9. Stock Option and Incentive Plans

Amended and Restated 2008 Equity Incentive Plan

In July 2008, the Company adopted the 2008 Equity Incentive Plan (the “Plan”). The Plan allows for the granting of non- qualified stock options, restricted stock, stock appreciation rights and other performance awards to the Company’s employees, members of the board of directors and consultants of the Company. On February 26, 2013, the board of directors approved an amended and restated plan (the “Amended Plan”) to increase the number of shares of common stock available under the Plan to 1,571,428 and, for new awards, to reduce the period that vested awards would remain exercisable upon termination of service from ten years to two years. Since the closing of the Company’s IPO, no further grants are made under the Amended Plan.

2014 Omnibus Incentive Plan

In April 2014, the Company’s board of directors adopted the 2014 Omnibus Incentive Plan (the “2014 Plan”). The 2014 Plan was approved by the Company’s stockholders on July 3, 2014. The 2014 Plan allows for the granting of incentive and non-qualified stock options, restricted stock and stock unit awards, stock appreciation rights and other performance-based awards to the Company’s employees, members of the board of directors and consultants of the Company. On July 28, 2014, the effective date of the 2014 Plan, the number of shares of common stock reserved pursuant to the 2014 Plan was 571,429. The 2014 Plan provides for an annual increase, to be added on the first day of each fiscal year, beginning with the fiscal year ended December 31, 2015 and continuing until the expiration of the 2014 Plan, equal to the lesser of (i) 4% of the outstanding shares of common stock on December 31 immediately preceding such date or (ii) an amount determined by the Company’s board of directors. Consistent with the provision for an annual increase, an additional 6,520,477 shares of common stock have been reserved under the 2014 Plan.

The Company recognized compensation expense for share-based compensation based on the fair value of the underlying instrument. The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. A summary of stock option activity for the nine months ended September 30, 2018, is summarized as follows:

 

		Number of Options				Weighted Average Exercise Price				Weighted Average Remaining Contractual Life (in years)				Aggregate Intrinsic Value
Options outstanding at December 31, 2017			6,200,151			$	3.81
Granted			2,280,000				1.45
Exercised			—				—
Expired			(865,606	)			3.93
Forfeited			(366,347	)			1.84
Options outstanding at September 30, 2018			7,248,198				3.15				6.92			$	1,987,550
Vested and exercisable at September 30, 2018			4,714,393				3.88				5.89			$	762,306

The fair value of each option grant is estimated on the date of the grant using the Black-Scholes option-pricing model. The weighted average grant date fair value of options granted during the nine months ended September 30, 2018 and 2017 was $1.45 and $1.73, respectively. Total compensation expense recognized amounted to $383,158, $1,236,972, $359,376 and $1,087,179, for the three and nine months ended September 30, 2018 and 2017, respectively. As of September 30, 2018, the total remaining unrecognized compensation cost related to unvested stock options was approximately $2.7 million which will be recognized over a weighted average period of approximately 2.68 years.

 

The following assumptions were used to compute the fair value of stock option grants:

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2018				2017				2018				2017
Risk free interest rate			—				—				2.57	%			2.08	%
Expected dividend yield			—				—				—				—
Expected term (in years)			—				—				6.02				6.00
Expected volatility			—				—				82.3	%			79.1	%

Expected volatility—The Company estimated the expected volatility based on an average of the volatility of similar companies with publicly-traded equity securities. The companies were selected based on their enterprise value, risk profiles, position within the industry, and with historical information sufficient to meet the expected term of the associated award.

Expected term—The Company based expected term on the midpoint of the vesting period and the contractual term of each respective option grant.

Risk-free interest rate—The Company estimated the risk-free interest rate in reference to yield on U.S. Treasury securities with a maturity date commensurate with the expected term of the associated award.

Expected dividend yield—The Company estimated the expected dividend yield based on consideration of its historical dividend experience and future dividend expectations. The Company has not historically declared or paid dividends to common stockholders. Moreover, it does not intend to pay dividends in the future, but instead expects to retain any earnings to invest in its continued growth.