Stockholder's Equity and Stock-Based Compensation Expense

Public Equity Offering

On February 21, 2018, the Company completed a public equity offering (“Offering”) of its 1,820,000 shares of common stock at a public offering price of $27.50 per share, and warrants to purchase an additional 1,820,000 shares of the Company’s common stock pursuant to the Registration Statement on Form S-3 (No. 33-213769) filed with the Securities and Exchange Commission under the Securities Act of 1933 and declared effective on December 2, 2016. The net proceeds from this offering were $47.0 million, including transaction expenses. A portion of the net proceeds were used to retire the Company’s $28.5 million Third Lien Notes in March 2018. The warrants have an exercise price of $33.60 per share, are immediately exercisable and were to expire on March 21, 2019. On February 4, 2019, the Company extended expiration of the warrants to March 21, 2020.

Stock-Based Compensation

The total number of shares issued or reserved for future issuance under outstanding stock options at September 30, 2019 and 2018 was 700,759 and 804,936, respectively, and the total number of shares of restricted stock and shares reserved for restricted stock units outstanding at September 30, 2019 and 2018 was 926,917 and 128,131, respectively. The total number of stock appreciation rights (“SARs”) awards outstanding at September 30, 2019 and 2018 was 963,013 and 530,865, respectively. The following table presents a summary of the activity related to stock options, restricted stock, restricted stock unit awards and SARs awards for the nine months ended September 30, 2019:



	Stock Options		Restricted Stock and Unit Awards		Stock Appreciation Rights
	Number of Shares
Outstanding at December 31, 2018	785,890		1,044,125		1,481,541
Granted	10,000		152,155		—
Stock options and SARs exercised/restricted stock and unit awards vested	(82,900	)	(202,697	)	(150,000	)
Cancelled/forfeited	(12,231	)	(66,666	)	(368,528	)
Outstanding at September 30, 2019	700,759		926,917		963,013

Cancelled/forfeited SARs relates to the 2015 issuance of 176,528 awards that expired during the current period and also 192,000 forfeited awards of the former Chief Executive Officer. On September 1, 2019, the Company granted 130,000 shares of restricted stock to the new Chief Executive Officer. The vesting of the 65,000 shares is achieved through a time based condition and the vesting of the remaining 65,000 shares is achieved through both a time based condition and performance based condition.

Stock-based compensation expense recognized for the nine months ended September 30, 2019 and 2018, totaled $3.7 million and $2.5 million, respectively. SARs expense recognized for the nine months ended September 30, 2019 and 2018, totaled $2.7 million and $2.8 million, respectively.

SARs awards are considered liability awards as they are ultimately settled in cash. As such, these amounts are incrementally accrued in the liability section of the condensed consolidated balance sheets over the service period. All of the Company’s currently outstanding SARs awards achieve vesting through both a market condition and a service condition. SARs awards that are fully vested under both conditions are measured at intrinsic value (i.e. the difference between the market price on the last day of the quarter and the strike price of the awards times the number of awards vested and outstanding) and marked to market each quarter until settled. SARs awards that are not fully vested are incrementally accrued over the service period and adjusted to their fair value each quarter until settled based on a valuation model. The Company calculated the fair value of each award as of September 30, 2019 and December 31, 2018 using a Monte Carlo simulation model. The following assumptions were used:



	September 30, 2019		December 31, 2018
Risk-free interest rates	1.97	%	3.0	%
Expected lives (in years)	5.31		5.31
Expected dividend yield	—	%	—	%
Expected volatility	86.1	%	82.9	%