As used in this Quarterly Report on Form 10-Q, "
The following Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our condensed financial statements and related notes. Forward-Looking Statements Some statements and information contained in this Management's Discussion and Analysis of Financial Condition and Results of Operations, notes to our condensed financial statements and elsewhere in this report are not historical facts but are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and within the meaning of the safe-harbor provisions of theU.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can often be identified by words such as: "expect," "believe," "estimate," "plan," "strategy," "future," "potential," "continue," "may," "should," "will," and similar references to future periods. Examples include, among others, statements about: ? The impacts and implications of the COVID-19 pandemic;
? Our commercialization and promotion strategy and plans, including key elements
to our business strategy, how we commercialize, our sales approach, the tools
we use, our hiring and retention strategy; our areas and markets of focus, our
pricing strategy, our strategic relationships and which geographic markets we
target; ? The success and effectiveness of our products;
? Our seeking, obtaining or maintaining regulatory approvals for our product
candidates;
? Our expectations regarding the potential market size for our products and how
the market may develop;
? Our estimates or expectations related to our revenue, cash flow, expenses,
operating results, capital requirements and need for additional financing;
? Our ability, and the time required, to improve our cost structure and gross
margins, and limit our cash burn; ? Our plans for our business, including for research and development;
? Our ability to enter into strategic arrangements and to achieve the expected
results from such arrangements; ? The adequacy of our facilities to meet our current needs; ? The initiation, timing, progress and results of field studies and other studies and trials and our research and development programs; ? Our financial performance, including our ability to fund operations;
? Developments and projections relating to our projects, competitors and our
industry, including legislative developments and impacts from those developments. These forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and situations that are difficult to predict and that may cause our own, or our industry's, actual results to be materially different from the future results that are expressed or implied by these statements. Accordingly, actual results may differ materially from those anticipated or expressed in such statements as a result of a variety of factors, including those discussed in Item 1A-"Risk Factors" of Part I of our Annual Report on Form 10-K, for the year endedDecember 31, 2020 , filed with theSEC onMarch 29, 2021 , and Item 1A of Part II of this Form 10-Q, in each case entitled "Risk Factors," and those contained from time to time in our other filings with theSecurities and Exchange Commission . Readers are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date made. Except as required by law, we undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise. 25 Overview
Since our inception, we have sustained significant operating losses in the course of our research and development activities and commercialization efforts and expect such losses to continue for the near future. We have generated limited revenue to date from product sales, research grants and licensing fees received under a former license. We have primarily funded our operations to date through the sale of equity securities, including convertible preferred stock, common stock and warrants to purchase common stock; and debt financing, consisting primarily of convertible notes. ThroughMarch 31, 2021 , we have received net proceeds of$89.3 million from our sales of common stock, preferred stock and warrant exercises and issuance of convertible and other promissory notes, an aggregate of$1.7 million from licensing fees and an aggregate of$1.0 million in net product sales. As ofMarch 31, 2021 , we had an accumulated deficit of$106.1 million and cash and cash equivalents of$15.2 million .
On
We have incurred significant operating losses every year since our inception. Our net losses were$1.8 million and$2.7 million for the three months endedMarch 31, 2021 and 2020, respectively. We expect to continue to incur significant expenses and generate operating losses for at least the next 12 months. We will need additional funding in order to continue to fund our operations and achieve profitability and become cash flow positive and will continue to seek additional financing. If such equity or debt financing is not available at adequate levels or on acceptable terms, we may need to delay, limit or terminate commercialization and development efforts or discontinue operations. While it is difficult to measure the effect and impact of the COVID-19 pandemic on revenue during the three months endedMarch 31, 2021 , the travel and other restrictions that started inMarch 2020 resulted in a significant slowdown in our proof-of-concept field studies and sales efforts. While we were able to resume field studies in some important projects by mid-year 2020 and initially believed that we would re-start all our most significant field studies as we obtained limited waivers of certain travel bans, we still have delays on certain projects that might remain on hold until further lifting of government restrictions. These continued delays could impact our results in future quarters. Initially, we believed that pest control would continue through the pandemic as a necessity and we were and have been able to maintain our manufacturing with cautionary, best practices put in place. However, we have concerns about distributor, pest control operator and individual consumer spending as restrictive measures related to the pandemic continue. Extended stay at home orders across the world have impeded our ability to communicate with current and prospective customers, potentially reducing sales until the orders are lifted. In addition, federal, state and municipal budgets continue to be severely strained as a result of the pandemic. This may delay or impede their ability to make near term purchases of our products. While we have stocked certain long lead time inventory raw material ingredients, any prolonged impact on the suppliers we rely on for the purchase of these items by the COVID-19 pandemic could impact future manufacturing operations.
