Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.10.0.1
Stock-Based Compensation
6 Months Ended
Jun. 30, 2018
Stock-Based Compensation [Abstract]  
Stock-Based Compensation

11. Stock-Based Compensation

As of June 30, 2018, the Company had 2,664,538 options to purchase common stock and 35,475 RSUs 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. At the Company’s Annual Meeting held on June 9, 2016, the Company’s shareholders voted to approve an amendment and restatement of the 2013 Plan, including to provide for awards of restricted stock and restricted stock units.  The Company initially reserved 1,700,000 shares of common stock for issuance pursuant to the 2013 Plan, and on April 11, 2017, the Company’s shareholders approved an increase of 1,700,000 shares of common stock reserved for issuance pursuant to the 2013 Plan. As of June 30, 2018, there were 2,337,538 options and 35,475 RSUs outstanding under the 2013 Plan, and 1,014,412 shares were available for issuance. 

On August 5, 2003, the Company established a stock option plan (the “2003 Plan”).  Under the 2003 Plan, the Company granted stock options to key employees, directors and consultants of the Company.  With the adoption of the 2013 Plan, no new stock options may be issued under the 2003 Plan, but previously issued options under the 2003 Plan remain outstanding until their expiration.  As of June 30, 2018, there were 315,000 options outstanding under the 2003 Plan. 

In March 2016, the Company granted to a third party an option to purchase up to 12,000 shares of the Company’s common stock.  These were the only Company stock options outstanding as of June 30, 2018 that were not issued pursuant to the 2013 Plan or the 2003 Plan.

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 six months ended June 30, 2018 and 2017 is as follows:





 

 

 

 

 

 

 

 



For the Three Months

Ended

June 30,

For the Six Months Ended
June 30,



2018

2017

2018

2017

Statement of operations line item:

 

 

 

 

 

 

 

 

General and administrative

$

174,589 

$

207,587 

$

391,004 

$

395,898 

Research and development

 

92,562 

 

80,478 

 

172,724 

 

166,494 



 

 

 

 

 

 

 

 

Total

$

267,151 

$

288,065 

$

563,728 

$

562,392 

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 860,307 stock options granted at exercise prices ranging from $1.46 to $2.29 with an aggregate fair value of $1,089,851 during the six months ended June 30, 2018.  There were 393,260 stock options granted at exercise prices ranging from $1.84 to $6.18 with an aggregate fair value of $620,185 during the six months ended June 30, 2017. 

For the majority of the grants to employees, the vesting period is 25% on the first anniversary of the grant date and, thereafter, one thirty-sixth of the remaining option vests in equal installments on the first business day of each month until fully vested.  Options generally expire ten years from the date of grant. For the majority of grants to non-employee consultants of the Company, the vesting period is between one and three years, subject to the fulfillment of certain conditions in the individual stock agreements, or 100% upon the occurrence of certain events specified in the individual stock agreements.

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:





 

 

 

 



 

 

 

 



Six Months Ended June 30,



2018

2017

Black-Scholes assumptions

 

 

 

 

Expected dividend yield

%

%

Expected volatility

69-72 

%

69-79 

%

Risk-free interest rate

2.3-2.8

%

1.8-2.0

%

Expected term (in years)

5.5-6 years

 

5.5-6 years

 

A summary of stock option activity for the six months ended June 30, 2018 is as follows:





 

 

 

 

 

 



 

 

 

 



Number of Options

 

Weighted Average Exercise Price

Weighted Average Remaining Contractual Term

 

Aggregate Intrinsic Value

Outstanding, January 1, 2018

1,814,231 

$

5.33 

7.1 years

$

53,883 

Granted

860,307 

$

1.96 

 

 

 

Exercised

 -

$

 -

 

 

 

Expired

(10,000)

$

32.40 

 

 

 

Cancelled

 -

$

 -

 

 

 



 

 

 

 

 

 

Outstanding, June 30, 2018

2,664,538 

$

4.14 

7.7 years

$

 -

Exercisable, June 30, 2018

1,318,867 

$

5.89 

6.2 years

$

 -







There were no stock options exercised during the three and six months ended June 30, 2018.  The total intrinsic value of options exercised was $97,872 for the three and six months ended June 30, 2017.  The weighted average fair value of the options granted was $1.27 and $1.58 for the six months ended June 30, 2018 and 2017, respectively.

A summary of the Company’s unvested options as of June 30, 2018 and changes during the six months ended June 30, 2018 is presented below:





 

 

 



 

 

 



2018



Number of  Options

Weighted Average Fair Value at Grant Date

Unvested at January 1, 2018

727,543 

$

2.39 

Granted

860,307 

$

1.27 

Vested

(242,179)

$

2.85 

Cancelled

 -

$

 -



 

 

 

Unvested at June 30, 2018

1,345,671 

$

1.59 

As of June 30, 2018, there was $1,770,305 of total unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted average vesting period of 2.7 years.

Summary of Restricted Stock Unit Transactions

The Company began granting RSUs to employees in 2017.  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 six months ended June 30, 2018 is as follows:





 

 

 



Number of RSUs

 

Weighted Average Grant Date Fair Value

Outstanding, January 1, 2018

47,300 

$

1.84 

Granted

 -

$

 -

Vested and Released

(11,825)

$

1.84 

Cancelled

 -

$

 -



 

 

 

Outstanding, June 30, 2018

35,475 

$

1.84 

As of June 30, 2018, there was $56,837 of total unrecognized compensation cost related to unvested RSUs which is expected to be recognized over a weighted average vesting period of 2.7 years.