Stock Based Compensation

3 Months Ended

Mar. 31, 2019

Share-based Payment Arrangement [Abstract]

Stock Based Compensation

9. Stock Based Compensation

We have a 2000 Long-Term Incentive Plan, which expired on August 6, 2010. As of March 31, 2019, there were 14,018 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 under which 5 million shares of common stock are reserved for issuance. As of March 31, 2019, there were approximately 2.4 million shares subject to outstanding stock options and approximately 0.8 million shares outstanding related to restricted stock grants issued from the 2008 Plan. This plan expired on November 20, 2018 and thus no further shares are available for future grant under this plan.

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. Since the fair market value of options granted to non-employees is subject to change in the future, 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, restricted stock and warrants included in our unaudited interim statements of operations:

	Three Months Ended March 31,
	2019		2018
Research and development — employee	$	—	$	—
General and administrative — employee		213,174		428,989
Total employee stock-based compensation	$	213,174	$	428,989
Research and development — non-employee	$	—	$	—
General and administrative — non-employee		—		21,350
Total non-employee stock-based compensation	$		$	21,350

No options were granted during the current three-month-period ended March 31, 2019 as compared to 1,667 stock options at an exercise price of $1.89 during the comparative March 31, 2018 period. The fair value of the stock options and warrants was estimated using the Black-Scholes option-pricing model, based on the following assumptions:

	Three Months Ended March 31, 2019		Three Months Ended March 31, 2018
Risk-free interest rate		—		2.42	%
Expected volatility		—		91.6	%
Expected lives (years)		—		6
Expected dividend yield		—		0.0	%

We compute expected volatility based on the historical daily volatility of our publicly traded stock. We use historical information to compute expected lives. In the three-month period ended March 31, 2018, the expected life of the options granted were six years and the contractual term 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. No amounts relating to stock-based compensation have been capitalized.

As of March 31, 2019, there remained approximately $0.3 million of unrecognized compensation expense related to unvested stock options granted to current employees, which we expect will be recognized over a weighted-average period of 0.73 years. Presented below is our stock option activity:

	Three Months Ended March 31, 2019
	Number of Options (Employees)			Number of Options (Non-Employees)		Total Number of Options			Weighted-Average Exercise Price
Outstanding at January 1, 2019		2,190,835			365,000		2,555,835		$	10.69
Granted		—			—		—			—
Forfeited or expired		(146,950	)		—		(146,950	)	$	10.03
Outstanding at March 31, 2019		2,043,885			365,000		2,408,885		$	10.73
Exercisable at March 31, 2019		1,803,304			365,000		2,168,304		$	11.69

The following table summarizes significant ranges of outstanding stock options under our plans at March 31, 2019:

Range of Exercise Prices	Number of Options		Weighted-Average Remaining Contractual Life (years)		Weighted-Average Exercise Price		Number of Options Exercisable		Weighted-Average Remaining Contractual Life (years)		Weighted-Average Exercise Price
$1.75 – $5.00		1,138,099		8.34	$	2.13		897,518		8.32	$	2.17
$5.01 – $11.00		165,834		3.70	$	10.98		165,834		3.70	$	10.98
$11.01 – $15.00		634,025		6.05	$	13.91		634,025		6.05	$	13.91
$15.01 – $98.28		470,927		4.44	$	27.12		470,927		4.44	$	27.12
		2,408,885		6.65	$	10.73		2,168,304		6.46	$	11.69

There was no aggregate intrinsic value to the outstanding options and options vested as of March 31, 2019.

At March 31, 2019 and December 31, 2018, there were warrants outstanding to purchase 193,196 and 693,196, respectively, at a weighted-average exercise price of $8.60 and $7.16, respectively, in each period.

Restricted Stock

No restricted stock was granted in 2018. In December 2017, the Company granted to Steven Kriegsman, 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 Steven Kriegsman, 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 $137,766 and $137,766 respectively, for the quarters ended March 31, 2019 and 2018.