9. Stock Based Compensation

Our 2000 Long-Term Incentive Plan expired on August 6, 2010 and no further shares are available for future grant under this plan. As of September 30, 2016, there were approximately 0.6 million shares subject to outstanding stock options under this plan.

We also have a 2008 Stock Incentive Plan. As of September 30, 2016, there were 13.4 million shares subject to outstanding stock options and 16.4 million shares available for future grant.

We follow 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, we recognize 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 our Condensed Statements of Operations:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016		2015
Research and development — employee	$	455,341		$	402,292		$	1,443,347	$	1,131,072
General and administrative — employee		586,315			482,954			3,742,733		3,182,798
Total employee stock-based compensation	$	1,041,656		$	885,246		$	5,186,080	$	4,313,870

Research and development — non-employee	$	—		$	—		$	—	$	—
General and administrative — non-employee		(5,938	)		(27,647	)		214,524		206,437
Total non-employee stock-based compensation	$	(5,938	)	$	(27,647	)	$	214,524	$	206,437

During the nine-month period ended September 30, 2016, we granted stock options to purchase 475,000 shares of its common stock and warrants to purchase 500,000 shares of our common stock at a average weighted exercise price of $1.89. In the nine-month period ended September 30, 2016, we amended the terms of stock options of a former executive in respect of a Retirement Agreement, resulting in a one-time expense of approximately $1.9 million. During the nine-month period ended September 30, 2015, we granted stock options to purchase 550,000 shares of our common stock. 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, 2016			Nine Months Ended September 30, 2015
Risk-free interest rate		1.72	%		2.21	%
Expected volatility		74.9	%		78.2% - 84.4	%
Expected lives (years)		6			6 - 10
Expected dividend yield		0.00	%		0.00	%

Our computation of expected volatility is based on the historical daily volatility of our publicly traded stock. We use historical information to compute expected lives. In the nine-month period ended September 30, 2016, the contractual term of the options granted was ten years. The dividend yield assumption of zero is based upon the fact we have never paid cash dividends and presently have 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 periods ended September 30, 2016 and 2015, we estimated annualized forfeiture rates of 10% for options granted to our 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 Compensation costs will be adjusted for future changes in estimated forfeitures. We 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, 2016, there remained approximately $4.1 million of unrecognized compensation expense related to unvested stock options granted to current and former employees, directors, to be recognized as expense over a weighted-average period of 0.96 years. Presented below is our stock option activity:

	Nine Months Ended September 30, 2016
	Number of Options (Employees)			Number of Options (Non-Employees)			Total Number of Options			Weighted-Average Exercise Price
Outstanding at January 1, 2016		13,583,862			635,714			14,219,576		$	3.10
Granted		475,000			—			475,000		$	2.05
Exercised, Forfeited or Expired		(1,221,040	)		(35,714	)		(1,256,754	)	$	3.30
Outstanding at September 30, 2016		12,837,822			600,000			13,437,822		$	3.04
Options exercisable at September 30, 2016		9,242,803			600,000			9,842,803		$	3.27

The following table summarizes significant ranges of outstanding stock options under our plans at September 30, 2016:

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
$	0.60 – $2.00		1,274,498		6.34	$	1.78		1,224,498		6.19	$	1.83
$	2.01 – $2.50		7,899,179		8.41	$	2.33		4,522,874		8.06	$	2.30
$	2.51 – $4.00		968,291		7.37	$	2.88		937,458		7.34	$	2.87
$	4.01 – $32.55		3,295,854		6.46	$	5.30		3,157,973		6.42	$	5.32
			13,437,822		7.66	$	3.04		9,842,803		7.23	$	3.27

The aggregate intrinsic value of all outstanding options and vested options as of September 30, 2016 was $0 and $0, respectively, representing options with exercise prices of less than the closing fair market value of our common stock on September 30, 2016 of $0.59 per share.

There were 30,559,148 and 7,225,472 warrants outstanding at September 30, 2016 and December 31, 2015, respectively at a weighted-average exercise price of $0.80 and $4.28, respectively.