Quarterly report pursuant to Section 13 or 15(d)

STOCK-BASED COMPENSATION

v2.4.0.8
STOCK-BASED COMPENSATION
 6 Months Ended
Jun. 30, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]
4.  STOCK-BASED COMPENSATION
 
Accounting for Stock-Based Compensation
 
The Company uses the Black-Scholes option-pricing model to calculate the grant-date fair value of stock option awards. The resulting compensation expense, net of expected forfeitures, for non-performance based awards is recognized on a straight-line basis over the service period of the award, which is generally three years for stock options. For stock options with performance-based vesting provisions, recognition of compensation expense, net of expected forfeitures, commences if and when the achievement of the performance criteria is deemed probable. The compensation expense, net of expected forfeitures, for performance-based stock options is recognized over the relevant performance period. Evaluation of the probability of meeting performance targets is evaluated at the end of each reporting period. Non-employee stock-based compensation is accounted for in accordance with the guidance of FASB ASC Topic 505,  Equity.    As such, the Company recognizes expense based on the estimated fair value of options granted to non-employees over their vesting period, which is generally the period during which services are rendered and deemed completed by such non-employees.
 
The following table summarizes amounts charged to expense for stock-based compensation related to employee and director stock option grants and stock-based compensation recorded in connection with stock options granted to non-employee consultants:
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
Cumulative
Development
Stage Period
from
November 7,
2002 through
June 30,
 
 
 
2013
 
2012
 
2013
 
2012
 
2013
 
Employee and director stock option grants:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Research and development
 
$
106,774
 
$
78,145
 
$
212,612
 
$
156,189
 
$
1,020,873
 
General and administrative
 
 
264,243
 
 
249,278
 
 
576,282
 
 
498,246
 
 
3,735,074
 
 
 
 
371,017
 
 
327,423
 
 
788,894
 
 
654,435
 
 
4,755,947
 
Non-employee consultant stock option grants:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Research and development
 
 
3,311
 
 
34,355
 
 
4,322
 
 
81,369
 
 
120,358
 
General and administrative
 
 
3,565
 
 
44,344
 
 
10,575
 
 
87,671
 
 
285,656
 
 
 
 
6,876
 
 
78,699
 
 
14,897
 
 
169,040
 
 
406,014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total stock-based compensation
 
$
377,893
 
$
406,122
 
$
803,791
 
$
823,475
 
$
5,161,961
 
  
During the year ended December 31, 2012, the Company granted options to purchase 167,550 shares of common stock pursuant to performance-based awards to its chief executive officer. No compensation expense was recognized related to the performance-based awards as the award was forfeited in January 2013 when the milestones were not met.
 
The following table summarizes weighted-average values and assumptions used for options granted to employees, directors and consultants in the periods indicated:
 
 
 
Six Months Ended
June 30, 2013
 
 
Volatility
 
 
109
%
 
Risk-free interest rate
 
 
0.915
%
 
Expected life (years)
 
 
6.0
 
 
Dividend
 
 
0
%
 
Weighted-average exercise price
 
$
0.74
 
 
Weighted-average grant-date fair value
 
$
0.61
 
 
 
The Company granted 20,000 stock options to an employee during the six months ended June 30, 2013 under the Company’s 2006 Stock Incentive Plan. No stock options were granted in the three months ended June 30, 2013. The exercise price for the grant made during the six months ended June 30, 2013 was equal to the market value of the Company’s common stock on the date of grant. There were no stock options granted in the three or six months ended June 30, 2012.
 
Stock Option Activity
 
A summary of stock option activity under stock option plans is as follows:
 
 
 
Number of
Shares
Issuable Upon
Exercise of
Outstanding
Options
 
Weighted
Average
Exercise Price
 
Weighted
Average
Remaining
Contracted 
Term in
Years
 
Aggregate
Intrinsic
Value
 
Outstanding at December 31, 2012
 
 
6,439,188
 
$
1.52
 
 
 
 
 
 
 
Granted
 
 
20,000
 
$
0.74
 
 
 
 
 
 
 
Forfeited
 
 
(167,550)
 
$
0.75
 
 
 
 
 
 
 
Outstanding at March 31, 2013
 
 
6,291,638
 
$
1.54
 
 
 
 
 
 
 
Granted
 
 
—
 
 
 
 
 
 
 
 
 
 
Forfeited
 
 
—
 
 
 
 
 
 
 
 
 
 
Outstanding at June 30, 2013
 
 
6,291,638
 
$
1.54
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vested, June 30, 2013
 
 
3,418,004
 
$
2.12
 
 
8.14
 
$
8,068
 
Unvested, June 30, 2013
 
 
2,873,634
 
$
0.86
 
 
8.82
 
$
6,432
 
Exercisable at June 30, 2013
 
 
3,418,004
 
$
2.12
 
 
8.14
 
$
8,068
 
 
The aggregate intrinsic value of options outstanding is calculated based on the positive difference between the estimated per-share fair value of common stock at the end of the respective period and the exercise price of the underlying options.  There have been no option exercises to date. Shares of common stock issued upon the exercise of options are from authorized but unissued shares.
 
As of June 30, 2013, there was $1,911,165 of total unrecognized compensation cost related to unvested stock-based compensation arrangements.  Of this total amount, the Company expects to recognize $629,767, $872,296, $359,254 and $49,848 during 2013, 2014, 2015 and 2016, respectively.  The Company expects 2,873,634 in unvested options to vest in the future.  The weighted-average grant-date fair value of vested and unvested options outstanding at June 30, 2013 was $0.95 per share and $0.71 per share, respectively.