|12 Months Ended|
Dec. 31, 2018
|Disclosure of Compensation Related Costs, Share-based Payments [Abstract]|
The Company’s Amended 2013 Plan provides for the granting of stock options, restricted stock awards, restricted stock units, stock bonus awards and performance-based awards. As of December 31, 2018, the Company had 10,475 of authorized unissued shares reserved and available for issuance upon exercise and conversion of outstanding awards under the Amended 2013 Plan.
The stock options are exercisable at no less than the fair market value of the underlying shares on the date of grant, and restricted stock and restricted stock units are issued at a value not less than the fair market value of the common stock on the date of the grant. Generally, stock options awarded are vested in equal increments ranging from two to four years on the annual anniversary date on which such equity grants were awarded. The stock options generally have a maximum term of 10 years.
The Company recognized stock-based compensation expense of $2,925 and $3,419 in its operating income (loss) for the years ended December 31, 2018 and 2017, respectively. As of December 31, 2018, total unrecognized compensation cost related to non-vested stock-based compensation arrangements was $7,363 which is expected to be recognized over a weighted-average period of 3.1 years.
The following summarizes activity related to the Company's stock options and includes 7,250 options issued prior to December 31, 2017 outside of the Amended 2013 Plan:
The total intrinsic value of stock options exercised during the year ended December 31, 2018 was $5,903. Upon option exercise, the Company issues new shares of stock. There were no stock option exercises during the year ended December 31, 2017.
The Company has established performance milestones in connection with the drug development efforts for its lead drug candidate CVSI-007. During the year ended December 31, 2016, the Company achieved the milestone of completing the development of an FDA current good manufacturing practice grade batch of successfully synthetically formulated “ready to ship” CBD for use in drug development activities, and an aggregate of 2,750 options vested for three members of senior management outside of the Amended 2013 Plan. During the year ended December 31, 2017, the Company achieved the milestone of receiving the minutes from the Pre- Investigational New Drug Application meeting held with the FDA in June 2017 which resulted in an aggregate of 4,500 options vested for three members of senior management outside of the Amended 2013 Plan. As of December 31, 2018, there were 10,750 remaining unvested stock options granted outside of the Amended 2013 Plan which vest upon the completion of future performance conditions.
The following table presents the weighted average grant date fair value of stock options granted and the weighted-average assumptions used to estimate the fair value on the date of grant using the Black-Scholes valuation model:
The risk-free interest rates are based on the implied yield available on U.S. Treasury constant maturities with remaining terms equivalent to the respective expected terms of the options. The Company estimates the expected term for stock options awarded to employees, non-employees, officers and directors using the simplified method in accordance with ASC Topic 718, Stock Compensation, because the Company does not have sufficient relevant historical information to develop reasonable expectations about future exercise patterns. Expected volatility is calculated based on the Company’s peer group, consisting of five companies in the industry in which the Company does business because the Company does not have sufficient historical volatility data. The Company will continue to use peer group volatility information until historical volatility of the Company is available to measure expected volatility for future grants. In the future, as the Company gains historical data for volatility of its own stock and the actual term over which stock options are held, expected volatility and the expected term may change, which could substantially change the grant-date fair value of future stock option awards, and, consequently, compensation of future grants.
The following summarizes RSU activity that contain only service requirements to vest for the Amended 2013 Plan:
The total fair value of RSU's vested during the year ended December 31, 2017 was $660.
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.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef