Stock Options

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

Stock Options

Note 5. Stock Options

The following table summarizes stock option activity for the period ended June 30, 2020:

	Number of Options		Weighted Average Exercise Price ($)		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value ($)
Outstanding at December 31, 2019		2,317,500		2.68		5.68	$	1,460,507
Grants		2,470,571		1.90		-		-
Outstanding at June 30, 2020		4,788,071		2.28		5.49	$	827,500
Vested and Exercisable at June 30, 2020		1,242,500		1.96		5.40		441,250
Available for grant at June 30, 2020		14,970,194

On January 2, 2020, the Company granted Alan L. Rubino, the Company’s President and Chief Executive Officer, an option to purchase up to 620,571 shares of the Company’s common stock at an exercise price of $3.23. The option was granted in fulfillment of the Company’s obligation under the terms of Mr. Rubino’s employment agreement dated November 15, 2019. On May 22, 2020, the Board of Directors approved the modification of these 620,571 options to accelerate the vesting from November 14, 2023 to November 14, 2022. The Company calculated the fair value of the options immediately before and after the modification using the Black-Scholes model. There was no incremental consideration due to the modification.

On May 22, 2020, the Company granted options to two consultants and a board member to purchase an aggregate 1,550,000 shares of the Company’s common stock at an exercise price of $1.40. On June 1, 2020, pursuant to his employment agreement, the Company granted Dr. Robin Robinson, the Company’s Chief Scientific Officer, an option to purchase up to 200,000 shares of the Company’s common stock at an exercise price of $1.65. On June 22, 2020, pursuant to his employment agreement, the Company granted Robert Cook, the Company’s Chief Financial Officer, an option to purchase up to 100,000 shares of the Company’s common stock at an exercise price of $1.96. The fair value of the options was estimated at the date of grant using the Black-Scholes option pricing model. Assumptions regarding volatility, expected term, dividend yield and risk-free interest rate are required under the Black-Scholes model. The volatility assumption is based on the Company’s historical experience. The risk-free interest rate is based on a U.S. Treasury note with maturity similar to the option award’s expected life. The expected life represents the average period of time that options granted are expected to be outstanding.

The assumptions for volatility, expected life, dividend yield and risk-free interest rate for the options granted are as follows:

	Six Months Ended
	June 30, 2020
Risk-free interest rate	0.34%	-	1.67%
Expected life in years	3.25	-	4.98
Expected Volatility	105.71%	-	106.88%
Expected dividend yield		0%

The share-based compensation cost resulting from stock option grants, including those previously granted and vesting over time is expensed ratably over the respective vesting periods. During the three and six months ended June 30, 2020, the Company recognized $465,763 and $2,052,285, respectively, in stock-based compensation. During each of the three and six months ended June 30, 2019, the Company recognized $832 in stock-based compensation. As of June 30, 2020, the Company’s unrecognized compensation cost related to unvested stock options was $2,919,698 to be amortized through 2022. Stock-based compensation has been included in the consolidated statement of operations as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Research and development	$	631,876	$	-	$	631,876	$	-
General and administrative		954,646		832		1,420,409		832
Total	$	1,586,522	$	832	$	2,052,285	$	832

The following table summarizes information about stock options outstanding and exercisable at June 30, 2020:

		Stock Options Outstanding						Stock Options Exercisable
Range of Exercise Prices		Number of Shares Subject to Outstanding Options		Weighted Average Contractual Life (years)		Weighted Average Exercise Price		Number of Shares Subject to Options Exercise		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price
	1.05		55,000		4.00		1.05		55,000		3.75		1.05
	1.25		7,500		5.21		1.25		7,500		4.96		1.25
	1.34		7,500		5.25		1.34		7,500		5.00		1.34
	1.40		1,550,000		5.90		1.40		775,000		5.90		1.40
	1.65		200,000		5.92		1.65		100,000		5.92		1.65
	1.70		7,500		5.54		1.70		7,500		5.29		1.70
	1.96		100,000		5.98		1.96		50,000		5.98		1.96
	2.28		7,500		6.30		2.28		7,500		6.05		2.28
	4.20		232,500		4.03		4.20		232,500		4.03		4.20
	1.98		667,800		5.63		1.98		-		-		-
	2.48		667,800		5.63		2.48		-		-		-
	3.23		664,400		5.63		3.23		-		-		-
	3.23		620,571		5.76		3.23		-		-		-
	Total		4,788,071		5.49	$	2.28		1,242,500		5.40	$	1.96