Stock-Based Compensation Arrangements

9 Months Ended

Sep. 30, 2015

Stock-Based Compensation Arrangements [Abstract]

Note 8—Stock-Based Compensation Arrangements

Total stock-based compensation is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Stock option grants beginning of period	$	251,374	$	108,363	$	491,197	$	348,545
Stock-based arrangements during the period:
Stock option grants		92		—		157,463		1,166
Restricted stock issued:
Employee stock purchase plan		1,088		1,279		3,129		4,730
	$	252,554	$	109,642	$	651,789	$	354,441

Stock option and restricted stock grants

The following table details stock option activity:

	Nine Months Ended				Nine Months Ended
	September 30, 2015				September 30, 2014
			Weighted Avg				Weighted Avg
			Exercise				Exercise
	Shares		Price		Shares		Price
Outstanding, beginning of period		4,523,900	$	0.39		5,884,050	$	0.43
Stock options granted		17,793,027		0.17		137,000		0.35
Stock options exercised		—		0.00		—		0.00
Restricted stock exercised		—		0.00		—		0.00
Canceled/Expired		(58,268)		0.28		(1,210,375)		0.43
Outstanding, end of period		22,258,659	$	0.22		4,810,675	$	0.43
Exercisable, end of period		3,067,959	$	0.34		723,925	$	0.71

At September 30, 2015, there was approximately $2,700,000 of total unrecognized compensation related to non-vested share-based compensation arrangements granted under the Company’s stock plans.

Restricted Stock Awards

At September 30, 2015 and 2014, there were no outstanding restricted stock awards.

Stock Option Grants

On August 9, 2013, the Company’s shareholders’ approved the 2013 Employee, Director and Consultant Equity Incentive Plan (the “2013 Plan”). The 2013 Plan allows for the issuance of up to 8,860,000 additional shares of our common stock pursuant to awards granted under the 2013 Plan. Additionally, the 2013 plan allows for the issuance of up to a maximum of 2,435,500 additional shares of our common stock, pursuant to the cancellation, forfeiture, or expiry, of awards granted under the 2004 Plan and terminated on or after the 2013 plan approval on August 9, 2013. During the nine month period ended September 30, 2015, the Company granted 6,170,748 stock options under the 2013 Plan. On July 21, 2015, the Company’s stockholders approved an amendment to the 2013 Plan to increase the number of shares of common stock available for issuance thereunder by 30,000,000 shares. At September 30, 2015, the Company had an aggregate of 30,052,620 shares of common stock available for grant under the 2013 Plan.

Pursuant to his Employment Agreement on April 6, 2015, Mr. Carbeau was granted options to purchase up to 14,245,227 shares of Interleukin’s common stock at an exercise price of $0.1525 per share (the closing price of the common stock on April 6, 2015). Of those options, 2,622,948 were granted under the 2013 Plan and 11,622,279 were granted outside of the 2013 Plan. The options will vest as to 25% of the shares on April 6, 2016, and as to an additional 2.083% of the shares on the last day of each successive month thereafter, provided that he remains employed by Company on the vesting date.

It is the Company’s policy to grant stock options with an exercise price equal to the fair market value of the Company’s common stock at the grant date, and stock options to employees generally vest over four years based upon continuous service. Historically, the majority of the Company’s stock options have been granted in connection with the employee’s start date with the Company. In addition, the Company may grant stock options in recognition of promotion and/or performance.

Employee Stock Purchase Plan

Purchases made under the Company’s Employee Stock Purchase Plan are deemed to be compensatory because employees may purchase stock at a price equal to 85% of the fair market value of the Company’s common stock on either the first day or the last day of a calendar quarter, whichever is lower. During the nine months ended September 30, 2015 and 2014, employees purchased 157,705 and 99,585 shares, respectively, of common stock at a weighted-average purchase price of $0.10 and $0.28, respectively, while the weighted-average market value was $0.12 and $0.32 per share, respectively, resulting in compensation expense of $3,129 and $4,730, respectively.