Components of our Results of Operations
Sales
Sales are comprised primarily of sales, net of discounts and promotions, of ContraPest and related components, to our distributors and customers, as well as consulting and implementation services provided in conjunction with ContraPest deployments. Cost of Sales Cost of sales consist primarily of cost of products sold, including scrap and reserves for obsolescence. We continue to focus on improving our cost structure, with the goals of shifting resources to commercialization, significantly reducing our year-over-year burn rate and achieving a 50% or greater gross margin. Steps have included relocating to more cost-efficient space, organizational restructuring, and improving our manufacturing and supply processes and reducing staffing. We expect to realize the benefits from these steps in the coming quarters. 26 Operating Expenses
Research and Development Expenses
Research and development expenses consist primarily of costs incurred in connection with the research and development of ContraPest and our other product candidates, which costs include:
? Employee related expenses, including salaries, related benefits, travel and
stock-based compensation expense for employees engaged in research and development functions; ? Expenses incurred in connection with the development of our product candidates; and ? Facilities, depreciation and other expenses, which include direct and
allocated expenses for rent and maintenance of facilities, insurance and
supplies.
We expense research and development costs as incurred.
We continue to investigate other applications of our core technology to other product candidates, which includes laboratory tests and academic collaborations. We also continue to develop our supply chain, particularly identifying and improving our sourcing of triptolide, a key active ingredient for our product candidates. At this time, we cannot reasonably estimate the costs for further development of ContraPest or the cost associated with the development of any of our other product candidates.
Selling, General and Administrative Expenses
Selling, general and administrative expenses consist primarily of salaries and related costs, including stock-based compensation, for personnel in executive, finance, sales, marketing and administrative functions. Selling, general and administrative expenses also include direct and allocated facility-related costs as well as professional fees for legal, consulting, accounting and audit services. We plan to continue to utilize various forms of stock-based compensation awards in order to attract and retain qualified employees. As a result, we anticipate that stock-based compensation expense will continue to represent a significant portion of our selling, general and administrative expenses for the foreseeable future. Interest Income
Interest income consists primarily of interest income earned on cash and cash equivalents.
Interest Expense
Interest expense consists primarily of interest accrued on our finance lease and note commitments.
Other Income (Expense), Net Other income (expense), net, consists primarily of any recognized gains or losses related to the sale of fixed assets. In 2021, other income also included the reversal of a payroll benefits accrual from 2019 that was reversed as the liability period had expired. Income Taxes Deferred tax assets and liabilities are determined based on differences between the financial statement and tax basis of assets and liabilities, as well as a consideration of net operating loss and credit carry forwards, using enacted tax rates in effect for the period in which the differences are expected to impact taxable income. A valuation allowance is established, when necessary, to reduce deferred tax assets to the amount that is more likely than not to be realized. The Company's effective tax rate for the three months endedMarch 31, 2021 , as well as for the year endedDecember 31, 2020 , has been impacted by the full valuation allowance on the Company's deferred tax assets. 27
Since our inception, we have not recorded anyU.S. federal or state income tax benefits for the net operating losses we have incurred in each year in our history or for our generated research and development tax credits, due to the uncertainty regarding our ability to realize a benefit from these tax attributes. AtMarch 31, 2021 , the Company has federal and state net operating loss carryforwards of approximately$69.5 million and$56.1 million , respectively, not considering any potential IRC Section 382 annual limitation discussed below. The federal loss carryforwards begin to expire in 2032, unless previously utilized. Included in the$69.5 million of federal loss carryforwards are approximately$25.1 million of net operating losses that do not expire due to the tax law changes promulgated in conjunction with the Tax Cuts and Jobs Act of 2017. Additionally, the utilization of the net operating loss carryforwards are subject to an annual limitation under Section 382 and 383 of the Internal Revenue Code od 1986, and similar state tax provisions due to ownership change limitations that have occurred previously or that could occur in the future. These ownership changes limit the amount of net operating loss carryforwards and other deferred tax assets that can be utilized to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section 382 and 383 results from transactions increasing ownership of certain stockholders or public groups in the stock of the corporation by more than 50 percent points over a three-year period. The Company has not conducted an analysis of an ownership change under section 382. To the extent that a study is completed and an ownership change is deemed to occur, the Company's net operating losses could be limited.
