdaq listing rules, the Company issued inducement awards in December 2017 outside of the Plan in the form of an option to purchase 775,000 shares of the Company’s common stock and a restricted stock unit award to purchase 40,000 shares of the Company’s common stock. Stock option activity for employees and non-employees under the Plan for the three months ended March 31, 2018 is as follows:

 

 

 

Shares Issuable Pursuant to Stock Options

 

 

Weighted-

Average

Exercise Price

 

 

Weighted-Average Remaining Contractual Term (Years)

 

Total Intrinsic Value (in thousands)

 

Outstanding January 1, 2018

 

 

6,132,650

 

 

$

6.54

 

 

8.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Granted

 

 

430,000

 

 

$

6.22

 

 

 

 

 

 

 

Exercised

 

 

 

 

$

 

 

 

 

 

 

 

Forfeited

 

 

(7,500

)

 

$

12.35

 

 

 

 

 

 

 

Outstanding March 31, 2018

 

 

6,555,150

 

 

$

6.51

 

 

8.2

 

$

1,741

 

Exercisable March 31, 2018

 

 

2,760,612

 

 

$

5.56

 

 

6.9

 

$

1,464

 

Available for future grant

 

 

342,654

 

 

 

 

 

 

 

 

 

 

 

 

The weighted average grant-date fair value of stock options outstanding on March 31, 2018 was $4.95 per share. Total unrecognized compensation costs related to non-vested stock options at March 31, 2018 was approximately $16.9 million and is expected to be recognized within future operating results over a weighted-average period of 3.2 years. The total intrinsic value of the options exercised during the three months ended March 31, 2017 was approximately $0.2 million.

 

The expected term of the employee-related options was estimated using the “simplified” method as defined by the Securities and Exchange Commission’s Staff Accounting Bulletin No. 107, Share-Based Payment. The volatility assumption was determined by examining the historical volatilities for industry peer companies, as the Company did not have sufficient trading history for its common stock. The risk-free interest rate assumption is based on the U.S. Treasury instruments whose term was consistent with the expected term of the options. The dividend assumption is based on the Company’s history and expectation of dividend payouts. The Company has never paid dividends on its common stock and does not anticipate paying dividends on its common stock in the foreseeable future. Accordingly, the Company has assumed no dividend yield for purposes of estimating the fair value of the options.

 

The Company uses the Black Scholes model to estimate the fair value of stock options granted. For stock options granted during the three months ended March 31, 2018 and 2017, the Company utilized the following assumptions:

 

 

 

March 31,

 

 

 

2018

 

 

2017(1)

 

Expected term (years)

 

6.25

 

 

 

 

Risk free interest rate

 

2.33%

 

 

 

 

Volatility

 

83%

 

 

 

 

Dividend yield

 

0%

 

 

 

 

Weighted average grant date fair value per share of

   common stock

 

$

4.47

 

 

 

 

(1)

There were no stock options granted to employees during the three months ended March 31, 2017

 

Stock-Based Awards Granted to Non-employees-The Company from time to time grants options to purchase common stock to non-employees for services rendered and records expense ratably over the vesting period of each award. The Company estimates the fair value of the stock options using the Black-Scholes valuation model at each reporting date. The Company granted 40,000 stock options to non-employees during the three months ended March 31, 2018. The Company recorded stock-based compensation expense for stock options granted to non-employees of $0.2 million and $0.1 million during the three months ended March 31, 2018 and 2017, respectively. 

For stock options granted to non-employees, the Company utilized the following assumptions:

 

 

 

March 31,

 

 

 

2018

 

 

2017

 

Expected term (years)

 

8.4-9.8

 

 

9.4-9.8

 

Risk free interest rate

 

2.71-2.74%

 

 

2.37-2.39%

 

Volatility

 

85-113%

 

 

110-112%

 

Dividend yield

 

0%

 

 

0%

 

Weighted average reporting date fair value per share of

   common stock

 

$

5.56

 

 

$

7.36

 

 

RSU activity under the Plan for the three months ended March 31, 2018 is as follows:

 

 

 

 

 

 

 

Weighted-Average

 

 

 

 

 

 

 

Grant Date

 

 

 

RSUs

 

 

Fair Value

 

Unvested January 1, 2018

 

 

185,950

 

 

$

11.86

 

Granted

 

 

 

 

$

 

Vested

 

 

 

 

$

 

Forfeited

 

 

 

 

$

 

Unvested March 31, 2018

 

 

185,950

 

 

$

11.86

 

RSUs awarded to employees generally vest one-fourth per year over four years from the anniversary of the date of grant, provided the employee remains continuously employed with the Company. Shares of the Company’s stock are delivered to the employee upon vesting, subject to payment of applicable withholding taxes. The fair value of RSUs is equal to the closing price of the Company’s common stock on the date of grant. Total unrecognized compensation costs related to non-vested RSUs at March 31, 2018 was approximately $2.0 million and is expected to be recognized within future operating results over a period of 2.9 years.

The Company recognized stock-based compensation expense for the three months ended March 31, 2018 and 2017 of $2.1 million and $1.3 million, respectively.