Stock-Based Compensation

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

The 2015 Employee, Director and Consultant Equity Incentive Plan

In connection with the business combination transaction in July 2017 between the Company and Daré Bioscience Operations, Inc., a privately held Delaware corporation, or Private Daré, the Company assumed the Private Daré 2015 Employee, Director and Consultant Equity Incentive Plan, or the 2015 Private Daré Plan and each then outstanding award granted thereunder, which consisted of options and restricted stock. Based on the exchange ratio for the business combination transaction and after giving effect to the reverse stock split effected in connection with the closing of that transaction, the outstanding options and restricted stock awards granted under the 2015 Private Daré Plan were replaced with options to purchase 10,149 shares of the Company’s common stock with a correspondingly adjusted exercise price and 223,295 shares of the Company’s common stock. All of the options that were assumed were exercised as of September 30, 2020. No awards may be granted under the 2015 Private Daré Plan following the closing of the business combination transaction.

2014 Employee Stock Purchase Plan

The Company’s 2014 Employee Stock Purchase Plan, or the ESPP, became effective in April 2014, but no offering period has been initiated thereunder since January 2017 and there was no stock-based compensation related to the ESPP for the nine months ended September 30, 2020 or September 30, 2019.

Amended and Restated 2014 Stock Incentive Plan

The Company maintains the Amended and Restated 2014 Plan, or the Amended 2014 Plan, which provides for the grant of options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards to employees, officers and directors, and consultants and advisors. There were 2,046,885 shares of common stock authorized for issuance under the Amended 2014 Plan when it was approved by the Company's stockholders in July 2018. The number of authorized shares increases annually on the first day of each fiscal year until, and including, the fiscal year ending December 31, 2024 by the least of (i) 2,000,000, (ii) 4% of the number of outstanding shares of common stock on such date, or (iii) an amount determined by the Company’s board of directors. On January 1, 2020, the number of authorized shares increased by 787,336 to 1,411,481, which increase represented 4% of the number of outstanding shares of common stock on such date.

Summary of Stock Option Activity

The table below summarizes stock option activity under the Amended 2014 Plan, and related information for the nine months ended September 30, 2020. The exercise price of all options granted during the nine months ended September 30, 2020 was equal to the market value of the Company’s common stock on the date of grant. As of September 30, 2020, unamortized stock-based compensation expense of $1,493,686 will be amortized over a weighted average period of 2.37 years. At September 30, 2020, 507,516 shares of common stock were reserved for future awards granted under the Amended 2014 Plan.


	Number of Shares	Weighted Average Exercise Price
Outstanding at December 31, 2019	1,889,775	$	1.21
Granted	903,965	1.06
Exercised	(10,149)	0.01
Canceled/forfeited	—	—
Expired	—	—
Outstanding at September 30, 2020	2,783,591	$	1.16
Exercisable at September 30, 2020	1,038,659	$	1.48

Compensation Expense

Total stock-based compensation expense related to stock options granted to employees and directors recognized in the consolidated statement of operations is as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Research and development	$	60,546	$	27,081	$	166,639	$	78,780
General and administrative	$	134,336	$	108,312	$	375,943	$	265,932
Total	$	194,882	$	135,393	$	542,582	$	344,712

The assumptions used in the Black-Scholes option-pricing model for stock options granted to employees and to directors in respect of board services during the three and nine months ended September 30, 2020 are as follows:


	Three Months Ended September 30,	Nine Months Ended September 30,
Expected life in years	10.0	10.0
Risk-free interest rate	0.71%	0.82%
Expected volatility	119%	120%
Forfeiture rate	0.0%	0.0%
Dividend yield	0.0%	0.0%
Weighted-average fair value of options granted	$1.10	$1.00