Stock Based Compensation

6 Months Ended

Jun. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Based Compensation

8. Stock Based Compensation

We have a 2000 Long-Term Incentive Plan, which expired on August 6, 2010. As of June 30, 2018, there were 30,682 shares subject to outstanding stock options under this plan. No further shares are available for future grant under this plan.

We also have a 2008 Stock Incentive Plan. As of June 30, 2018, there were approximately 2.7 million shares subject to outstanding stock options and approximately 0.8 million shares outstanding related to restricted stock grants options.

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 Consolidated Statements of Operations:

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Research and development — employee	$	29,451	$	278,533	$	60,423	$	631,616
General and administrative — employee		264,935		401,820		556,158		869,485
Total employee stock-based compensation	$	294,386	$	680,353	$	616,581	$	1,501,101
Research and development — non-employee	$	—	$	—	$	—	$	—
General and administrative — non-employee		19,517		36,578		40,867		65,237
Total non-employee stock-based compensation	$	19,517	$	36,578	$	40,867	$	65,237

During the six-month period ended June 30, 2018, we granted stock options to purchase 1,667 shares of our common stock at an average weighted exercise price of $1.89. During the six-month period ended June 30, 2017, we granted stock options to purchase 1,667 shares of our common stock at a weighted average exercise price of $2.46. The fair value of the stock options was estimated using the Black-Scholes option-pricing model, based on the following assumptions:

	Six Months Ended June 30, 2018			Six Months Ended June 30, 2017
Risk-free interest rate		2.42	%		2.04	%
Expected volatility		91.6	%		85.5	%
Expected lives (years)		6			6
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 six-month period ended June 30, 2018, 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. On January 1, 2017, the Company adopted ASU 2016-09 and made a policy election to recognize forfeitures as they occur. The adoption of ASU 2016-09 did not have a material impact to the Company’s financial condition or results of operations. No amounts relating to stock-based compensation have been capitalized.

As of June 30, 2018, there remained approximately $1.0 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 0.93 years. Presented below is our stock option activity:

	Six Months Ended June 30, 2018
	Number of Options (Employees)			Number of Options (Non-Employees)		Total Number of Options			Weighted-Average Exercise Price
Outstanding at January 1, 2018		2,492,179			373,333		2,865,512		$	10.62
Granted		1,667			—		1,667		$	1.89
Exercised, Forfeited or Expired		(116,170	)		—		(116,170	)	$	10.11
Outstanding at June 30, 2018		2,377,676			373,333		2,751,009		$	10.63
Options exercisable at June 30, 2018		1,833,715			373,333		2,207,048		$	12.44

The following table summarizes significant ranges of outstanding stock options under our plans at June 30, 2018:

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
$1.75 - $5.00		1,287,364		9.08	$	2.14		797,279		9.06	$	2.19
$5.01 – $11.00		178,334		4.45	$	10.98		178,334		4.45	$	10.98
$11.01 – $15.00		767,958		6.69	$	13.91		714,498		6.64	$	13.86
$15.01 – $98.28		517,353		5.07	$	26.79		516,937		5.07	$	26.80
		2,751,009		7.36	$	10.63		2,207,048		6.97	$	12.44

There was no aggregate intrinsic value to the outstanding options and vested options as of June 30, 2018.

There were 3,647,447 and 3,980,781 warrants outstanding at June 30, 2018 and December 31, 2017, respectively at a weighted-average exercise price of $4.27 and $4.26, respectively.

Restricted Stock

In December 2017, the Company granted to its Chairman and Chief Executive Officer, 387,597 shares of restricted common stock, pursuant to the 2008 Plan. This restricted stock vests in equal annual instalments over three years. 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 stock on the grant date was $679,000. In December 2016, the Company granted to its Chairman and Chief Executive Officer, 387,597 shares of restricted common stock, pursuant to the 2008 Plan. This restricted stock vests in equal annual instalments over three years. 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 stock on the grant date was $1,000,000. The Company recorded an employee stock-based compensation expense for restricted stock of $139,296 and $277,062 respectively, for the three and six-month periods ended June 30, 2018 as compared to $83,029 and $165,146 respectively, for the three and six-month periods ended June 30, 2017.