Annual report pursuant to Section 13 and 15(d)


12 Months Ended
Dec. 31, 2018
Stock-based Compensation  

Equity Incentive Plans


In the first quarter of 2016, the Company adopted the 2016 Equity Incentive Plan. In the fourth quarter of 2018, the Company adopted the 2018 Equity Incentive Plan. The following table contains information about both plans as of December 31, 2018:


    Awards Reserved for Issuance     Awards Issued     Awards Available for Grant  
2016 Equity Incentive Plan     2,000,000       1,541,064       458,936  
2018 Equity Incentive Plan     6,600,000       5,100,000       1,500,000  


Stock Options


The following table summarizes the Company’s stock option activity and related information for the year ended December 31, 2018 and 2017:



Number of


    Weighted-Average Exercise Price Per Share     Weighted-Average Remaining Contractual Life   Aggregate Intrinsic Value of In-the-Money Options  
Options Outstanding as of January 1, 2017     446,667     $ 1.35            
Options Granted     731,065     $ 2.68            
Options Exercised     -     $ -            
Options Forfeited     -     $ -            
Options Expired     -     $ -            
Options Outstanding as of December 31, 2017     1,177,732     $ 2.17            
Options Granted     6,911,667     $ 1.56            
Options Exercised     -     $ -            
Options Forfeited     (436,668 )   $ 2.36            
Options Expired     -     $ -            
Options Outstanding as of December 31, 2018     7,652,731     $ 1.61     9.6 years   $ -  
Options Exercisable as of December 31, 2018     1,870,039     $ 1.92     9.1 years   $ -  


The aggregate intrinsic value is calculated as the difference between the Company’s closing stock price of $0.56 on December 31, 2018 and the exercise price of options, multiplied by the number of options. As of December 31, 2018, there was $7,967,114 total unrecognized stock-based compensation. Such costs are expected to be recognized over a weighted-average period of approximately 2.75 years.


The Company recognizes compensation expense for stock option awards on a straight-line basis over the applicable service period of the award. The service period is generally the vesting period. The following weighted-average assumptions were used to calculate stock-based compensation:



Year Ended

December 31,

    2018     2017  
Expected term (years)   6 Years     5 Years  
Volatility   113.2-128.0 %   117.3-120.9 %
Risk-Free Interest Rate   2.5-2.9 %   2.0-2.4 %
Dividend Yield     0 %     0 %


The Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. Hence, the Company uses the “simplified method” described in Staff Accounting Bulletin 107 to estimate the expected term of share option grants.


The expected stock price volatility assumption was determined by examining the historical volatilities for the Company’s common stock. The Company will continue to analyze the historical stock price volatility and expected term assumptions as more historical data for the Company’s common stock becomes available.


The risk-free interest rate assumption is based on the U.S. treasury instruments whose term was consistent with the expected term of the Company’s stock options.


The expected 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 Company stock-based compensation.


The Company estimates the forfeiture rate at the time of grant and revisions, if necessary, were estimated based on management’s expectation through industry knowledge and historical data.


Stock-Based Compensation Expense


The following table sets forth the total stock-based compensation expense resulting from stock options and restricted grants of common stock to employees, directors and non-employee consultants in the consolidated statement of operations which are included in selling, general and administrative expenses: 


    For the Year Ended  
    December 31, 2018     December 31, 2017  


Type of Award


Number of

Shares or

Options Granted 

    Stock-Based Compensation Expense     

Number of

Shares or

Options Granted 

    Stock-Based Compensation Expense   
Stock Options     6,911,667     $ 2,527,982       731,065     $ 692,971  
Stock Grants:                                
Employees (Common Stock)     201,296       603,117       158,867       490,880  
Employees (Series B Preferred Stock)     0       0       40,000       1,035,406  
Directors (Common Stock)     49,500       99,990       81,061       221,973  
Non–Employee Consultants (Common Stock)     132,971       225,428       389,374       1,284,562  
Total Stock–Based Compensation Expense           $ 3,456,517             $ 3,725,792