Comparison of the Three Months Ended
The following table summarizes our results of operations for the three months
ended
For the Three Months Ended March 31, 2021 2020 Revenue: Sales$ 88 $ 37 Cost of sales 50 22 Gross profit 38 15 Operating expenses: Research and development 455 296
Selling, general and administrative 1,422
2,045 Total operating expenses 1,877 2,341 Net operating loss (1,839 ) (2,326 ) Other income (expense): Interest income 2 2 Interest expense (5 ) (8 ) Other income 21 15 Total other income 18 9
Net loss and comprehensive loss (1,821
) (2,317 ) Deemed dividend-warrant price protection-revaluation adjustment
- 414 Net loss attributable to common shareholders $ (1,821
)
Weighted average common shares outstanding - basic and fully diluted 8,137,038
1,611,304
Net loss per common share - basic and fully diluted $ (0.22
)$ (1.69 ) 28 Sales Sales, shown net of sales discounts and promotions, were$88,000 for the three months endedMarch 31, 2021 , compared to$37,000 for the same period in 2020. Sales increased by$51,000 in the first three months of 2021 due, in part, to our implementation of an internet sales capability, augmenting our existing pull through sales strategy, where demand from the consumer market encourages, or pulls, resellers and pest management professionals to offer our products, as well as billings of$4,000 for customer product implementation services. These initiatives have shown initial promise. However, we believe the benefit has been offset by reduced sales, reflecting continued reduced spending by customers
due to the COVID-19 pandemic. Cost of Sales
Cost of sales was$50,000 or 56.8% of net sales for the three months endedMarch 31, 2021 , compared to$22,000 or 59.5% of net sales for the three months endedMarch 31, 2020 . The increase in cost of goods sold of$28,000 in 2021 is primarily due to higher sales volume. The decrease in cost of sales as a percentage of net sales was primarily due to the impact of customer product implementation billings. We continue to focus on manufacturing process improvement and efficiencies. We anticipate cost of goods sold as a percentage of sales will improve in the future due to manufacturing efficiencies as a result of scale-up activities. Gross Profit
Gross profit for the three months endedMarch 31, 2021 was$38,000 or 43.2% of net sales, compared to a gross profit of$15,000 or 40.5% of net sales, for the same period in 2020. The increase in gross profit was a direct result of the impact of customer product implementation billings.
Research and Development Expenses
Three Months Ended March 31, Increase 2021 2020 (Decrease) (in thousands) Direct research and development expenses: Personnel related (including stock-based compensation)$ 232 $
137 $ 95 Facility-related 20 42 (22 ) Other 203 117 86
Total research and development expenses$ 455 $
296$ 159
Research and development expenses were$455,000 for the three months endedMarch 31, 2021 , compared to$296,000 for the same period in 2020. The$159,000 increase in research and development expenses was primarily due to an increase of$95,000 in personnel-related costs, including stock-based compensation expense, due to an increase in manufacturing and regulatory headcount to meet current and future demand.
