7. Stock-Based Compensation

Stock Option Plan

In June 2016, the Company’s stockholders approved the 2016 Equity Incentive Plan (the “2016 Plan”). The 2016 Plan provides for the issuance of incentive awards in the form of non-qualified and incentive stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards and performance-based stock awards. The awards may be granted by the Company’s Board of Directors to its employees, directors and officers and to consultants, agents, advisors and independent contractors who provide services to the Company or to a subsidiary of the Company. The exercise price for stock options must not be less than the fair market value of the underlying shares on the date of grant. Stock options expire no later than ten years from the date of grant and generally vest and typically become exercisable over a four-year period following the date of grant. Upon the exercise of stock options, the Company issues the resulting shares from shares reserved for issuance under the 2016 Plan. With the approval of the 2016 Plan, the remaining unallocated shares under the Company’s 2013 Stock Incentive Plan were allocated to the 2016 Plan and an additional 100,000 new shares were added to the authorized share reserve under the 2016 Plan. Under the 2016 Plan, the number of shares authorized for issuance automatically increases annually beginning January 1, 2017 and through January 1, 2026. On January 1, 2018, the number of shares of common stock authorized for future issuance was automatically increased by 474,946 shares.

Share-based Compensation

The Company estimates the fair value of stock options with performance and service conditions using the Black-Scholes valuation model. Compensation expense related to stock options granted is measured at the grant date based on the estimated fair value of the award and is recognized on a straight-line basis over the requisite service period.

The table below summarizes the total stock-based compensation expense included in the Company’s consolidated statements of operations for the periods presented:



	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017

Research and development	$	38,000	$	73,000	$	75,000	$	101,000
General and administrative		86,000		226,000		171,000		369,000
Total stock-based compensation	$	124,000	$	299,000	$	246,000	$	470,000

Stock option transactions during the six months ended June 30, 2018 are presented below:



					Weighted
					Average
			Weighted		Remaining
			Average		Contractual		Aggregate
			Exercise		Term		Intrinsic
	Shares		Price		(Years)		Value
Outstanding at December 31, 2017		1,115,865	$	3.17		8.98
Granted		36,500		1.20
Forfeited/Cancelled		(1,450)		17.46
Outstanding at June 30, 2018		1,150,915	$	3.09		8.53	$	234,000
Vested and expected to vest at June 30, 2018		865,802	$	3.80		8.29	$	172,000
Exercisable at June 30, 2018		174,578	$	11.43		4.67	$	29,000

The aggregate intrinsic value of options at June 30, 2018 is based on the Company’s closing stock price on that date of $1.13 per share. As of June 30, 2018, there was $0.9 million of total unrecognized compensation expense related to unvested stock options, which the Company expects to recognize over the weighted average remaining period of 2.3 years.

Shares Reserved For Future Issuance

As of June 30, 2018, the Company had reserved shares of its common stock for future issuance as follows:



	Shares Reserved
Stock options outstanding		1,150,915
Employee stock purchase plan		47,172
Available for future grants under the 2016 Plan		445,376
Warrants outstanding		8,296,995
Total shares reserved		9,940,458