7. Stock Based Compensation

The Company has a 2000 Long-Term Incentive Plan, which expired on August 6, 2010. As of September 30, 2015, there were approximately 0.6 million shares subject to outstanding stock options under this plan. No further shares are available for future grant under this plan.

The Company also has a 2008 Stock Incentive Plan. As of September 30, 2015, there were 9.6 million shares subject to outstanding stock options and 10.2 million shares available for future grant under this plan.

The Company follows ASC 718, Compensation-Stock Compensation, which requires the measurement and recognition of compensation expense for all stock-based awards made to employees.

For stock options and stock warrants paid in consideration of services rendered by non-employees, the Company recognizes compensation expense in accordance with the requirements of ASC 505-50.

Non-employee option grants that do not vest immediately upon grant are recorded as an expense over the vesting period. At the end of each financial reporting period, the value of these options, as calculated using the Black-Scholes option-pricing model, is determined, and compensation expense recognized or recovered during the period is adjusted accordingly. As a result, the amount of the future compensation expense is subject to adjustment until the common stock options are fully vested.

The following table sets forth the total stock-based compensation expense resulting from stock options and warrants included in the Company’s unaudited Condensed Statements of Operations:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2015			2014		2015		2014
Research and development — employee	$	402,292		$	213,180	$	1,131,072	$	622,818
General and administrative — employee		482,954			380,274		3,182,798		1,017,613
Total employee stock-based compensation	$	885,246		$	593,454	$	4,313,870	$	1,640,431

Research and development — non-employee	$	—		$	—	$	—	$	86,539
General and administrative — non-employee		(27,647	)		24,228		206,437		376,849
Total non-employee stock-based compensation	$	(27,647	)	$	24,228	$	206,437	$	463,388

During the nine-month period ended September 30, 2015, the Company granted stock options to purchase 550,000 shares of its common stock. During the nine-month period ended September 30, 2014, the Company granted stock options to purchase 362,500 shares of common stock and issued warrants to purchase 25,000 shares of common stock with an exercise of $5.60. The fair value of the stock options was estimated using the Black-Scholes option-pricing model, based on the following assumptions:

	Nine Months Ended September 30,2015			Nine Months Ended September 30, 2014
Risk-free interest rate		2.21	%		1.98	%
Expected volatility		78.2% - 84.4	%		83.9% - 89.6	%
Expected lives (years)		6 - 10			6 - 10
Expected dividend yield		0.00	%		0.00	%

The Company’s computation of expected volatility is based on the historical daily volatility of its publicly traded common stock. The Company uses historical information to compute expected lives. In the nine-month period ended September 30, 2015, the contractual term of the options granted was ten years. The dividend yield assumption of zero is based upon the fact the Company has never paid cash dividends and presently has no intention to do so. The risk-free interest rate used for each grant and issuance is equal to the U.S. Treasury rates in effect at the time of the grant and issuance for instruments with a similar expected life. Based on historical experience, for the nine-month period ended September 30, 2015, the Company estimated annualized forfeiture rates of 10% for options granted to its employees, 2% for options granted to senior management and 0% for options granted to directors and non-employees and for warrants issued to non-employees. For the nine-month period ended September 30, 2014, the Company estimated annualized forfeiture rates of 12% for options granted to its employees, 2% for options granted to senior management and 0% for options granted to directors and non-employees. Compensation costs will be adjusted for future changes in estimated forfeitures. The Company will record additional expense if the actual forfeitures are lower than estimated and will record a recovery of prior expense if the actual forfeiture rates are higher than estimated.

As of September 30, 2015, there remained approximately $4.2 million of unrecognized compensation expense related to unvested stock options granted to current and former employees and directors, to be recognized as expense over a weighted-average period of 0.91 years. Presented below is the Company’s stock option activity:

	Nine Months Ended September 30, 2015
	Number of Options (Employees)			Number of Options (Non-Employees)			Total Number of Options			Weighted-Average Exercise Price
Outstanding at January 1, 2015		9,348,592			692,143			10,040,735		$	2.87
Granted		550,000			—			550,000		$	3.86
Exercised		(287,143	)		—			(287,143	)	$	2.05
Expired		(77,587	)		(56,429	)		(134,016	)	$	6.82
Outstanding at September 30, 2015		9,533,862			635,714			10,169,576		$	3.36
Options exercisable at September 30, 2015		6,454,764			635,714			7,090,478		$	3.61

The following table summarizes significant ranges of outstanding stock options under the Company’s plans at September 30, 2015:

Range of Exercise Prices		Total Number of Options		Weighted-Average Remaining Contractual Life (years)		Weighted-Average Exercise Price		Total Number of Options Exercisable		Weighted-Average Remaining Contractual Life (years)		Weighted-Average Exercise Price
$	1.83 - $2.50		5,557,558		8.24	$	2.13		3,242,079		7.75	$	2.09
$	2.51 – $3.50		947,339		8.41	$	2.85		897,340		8.39	$	2.84
$	3.51 – $8.00		3,376,614		7.70	$	5.06		2,662,994		7.55	$	5.13
$	8.01 – $32.55		288,065		2.06	$	9.00		288,065		2.06	$	9.00
			10,169,576		7.90	$	3.36		7,090,478		7.56	$	3.61

The aggregate intrinsic value of all outstanding options and vested options as of September 30, 2015 was $1.4 million and $0.9 million, respectively, representing options with exercise prices of less than the price of the Company’s common stock on The NASDAQ Capital Market on September 30, 2015 of $2.37 per share.

There were 7,225,472 and 7,349,760 warrants outstanding at September 30, 2015 and December 31, 2014, respectively at a weighted-average exercise price of $4.28 and $4.27, respectively.

Restricted Stock

On January 1, 2014, the Company granted to Dr. Daniel Levitt, Executive Vice President and Chief Medical Officer, 100,000 shares of CytRx Corporation restricted stock pursuant to the 2008 Plan, which shares have now fully vested. The fair value of the restricted stock is based on the market price of the Company’s shares on the grant date less the par value received as consideration. The fair value of the restricted shares granted on January 1, 2014 was $627,000. The stock-based compensation expense relating to restricted stock included in the Company’s unaudited Condesned Statements of Operations for the three-month and nine-month periods ended September 30, 2014 was $158,013 and $468,887, respectively. No restricted shares of common stock of the Company were granted in the comparable periods in 2015.