Facility-related expenses decreased$22,000 due primarily to the expiration of a facility lease of 7,632 square feet of manufacturing space inFlagstaff, Arizona atDecember 31, 2020 . The increase in other research and development expenses of$86,000 in the three months endedMarch 31, 2021 compared to the same period in 2020 was primarily due to increased expenses related to field and product improvement studies as well as increased annual EPA and state registrations. We also continue to develop our supply chain, particularly identifying and improving our sourcing of key ingredients for our product candidates. 29
Selling, General and Administrative Expenses
Selling, general and administrative expenses were approximately$1.4 million for the three months endedMarch 31, 2021 , as compared to approximately$2.0 million for the three months endedMarch 31, 2020 . The decrease of$600,000 in selling, general and administrative expenses was primarily due to a decrease of$142,000 in net salary costs, a decrease of$28,000 in travel expenses, a$350,000 decrease in professional service fees, a$71,000 decrease in transfer agent fees and a$29,000 decrease in marketing expenses. The decrease in net salary costs of$142,000 was due primarily to a decrease in administration headcount inMarch 2020 to control expenses. The decrease in professional services expenses was primarily due to reduced legal expenses related to a litigation settlement incurred in the three months endedMarch 31, 2020 that were not incurred in the same period of 2021. The decrease in travel expenses was a direct result of COVID-19 travel restrictions put in place at the end ofMarch 2020 . Likewise, the pandemic continued to restrict access to trade shows and other marketing activities in the three months endedMarch 31, 2021 , resulting in lower marketing expenses than the same period in 2020. The$71,000 decrease in transfer agent fees in the three months endedMarch 31, 2021 over the same period of 2020 was due to expenses related to a 20 for 1 reverse stock split effected by the Company inFebruary 2020 .
Interest Income/Expense, Net
We recorded interest expense, net of$3,000 for the three months endedMarch 31, 2020 , as compared to interest expense, net of$6 for the same period in 2020. The$3,000 decrease in interest expense, net for the period was a result of decreased interest expense on certain notes payable and finance leases that expired afterMarch 31, 2020 . Other Income (Expense)
Other income, net, was
Liquidity and Capital Resources
Since our inception, we have sustained significant operating losses in the course of our research and development activities and commercialization efforts and expect such losses to continue for the near future. We have generated limited revenue to date from product sales, research grants and licensing fees received under a former license. We have primarily funded our operations to date through the sale of equity securities, including convertible preferred stock, common stock and warrants to purchase common stock; and debt financing, consisting primarily of convertible notes. ThroughMarch 31, 2021 , we have received net proceeds of$89.3 million from our sales of common stock, preferred stock and warrant exercises and issuance of convertible and other promissory notes, an aggregate of$1.7 million from licensing fees and an aggregate of$1.0 million in net product sales. As ofMarch 31, 2021 , we had an accumulated deficit of$106.1 million and cash and cash equivalents of$15.2 million . As discussed in Note 8 - Borrowings, of our Notes to Condensed Financial Statements, onApril 15, 2020 , the Company also received cash proceeds of$645,700 from the PPP of the Coronavirus Aid, Relief, and Economic Security Act. We used the proceeds from the PPP Loan to retain employees, maintain payroll and make lease, interest and utility payments. Our ultimate success depends upon the outcome of a combination of factors, including: (i) successful commercialization of ContraPest and maintaining and obtaining regulatory approval of our products and product candidates; (ii) market acceptance, commercial viability and profitability of ContraPest and other products; (iii) the ability to market our products and establish an effective sales force and marketing infrastructure to generate significant revenue; (iv) the success of our research and development; (v) the ability to retain and attract key personnel to develop, operate and grow our business; and (vi) our ability to meet our working capital needs. 30 Based upon our current operating plan, we expect that cash and cash equivalents atMarch 31, 2021 , in combination with anticipated revenue and any additional sales of our equity securities, will be sufficient to fund our current operations for at least the next 12 months. We have evaluated and will continue to evaluate our operating expenses and will concentrate our resources toward the successful commercialization of ContraPest inthe United States . However, if anticipated revenue targets and margin targets are not achieved or expenses are more than we have budgeted, we may need to raise additional financing before that time. If we need more financing and we are unable to raise necessary capital through the sale of our securities, we may be required to take other measures that could impair our ability to be successful and operate as a going concern. In any event, we may require additional capital in order to fund our operating losses and research and development activities before we become profitable and may opportunistically raise capital. We may never achieve profitability or generate positive cash flows, and unless and until we do, we will continue to need to raise capital through equity or debt financing. If such equity or debt financing is not available at adequate levels or on acceptable terms, we may need to delay, limit or terminate commercialization and development efforts or discontinue operations.
