11. Stock-Based Compensation

As of September 30, 2019, the Company had 219,653 options to purchase common stock outstanding.

At the Company’s Annual Meeting of Shareholders held on June 10, 2013, the Company’s shareholders voted to approve the Rexahn Pharmaceuticals, Inc. 2013 Stock Option Plan (the “2013 Plan”).  Under the 2013 Plan, the Company grants equity awards to key employees, directors and consultants of the Company.  The Company has reserved 283,333 shares of common stock for issuance pursuant to the 2013 Plan. As of September 30, 2019, there were 200,833 options outstanding under the 2013 Plan, and 80,469 shares were available for issuance.  In addition, as of September 30, 2019, there were 18,820 options outstanding under a previously established stock option plan under which no new stock options may be granted. 

Accounting for Awards

Stock-based compensation expense is the estimated fair value of options and RSUs granted amortized on a straight-line basis over the requisite vesting service period for the entire portion of the award. Total stock-based compensation recognized by the Company for the three and nine months ended September 30, 2019 and 2018 is as follows:





No income tax benefit has been recognized in the statement of operations for stock-based compensation arrangements as the Company has provided for a 100% valuation allowance on its deferred tax assets.

Summary of Stock Option Transactions

There were 52,465 stock options granted at exercise prices ranging from $5.23 to $7.45 with an aggregate fair value of $220,540 during the nine months ended September 30, 2019.    

The fair value of options at the date of grant was estimated using the Black-Scholes option pricing model.  The Company took into consideration guidance under ASC 718, “Compensation-Stock Compensation,” and Staff Accounting Bulletin No. 107 (“SAB 107”) when reviewing and updating assumptions.  The expected volatility is based upon historical volatility of the Company’s stock.  The expected term is based upon the simplified method as allowed under SAB 107.



The assumptions made in calculating the fair values of options are as follows:



A summary of stock option activity for the nine months ended September 30, 2019 is as follows:





There were no stock options exercised during the three and nine months ended September 30, 2019 and 2018. The weighted average fair value of the options granted was $4.20 and $15.24 for the nine months ended September 30, 2019 and 2018, respectively.

A summary of the Company’s unvested options as of September 30, 2019 and changes during the nine months ended September 30, 2019 is presented below:



As of September 30, 2019, there was $655,378 of total unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted average vesting period of 2.3 years.

Summary of Restricted Stock Unit Transactions

The fair value of an RSU award is the closing price of the Company’s common stock on the date of grant.

A summary of RSU activity for the nine months ended September 30, 2019 is as follows: