XML 32 R20.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Share-Based Compensation | 9 Months Ended
--- | ---
Sep. 30, 2018
Share-Based Compensation [Abstract] |
Share-Based Compensation |
Note 15. | Share-Based Compensation
The following table summarizes the components of share-based compensation expenses, including those related to the non-voting common shares, restricted stock awards and stock option grants, reflected in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine-month periods ended September 30, 2018:
|  | Periods Ended September 30, 2018 |
|  | Three Months |  |  | Nine Months |
Manufacturing and supply |  | $ | 32 |  |  | $ | 377 |
Research and development |  |  | 192 |  |  |  | 2,378 |
Selling, general and administrative |  |  | 1,012 |  |  |  | 25,786 |
Total share-based compensation expenses |  | $ | 1,236 |  |  | $ | 28,541 |
The table below reflects the following share-based compensation expenses incurred during 2018:
|  | Periods Ended September 30, 2018 |
|  | Three Months |  |  | Nine Months |
Non-voting common shares (A) |  | $ | - |  |  | $ | 27,298 |
Restricted Stock Units (B) |  |  | 610 |  |  |  | 610 |
Stock Options (B) |  |  | 626 |  |  |  | 633 |
Total share-based compensation expenses |  | $ | 1,236 |  |  | $ | 28,541 |
There were no restricted stock unit or option grants in 2017 and consequently no share-based compensation recognized during the three and nine months ended September 30, 2017. (A) Non-Voting Common Share Issuance The Company had two Performance Unit Plans, both of which were considered to be within the scope of FASB ASC Subtopic 718-30, Compensation – Stock Compensation – Awards Classified as Liabilities. Pursuant to the Plans, vested grants were not exercisable prior to either a change in control of the Company or completion of an IPO. These performance conditions rendered the grants contingent and deferred expense recognition until either of the conditions were satisfied. Neither of these conditions were satisfied as of December 31, 2017. On April 16, 2018, the Company terminated the Performance Unit Plans. The termination was executed in accordance with the provisions of the Plans’ termination, which required both Board of Directors and the certain plan participant approval. As a result, the Company accelerated the vesting of any unvested performance units and issued non-voting common shares to compensate the performance unit holders. Immediately prior to the consummation of the IPO, all of the Company’s outstanding shares of non-voting common stock were automatically converted to 4,922,353 shares of voting common stock. In accordance with ASC 718, Compensation — Stock Compensation, the Company recorded a total charge to earnings of $27,298 comprised of $19,934 which relates to the fair market value of the non-voting shares at the date the shares were granted and $7,364 related to withholding taxes which the Company elected to pay on behalf of the performance unit holders in the second quarter of 2018 to reflect the compensation cost associated with the issuance of 4,922,353 non-voting common shares. The compensation expense was estimated using an independent third-party valuation prepared in accordance with the American Institute of Certified Public Accountants Practice Aide, Valuation of Privately-Held Company Equity Securities Issued as Compensation. The assumptions for the determination of the fair value of are provided in the following table:
Valuation assumptions: |  |  |
Discount for lack of marketability |  |  | 34 | %
Volatility |  |  | 90 | %
Weighted average cost of capital |  |  | 27.5 | %
The discount for lack of marketability takes into consideration the illiquid nature of the security as well as other qualitative characteristics that would make it less marketable than the more senior securities. Volatility was based on that of comparable public companies. The weighted average cost of capital was also based on that of comparable public companies as well as market interest rate data. (B) Share-Based Compensation Equity Awards The Company provides certain employees, non-employee directors and consultants with performance incentives under its share-based compensation plans. Under these plans, the Company may grant restricted stock units and stock options in order to align the long-term financial interests of selected participants with those of its shareholders, strengthen the commitment of such persons to the Company, and attract and retain competent and dedicated persons whose efforts will enhance long-term growth, profitability and share value. Restricted stock and option awards are subject to graded vesting over a service period, which is typically two or three years. Compensation cost is recognized for these awards on a pro-rata basis over the requisite service period for each award granted. Restricted stock unit awards (RSUs) During the three months ended September 30, 2018, the Company granted to certain members of senior management and key employees a total of 264,781 restricted share units having an estimated grant date fair value of $3,926, of which 29,802 units were vested as of that date. The remaining unrecognized compensation expense of approximately $3,043, net of estimated forfeitures, is expected to be recognized over approximately three years. The RSUs granted to senior management vest in equal quarterly installments over two years; the RSUs granted to key employees are subject to a three-year graduated vesting schedule. These RSUs are not subject to performance-based criteria other than continued employment. There were no RSU grants prior to the three months ended September 30, 2018 and there were no forfeitures during the period. Stock option awards During the nine months ended September 30, 2018, the Company granted 1,033,042 stock options to certain members of senior management, members of its board of directors and a consultant having an estimated grant date fair value of $11,155, of which 28,666 options were vested as of that date. The remaining unrecognized compensation expense of $9,770, net of estimated forfeitures, is expected to be recognized over approximately three years. These stock options were granted with exercises prices ranging from $6.54 to $18.67 per share with three-year vesting and a 10-year contractual term. Options granted to senior management and board members vest in equal quarterly or monthly increments over three years; options granted to key employees are subject to a three-year graduated vesting schedule. These stock options are not subject to performance-based criteria other than continued employment. There were no option grants prior to the six months ended September 30, 2018, and there were no forfeitures during the period. The Company measured the fair value of these stock options at their grant dates using the Black-Scholes-Merton option pricing model. The assumptions for the determination of the fair value of options issued during 2018 are as follows:
Expected dividend yield |  |  | 0 | %
Expected volatility |  |  | 90 | %
Expected term (years) |  |  | 5.8 - 6.1 |
Risk-free interest rate |  |  | 2.8 - 2.9 | %
Aquestive anticipates reinvesting earnings for the foreseeable future in product development and other avenues of share-value growth and accordingly anticipates no dividend payouts. Volatility was determined based on that of comparable public companies, given the lack of any meaningful history regarding its own now-publicly-traded common stock. The expected term of the award was calculated using the simplified method. A weighted average was utilized taking into account the two vesting periods to determine the expected term in years. The risk-free interest rate is based on the average U.S. Treasury rate with a term that most closely resembles the estimated expected life of the award.

X
- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -URI http://asc.fasb.org/subtopic&trid=2208855 + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsSharebasedPaymentsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration