Stock Based Compensation

9 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement [Abstract]

Stock Based Compensation

8. Stock Based Compensation

We have a 2000 Long-Term Incentive Plan, which expired on August 6, 2010. As of September 30, 2019, there were 10,452 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 September 30, 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. 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. 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 September 30,				Nine Months Ended September 30,
	2019		2018		2019			2018
Research and development — employee	$	—	$	28,683	$	(2,672	)	$	89,105
General and administrative — employee		216,234		243,673		644,113			799,832
Total employee stock-based compensation	$	216,234	$	272,356	$	641,441		$	888,937
Research and development — non-employee	$	—	$	—	$	—		$	—
General and administrative — non-employee	$	—		19,517		—			60,384
Total non-employee stock-based compensation	$	—	$	19,517	$	—		$	60,384

No options were granted during the nine-month period ended September 30, 2019 as compared to 1,667 stock options at an exercise price of $1.89 during the comparative September 30, 2018 period. 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, 2019		Nine Months Ended September 30, 2018
Risk-free interest rate		—		2.42	%
Expected volatility		—		91.6	%
Expected lives (years)		—		6
Expected dividend yield		—		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, 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.

The Company recorded stock compensation expense on vested options of $75,407 and $226,225, respectively, for the three and nine-month periods ended September 30, 2019, as compared to $272,356 and $888,937, respectively, for the three and nine-month periods ended September 30, 2018.

As of September 30, 2019, there remained approximately $0.2 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 0.51 years. Presented below is our stock option activity:

	Nine Months Ended September 30, 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		—			—		—		$	—
Exercised, Forfeited or Expired		(181,837	)		—		(181,837	)	$	10.66
Outstanding at September 30, 2019		2,008,998			365,000		2,373,998		$	10.69
Options exercisable at September 30, 2019		1,857,291			365,000		2,222,291		$	11.29

The following table summarizes significant ranges of outstanding stock options under our plans at September 30, 2019:

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
$	0.77 - $5.00		1,123,449		7.84	$	2.13		971,743		7.81	$	2.16
$	5.01 – $11.00		165,834		3.19	$	10.98		165,834		3.19	$	10.98
$	11.01 – $15.00		623,193		5.54	$	13.89		623,193		5.54	$	13.89
$	15.01 – $98.28		461,523		3.96	$	27.09		461,523		3.96	$	27.09
			2,373,998		6.16	$	10.69		2,222,291		6.03	$	11.29

There was no aggregate intrinsic value to the outstanding options and vested options as of September 30, 2019.

There were 193,196 and 693,196 warrants outstanding at September 30, 2019 and December 31, 2018, respectively at a weighted-average exercise price of $8.60 and $7.16, respectively.

Restricted Stock

No restricted stock was granted in 2019 and 2018. In December 2017, the Company granted to our 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 our 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 $140,827 and $417,889 respectively, for the three and nine-month periods ended September 30, 2019 as compared to $140,827 and $417,889 respectively, for the three and nine-month periods ended September 30, 2018.