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COMMON STOCK OPTIONS
 12 Months Ended
Dec. 31, 2011
Notes to Financial Statements  
Note 12 - COMMON STOCK OPTIONS

On February 11, 2011, the Company adopted its 2011 Equity Incentive Plan (“the Plan”) under which 6,475,750 shares of common stock were reserved for issuance under options or other equity interests as set forth in the Plan. Under the Plan, options are available for issuance to employees, officers, directors, consultants and advisors. The Plan provides that the Board of Directors will determine the exercise price and vesting terms of each option on the date of grant. Options granted under the Plan generally expire ten years from the date of grant.

 

In connection with the Merger, the Company exchanged issued and outstanding stock options in FPI for stock options in FPM with substantially the same terms.  Pursuant to the Merger, the shares of FPI were modified for the exchange ratio of 3 for 2 whereby the exchange ratio was applied to the original exercise price of the option and the common shares underlying the option.  In connection with this modification to the terms of the stock options, the Company recorded a one-time charge of $1,351,452 to stock option expense.

 

In May 2011, prior to the Merger, the Company granted Johan (Thijs) Spoor, the Company’s CEO, options to purchase 400,000, shares of common stock in the Company at $0.75 per share (aggregate fair value of $200,763). Mr. Spoor’s options will vest annually over four (4) years.  These options were adjusted for the exchange ratio and post merger the options are exercisable into 600,000 shares of common stock at $0.50 (aggregate fair value of $671,520) per share with one-quarter vesting annually.

 

Additionally, in May 2011, the Company issued 450,000 shares of common stock as a cashless exercise of 900,000 Stock Options.  Immediately following the Merger, FPM issued 161,250 shares of common stock in the cashless exercise of 215,000 (pre-merger FluoroPharma, Inc. options) options issued to a director of the Company.

 

The following is a summary of all common stock option activity during the two years ended December 31, 2011:

 

    Shares Under     Weighted Average  
    Options Outstanding     Exercise Price  
             
Outstanding at December 31, 2009     2,983,000     $ 0.61  
   Options granted     460,000       0.57  
   Options forfeited     -       -  
   Options exercised     -       -  
Outstanding at December 31, 2010     4,616,000     $ 0.47  
   Options granted     666,584       0.57  
   Options forfeited     -          
   Options exercised     (1,115,000 )   $ 0. 55  
Outstanding at December 31, 2011     4,167,584     $ 0.62  

 

          Weighted Average Exercise  
    Options Exercisable     Price per Share  
Exercisable at December 31, 2010     3,101,000     $ 0.57  
Exercisable at December 31, 2011     2,876,714     $ 0.58  

 

 

The weighted average fair value of options granted during the year ended December 31, 2011 was $1.12.

 

The following represents additional information related to common stock options outstanding and exercisable at December 31, 2011:

      Outstanding     Exercisable  
            Weighted                    
            Average     Weighted           Weighted  
            Remaining     Average           Average  
Exercise Price     Number of     Contract Life     Exercise     Number of     Exercise  
Price     Shares     in Years     Price     Shares     Price  
                                 
$ 0.13       315,000       0.05     $  0.13        315,000     $ 0.13  
$ 0.17       885,000       6.60     $  0.17        705,000     $ 0.17  
$ 0.50        1,680,000       2.80     $  0.50        600,000     $ 0.50  
$ 0.67       318,000       1.00     $  0.67        318,000     $ 0.67  
$ 0.95       573,000       4.87     $  0.95        573,000     $ 0.95  
$            1.05          30,870           0.59     $     1.05               -     $    1.05  
$ 1.17       165,000       6.55     $  1.17        165,000     $ 1.17  
$     1.33         165,000           6.84     $     1.33                   165,000     $     1.33  
$ 1.40       35,714       0.59     $  1.40         35,714     $ 1.40  
          4,167,584       5.70     $  0.62       2,876,714     $ 0.58  

 

The weighted average remaining contractual term for fully vested share options (exercisable, above) and options expected to vest (outstanding, above) is 4.41 and 5.70 years, respectively.  The aggregate intrinsic value of all of the Company’s options is approximately $700,000.

 

During the year ended December 31, 2011, 737,500 shares were exercised pursuant to the Merger in exchange for shares of common stock of FPM.

 

A summary of the status of the Company’s non-vested stock options as of December 31, 2011 and changes is presented below:

 

Non-vested Stock Options   Shares    

Weighted Average Grant

Date Fair Value

  
             
Non-vested at December 31, 2009      1,575,000     $ 0.76  
   Options granted       690,000       0.50  
   Options vested         (525,000)       0.17  
   Options forfeited     -       -  
Non-vested at December 31, 2010      1,740,000     $ 1.15  
   Options granted       666,584       0.75  
   Options vested     (1,115,714)       0.47  
   Options forfeited     -       -  
Non-vested at December 31, 2011     1,290,870     $ 0.47  

 

As of December 31, 2011, there was approximately $1,179,244 of unrecognized compensation cost related to non-vested options. Weighted average period of non-vested stock options was 8.46 years as of December 31, 2011.

 

The Company used the Black-Scholes option price calculation to value the options granted in 2011 in connection with the merger transaction, using the following assumptions: risk-free rate of 3.90%; volatility range of 72% to 117%; average term of five (5) years and exercise price of options granted. See Note 2, Summary of Significant Accounting Policies, “Accounting for Share Based Payments.”