Stock-Based Compensation and Warrants

9 Months Ended

Sep. 30, 2015

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

Stock-Based Compensation and Warrants

The Plan - In 2007, the Company adopted the First Amended 2007 Stock Incentive Plan, as amended (the “Plan”). The Plan provides for the grant of Incentive Stock Options, Nonqualified Stock Options, Restricted Stock Awards, Restricted Stock Unit Awards, Performance Awards and other stock-based awards, or any combination of the foregoing to the Company's key employees, non-employee directors and consultants. Under the Plan, the exercise price is determined by the Board of Directors or the compensation committee of the Board of Directors, and for options intended to qualify as qualified incentive stock options, may not be less than the fair market value as determined by the closing stock price at the date of the grant. Each option and award shall vest and expire as determined by the Board of Directors or the compensation committee. Options expire no later than ten years from the date of grant. All grants provide for accelerated vesting if there is a change of control, as defined in the Plan.

Stock-based compensation expense for the three and nine months ended September 30, 2015 was $98,643 and $283,205, respectively. Of these amounts, stock-based compensation for outside directors, officers, management and administrative staff of the Company was $63,227 for the three months ended September 30, 2015 and $186,453 for the nine months ended September 30, 2015. Stock-based compensation for personnel involved in the Company’s R&D activities was $35,416 for the three months ended September 30, 2015 and $96,752 for the nine months ended September 30, 2015. Stock-based compensation expense for the three and nine months ended September 30, 2014 was $118,047 and $327,118, respectively. Of these amounts, stock-based compensation for outside directors, officers, management and administrative staff of the Company was $88,812 for the three months ended September 30, 2014 and $270,851 for the nine months ended September 30, 2014. Stock-based compensation for personnel involved in the Company’s R&D activities was $29,235 for the three months ended September 30, 2014 and $56,267 for the nine months ended September 30, 2014. The Company utilized the Black-Scholes valuation model for estimating the fair value of the stock options granted, with the following weighted-average assumptions for options granted in the nine months ended September 30, 2015 and 2014:

	2015			2014
Risk-free interest rate		1.65	%		2.03	%
Expected volatility		138	%		165	%
Expected term in years		6.1			6.8
Dividend yield		-	%		-	%

The following summary represents option activity under the Company’s stock-based compensation plan for the nine months ended September 30, 2015:

			Weighted-
			Average
			Exercise
	Options		Price
Outstanding at December 31, 2014		5,427,778	$	1.03
Granted		349,000		1.46
Forfeited		(18,750)		2.71
Outstanding at September 30, 2015		5,758,028		1.05
Exercisable at September 30, 2015		4,997,361	$	1.00

As of September 30, 2015, the aggregate intrinsic value of outstanding stock options was $1.7 million. The aggregate intrinsic value represents the total pretax intrinsic value (the difference between the Company’s closing stock price on September 30, 2015 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on September 30, 2015. This amount changes based on the fair market value of the Company’s stock.

Warrants - There were no warrants for services granted during the three months ended September 30, 2015. The Company had 10,000 warrants for services outstanding as of September 30, 2015 with a weighted average exercise price of $0.90. The warrants issued in connection with the sale of units of common stock were for cash value received and as such were not grants of compensation-based warrants.