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Share-Based Compensation | 6 Months Ended
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Jun. 30, 2020
Share-based Payment Arrangement [Abstract] |
Share-Based Compensation | Share-Based Compensation Description of Equity Plans The 2011 Equity Incentive Plan (the “2011 Plan”) was adopted by the Company’s Board of Directors on April 28, 2011 and approved by the Company’s stockholders on June 15, 2011. The 2011 Plan serves as the successor to the Company’s 2006 Stock Option Plan (the “2006 Plan”). Since the effective date of the 2011 Plan, all equity awards were made from the 2011 Plan, and no additional awards will be granted under the 2006 plan. Under the 2011 Plan, 3,000,000 shares of the Company’s common stock were initially reserved for issuance pursuant to a variety of share-based compensation awards, plus any shares available for issuance under the 2006 Plan or are subject to awards under the 2006 Plan which are forfeited or lapse unexercised and which following the effective date are not issued under the 2006 Plan. In accordance with the provisions of the 2011 Plan, the Board of Directors approved an increase of 1,500,000 shares to the plan on January 1, 2019 and 2020. As of June 30, 2020, the Company had 4,650,390 stock options outstanding and an additional 2,134,211 shares of common stock available for grant under the 2011 Plan. As of December 31, 2019, there were 3,860,390 stock options outstanding and 1,547,211 shares of common stock available for grant under the 2011 Plan. Stock Options Options are granted to purchase common stock at prices that are equal to the fair value of the common stock on the date the option is granted. Vesting is determined by the Board of Directors at the time of grant. The term of any stock option awards under the Company’s 2011 Plan is ten years except for certain options granted to the CEO (five years) and contractors (two or three years). The grant-date fair value of each option grant is estimated using the Black-Scholes option pricing model and amortized on a straight-line basis over the requisite service period, which is generally the vesting period, for each separately vesting portion of the award as if the award was, in substance, multiple awards. Use of a valuation model requires management to make certain assumptions with respect to selected model inputs, including the following: Risk-free interest rate. The risk-free interest rate is based on U.S. Treasury rates with securities approximating the expected lives of options at the date of grant. Expected dividend yield. The expected dividend yield is zero, as the Company has never paid dividends to common shareholders and does not currently anticipate paying any in the foreseeable future. Expected stock price volatility. The expected stock price volatility was calculated based on the Company’s own volatility after the DuPont Transaction. The Company reviews its volatility assumption on an annual basis and has used the Company’s historical volatility since 2016, as the DuPont Transaction resulted in significant changes in the Company’s business and capital structure. Expected life of option. The expected life of option was based on the contractual term of the option and expected employee exercise and post-vesting employment termination behavior. The Company uses the weighted average vesting period and contractual term of the option as the best estimate of the expected life of a new option, except for certain options granted to the CEO (five years) and contractors (two or three years). The assumptions used in the Black-Scholes option pricing model for stock options granted during the six months ended June 30, 2020 are as follows:
Risk-Free interest rate | 0.25% - 1.72%
Expected dividend yield | — | %
Expected stock price volatility | 39.94% - 51.22%
Expected life of options | 1.75 - 6.25 Years
The following table summarizes the stock option activities during the six months ended June 30, 2020:
| Shares |  | Weighted-Average Exercise Price |  | Weighted-Average Remaining Contractual Term (Years) |  | Aggregate Intrinsic Value
Outstanding at December 31, 2019 | 3,860,390 |  |  | $1.76 |  | 5.7 |  | $13,287,932
Granted (1) | 913,000 |  |  | 5.24 |  |  |  |  |
Exercised (2) | (123,000) |  |  | 1.88 |  |  |  |  |
Expired | — |  |  | — |  |  |  |  |
Canceled | — |  |  | — |  |  |  |  |
Outstanding at June 30, 2020 | 4,650,390 |  |  | $2.44 |  | 6.1 |  | $28,939,039
Exercisable at June 30, 2020 | 3,250,294 |  |  | $1.76 |  | 5.0 |  | $22,413,471
_________________ Notes: (1) Represents the following stock options granted: •Annual share-based compensation awards on January 2, 2020, including: (a) 525,000 stock options with an exercise price of $5.27 per share granted to executives and key personnel, vesting upon one year anniversary, or annually in equal installments over four years, (b) 325,000 stock options with an exercise price of $5.27 per share granted to the Board of Directors, vesting upon one year anniversary, (c) 23,000 stock options with an exercise price of $5.27 per share granted to employees, vesting annually in equal installments over four years, and (d) 15,000 stock options with an exercise price of $5.27 per share granted to a consultant, vesting upon one year anniversary. •One-time awards on March 22, 2020, including 25,000 stock options to a contractor with an exercise price of $3.99 per share, vesting in six months from the date of grant. (2) Represents the following stock options exercised: •A total of 123,000 stock options exercised with a weighted average exercise price of $1.88. Compensation Expenses We recognize all share-based payments to employees and our Board of Directors, as non-cash compensation expense, in research and development expenses or general and administrative expenses in the consolidated statement of operations, and these charges had no impact on the Company’s reported cash flows. Stock-based compensation expense is calculated on the grant date fair values of such awards, and recognized each period based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. Forfeitures are recorded as they occur. Total non-cash stock option compensation expense was allocated among the following expense categories:
| Three Months Ended June 30, |  |  |  | Six Months Ended June 30, |  |
| 2020 |  | 2019 |  | 2020 |  | 2019
General and administrative | $ | 390,702 |  |  | $ | 555,455 |  |  | $ | 770,953 |  |  | $ | 839,089 |
Research and development | 45,912 |  |  | 25,148 |  |  | 92,599 |  |  | 51,077 |
Total | $ | 436,614 |  |  | $ | 580,603 |  |  | $ | 863,552 |  |  | $ | 890,166 |

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