Additional Funding Requirements
We expect our expenses to continue or increase in connection with our ongoing activities, particularly as we focus on marketing and sales of ContraPest. Further, the COVID-19 pandemic will likely delay completion of field studies and achievement of sales, which will further increase our need for financing. In addition, we will continue to incur costs associated with operating as a public company.
In particular, we expect to incur substantial and increased expenses as we:
? Work to maximize market acceptance for, and generate sales of, our products;
? Manage the infrastructure for the sales, marketing and distribution of ContraPest and any other product candidates for which we may receive regulatory approval;
? Continue the development of ContraPest and our other product candidates,
including engaging in any necessary field studies;
? Seek additional regulatory approvals for ContraPest and our other product
candidates;
? Scale up manufacturing processes and quantities to meet future demand of
ContraPest and any other product candidates for which we receive regulatory
approval;
? Continue product development of ContraPest and advance our research and
development activities and advance the research and development programs for
other product candidates; ? Maintain, expand and protect our intellectual property portfolio;
? Add operational, financial and management information systems and personnel,
including personnel to support our product development and commercialization
efforts and operations as a public company; and
? Expand regulatory approvals for ContraPest, with an effort to make the product
more user friendly and available for use in an increased number of applications.
We believe we will need additional financing to fund these continuing and additional expenses.
31 Cash Flows The following table summarizes our sources and uses of cash for each of the periods presented: Three Months Ended March 31, 2021 2020 Cash used in operating activities$ (2,015 ) $ (1,871 ) Cash (used in) provided by investing activities (63 )
40
Cash provided by financing activities 13,600
1,387
Net increase (decrease) in cash and cash equivalents
Operating Activities. During the three months endedMarch 31, 2021 , operating activities used$2.0 million of cash, primarily resulting from our net loss of$1.8 million and by changes in our operating assets and liabilities of$424,000 , offset by non-cash charges of$228,000 , consisting primarily of stock-based compensation, depreciation and amortization. Our net loss was primarily attributable to research and development activities and our selling, general and administrative expenses, as we generated limited product revenue during the period. Net cash used by changes in our operating assets and liabilities for the three months endedMarch 31, 2021 of$424,000 consisted primarily of a net decrease in accrued expenses and accounts payable of$283,000 , an increase in prepaid expenses of$182,000 and an increase in accounts receivable of 2,000, offset by a decrease in inventory of$40,000 and a decrease in other assets of$3,000 . During the three months endedMarch 31, 2020 , operating activities used$1.9 million of cash, primarily resulting from our net loss of$2.3 million offset by changes in our operating assets and liabilities of$233,000 and by non-cash charges of$213,000 , consisting primarily of stock-based compensation, depreciation and gains recognized on sale of equipment. Our net loss was primarily attributable to research and development activities and our selling, general and administrative expenses, as we generated limited product revenue during the period. Net cash used by changes in our operating assets and liabilities for the three months endedMarch 31, 2020 consisted primarily of a net increase in prepaid expenses of$40,000 offset by a net decrease in accrued expenses and accounts payable of$119,000 , a decrease in accounts receivable-trade and accounts receivable-other of$127,000 , a decrease in other assets of$9,000 and a decrease in inventory of$18,000 . Investing Activities.
For the three months ended
For the three months ended
Financing Activities. During the three months endedMarch 31, 2021 , net cash provided by financing activities was$13.6 million as a result of$12.4 million in net proceeds from the issuance of common stock and net proceeds of$1.2 million from the exercise of warrants, offset by$17,000 of repayments related to notes payable and$13,000 in repayments of finance lease obligations. During the three months endedMarch 31, 2020 , net cash provided by financing activities was$1.4 million as a result of proceeds received from the issuance of common stock of$1.4 million offset by$34,000 related to payments of finance lease obligations and 14,000 of payments of notes payable. 32
Off-Balance Sheet Arrangements
None.
