Stock-Based Compensation

3 Months Ended

Mar. 31, 2014

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

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

4. Stock-Based Compensation

The Company’s Stock Incentive Plan provides for the issuance of long-term incentive awards, or Awards, in the form of non-qualified and incentive stock options, or Options, stock appreciation rights, stock grants and restricted stock units. The awards may be granted by the Company’s Board of Directors to its employees, directors and officers and to consultants, agents, advisors and independent contractors who provide services to the Company. The exercise price for Options must not be less than the fair market value of the underlying shares on the date of grant. Options expire no later than ten years from the date of grant and generally vest and become exercisable over a four-year period following the date of grant. Every non-employee member of the Company’s Board of Directors receives an annual non-qualified Option or restricted stock unit grant. Upon the exercise of Options, the Company issues the resulting shares from shares reserved for issuance under the Company’s Incentive Plan.

Under ASC 718 Stock Compensation, the Company is required to expense the fair value of share-based payments granted over the vesting period. The Company values Awards granted at their grant date fair value in accordance with the provisions of ASC 718 and recognizes stock-based compensation expense on a straight-line basis over the service period of each award.

Stock-based compensation expense is reduced by an estimated forfeiture rate derived from historical employee termination behavior. If the actual number of forfeitures differs from the Company’s estimates, the Company may record adjustments to increase or decrease compensation expense in future periods. There were no significant adjustments related to changes in the Company’s estimates for the three months-ended March 31, 2014 and year ended December 31, 2013.

Following is a summary of the amount included as stock-based compensation expense in the accompanying consolidated statements of operations and comprehensive loss:

	Three Months Ended March 31,				Year Ended
	2014 (Unaudited)		2013 (Unaudited)		December 31, 2013
Stock options:
General and administrative expense	$	196,000	$	112,000	$	191,000
Research and development expense		38,000		42,000		1,246,000
Total stock-based compensation expense	$	234,000	$	154,000	$	1,437,000

The following table summarizes Option activity:

	Shares		Weighted Average Exercise Price		Average Remaining Contractual Term (Years)		Intrinsic Value
Outstanding at December 31, 2013		25,721,000	$	0.19		9.15	$	6,451,441
Granted		—		—
Exercised		—		—
Forfeited		—		—
Expired		—		—
Outstanding at March 31, 2014		25,721,000	$	0.19		8.88	$	8,416,233
Exercisable at March 31, 2014		10,089,662	$	0.19		8.89	$	4,049,376

The aggregate intrinsic value is determined using the closing price of the Company’s common stock of $0.58 on March 31, 2014.

As of March 31, 2014, the Company had unrecognized compensation cost related to unvested Options of approximately $2,072,890 net of estimated forfeitures, which the Company expects to recognize over a weighted average period of approximately two and a half years

As of March 31, 2013, the Company had reserved shares of its common stock for future issuance as follows:

	Shares Reserved
Stock options outstanding		25,721,000
Available for future grants under the Stock Incentive Plan		40,000,000
Warrants		38,425,745
Total Shares reserved		104,146,745