Critical Accounting Policies and Significant Judgments and Estimates
Our financial statements are prepared in accordance with generally accepted accounting principles inthe United States , orU.S. GAAP. The preparation of our financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions. While our significant accounting policies are described in more detail in Note 2 to our financial statements included elsewhere in this Quarterly Report on Form 10-Q, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements. Revenue Recognition EffectiveJanuary 1, 2018 , the Company adopted Accounting Standards Codification ("ASC") 606 - Revenue from Contracts with Customers ("ASC 606"). Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 - Revenue Recognition ("ASC 605"). Under ASC 605, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of the fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured. The performance obligations identified by the Company under ASC 606 are straightforward and similar to the unit of account and performance obligation determination under ASC Topic 605, Revenue Recognition. The Company recognizes revenue when product is shipped at a fixed selling price on payment terms of 30 to 120 days from invoicing. The Company recognizes other revenue earned from pilot studies, consulting and implementation services upon the performance of specific services under the respective service contract.
The Company derives revenue primarily from commercial sales of products, net of discounts and promotions, as well as consulting and implementation services provided in conjunction with our product deployments.
Stock-Based Compensation We recognize compensation costs related to stock options granted to employees based on the estimated fair value of the awards on the date of grant, net of estimated forfeitures, in accordance with ASC Topic 718 - Stock Compensation. We estimate the grant date fair value of the awards, and the resulting stock-based compensation expense, using the Black-Scholes option-pricing model. The grant date fair value of stock-based awards is expensed on a straight-line basis over the vesting period of the respective award.
We recorded stock-based compensation expense of approximately
33 The Black-Scholes option-pricing model requires the use of highly subjective and complex assumptions, which determine the fair value of stock-based awards. If we had made different assumptions, our stock-based compensation expense, net loss and loss per share of common stock could have been significantly different.
Our assumptions are as follows:
? Expected term. The expected term represents the period that the stock-based
awards are expected to be outstanding. Our historical share option exercise
experience does not provide a reasonable basis upon which to estimate an
expected term because of a lack of sufficient data. Therefore, we estimate the
expected term by using the simplified method, which calculates the expected
term as the average of the time-to-vesting and the contractual life of the
options.
? Expected volatility. Expected volatility is derived from the average
historical volatilities of publicly traded companies within our industry that
we consider to be comparable to our business over a period approximately equal
to the expected term. We intend to continue to consistently apply this process
using the same or similar public companies unless circumstances change such
that the identified companies are no longer similar to us, in which case, more
suitable companies whose share prices are publicly available would be utilized
in the calculation.
? Risk-free interest rate. The risk-free interest rate is based on the
notes with maturities approximately equal to the expected term.
? Expected dividend. The expected dividend is assumed to be zero as we have
never paid dividends and have no current plans to pay any dividends on our
common stock.
? Expected forfeitures. We use historical data to estimate pre-vesting option
forfeitures and record stock-based compensation expense only for those awards
that are expected to vest. To the extent actual forfeitures differ from the
estimates, the difference will be recorded as a cumulative adjustment in the
period that the estimates are revised.
Significant Factors, Assumptions and Methodologies Used in Determining Fair Value of Our Common Stock
As noted above, we are required to estimate the fair value of the common stock underlying our stock-based awards when performing the fair value calculations using the Black-Scholes option-pricing model. In the absence of an active market for our common stock, we utilized methodologies in accordance with the framework of theAmerican Institute of Certified Public Accountants' Technical Practice Aid , Valuation of Privately-Held Company Equity Securities Issued as Compensation, to estimate the fair value of our common stock. In addition, we have conducted periodic assessments of the valuation of our common stock. The assumptions underlying these valuations represent management's best estimates, which involve inherent uncertainties and the application of management's judgment. If we had made different assumptions than those used, the amount of our stock-based compensation expense, net income and net income per share amounts could have been significantly different. The fair value per share of our common stock for purposes of determining stock-based compensation expense is the closing price of our common stock as reported on the applicable grant date. The compensation cost that has been included in the statements of operations and comprehensive loss for all stock-based compensation arrangements is as follows: Three Months Ended March 31, 2021 2020 Research and development$ 2 $ 3 Selling, general and administrative 153 148
Total stock-based compensation expense
The intrinsic value of stock options outstanding as of
34
Emerging Growth Company Status
The Jumpstart Our Business Startups Act of 2012, or the JOBS Act, permits an "emerging growth company" such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have irrevocably elected to "opt out" of this provision and, as a result, we intend to comply with new or revised accounting standards when they are required to be adopted by public companies that are not emerging growth companies.
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