Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.10.0.1
Stock-Based Compensation
6 Months Ended
Jun. 30, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-Based Compensation

6. Stock-Based Compensation

 

The Company issues common stock and stock options as incentive compensation to directors and as compensation for the services of independent contractors and consultants of the Company.

 

On June 20, 2007, the Board of Directors of the Company approved the 2007 Stock Compensation Plan (the “2007 Plan”), which provides for the granting of awards, consisting of stock options, stock appreciation rights, performance shares, or restricted shares of common stock, to employees and independent contractors, for up to 2,500,000 shares of the Company’s common stock, under terms and conditions as determined by the Company’s Board of Directors. The 2007 Plan terminated on June 19, 2017. As of June 30, 2018, unexpired stock options for 1,350,000 shares were issued and outstanding under the 2007 Plan.

  

The fair value of each stock option awarded is estimated on the date of grant and subsequent measurement dates using the Black-Scholes option-pricing model. The expected dividend yield assumption is based on the Company’s expectation of dividend payouts. The expected volatilities are based on historical volatility of the Company’s stock. The risk-free interest rate is based on the U.S. treasury yield curve in effect as of the grant date. The expected life of the stock options is the average of the vesting term and the full contractual term of the stock options.

 

There were no stock options requiring an assessment of value during the six months ended June 30, 2018.

 

For stock options requiring an assessment of value during the six months ended June 30, 2017, the fair value of each stock option award was estimated using the Black-Scholes option-pricing model with the following assumptions:

 

Risk-free interest rate   1.18% to 1.53 %
Expected dividend yield     0 %
Expected volatility     308.51% to 311.11 %
Expected life     1.5 to 3.5 years  

 

On December 24, 2013, the Company entered into an agreement with NDA Consulting Corp. (“NDA”) for consultation and advice in the field of oncology research and drug development. As part of the agreement, NDA also agreed to cause its president, Dr. Daniel D. Von Hoff, M.D., to become a member of the Company’s Scientific Advisory Committee. In connection with this agreement, NDA was granted stock options to purchase 100,000 shares of the Company’s common stock, vesting 25,000 shares on June 24, 2014, and thereafter 25,000 shares annually on June 24, 2015, 2016 and 2017, exercisable for a period of five years from the date of grant at $0.13 per share, which was the fair market value of the Company’s common stock on the grant date. The fair value of these stock options, as calculated pursuant to the Black-Scholes option-pricing model, was initially determined to be $12,960 ($0.13 per share). The Company re-measures the non-vested options to fair value at the end of each reporting period. The unvested portion of the fair value of the stock options was charged to operations ratably from December 24, 2013 through June 24, 2017. During the three months and six months ended June 30, 2017, the Company recorded a (credit) charge to operations of ($9,646) and $2,492, respectively, with respect to these stock options.

 

Effective September 14, 2015, the Company entered into a Collaboration Agreement with BioPharmaWorks LLC (“BioPharmaWorks”), pursuant to which the Company engaged BioPharmaWorks to perform certain services for the Company as described at Note 7. In connection with the Collaboration Agreement, the Company agreed to issue to BioPharmaWorks 1,000,000 fully-vested shares of the Company’s common stock, valued at $260,000, based upon the closing price of the Company’s common stock of $0.26 per share, on September 14, 2015. Additionally, the Company issued to BioPharmaWorks two options in the form of warrants to purchase 1,000,000 shares (500,000 shares per warrant) of the Company’s common stock. The first warrant vested on September 14, 2016 and is exercisable for a period of five years from the date of grant at $1.00 per share. The second warrant vested on September 14, 2017 and is exercisable for a period of five years from the date of grant at $2.00 per share. The fair value of the first and second warrants, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $128,400 ($0.2568 per share) and $127,850 ($0.2557 per share), respectively. The Company re-measured the non-vested stock options to fair value at the end of each reporting period through September 30, 2017. During the three months and six months ended June 30, 2017, the Company recorded a (credit) charge to operations of ($42,389) and $13,568, respectively, with respect to these warrants.

 

Effective May 13, 2016, in conjunction with his appointment as a director of the Company, the Company granted to Dr. Stephen J. Forman stock options to purchase an aggregate of 200,000 shares of common stock under the 2007 Plan, exercisable for a period of five years from vesting date at $0.16 per share, which was the fair market value of the Company’s common stock on such date. One-half of such stock option (100,000 shares) vested on May 13, 2016 and the remaining one-half of such stock option (100,000 shares) vested on May 13, 2017. The fair value of these stock options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $31,180 ($0.1559 per share), of which $15,590 was attributable to the stock options fully-vested on May 13, 2016 and was therefore was charged to operations on that date. The remaining unvested portion of the fair value of the stock options was charged to operations ratably from May 13, 2016 through May 13, 2017. During the three months and six months ended June 30, 2017, the Company recorded charges to operations of $1,837 and $5,681, respectively, with respect to these stock options.

 

Total stock-based compensation expense (credit) was $0 and ($50,198) for the three months ended June 30, 2018 and 2017, respectively. Total stock-based compensation expense was $0 and $21,741 for the six months ended June 30, 2018 and 2017, respectively.

  

A summary of stock option activity, including options issued in the form of warrants, during the six months ended June 30, 2018 is presented in the table below.

 

                Weighted  
                Average  
          Weighted     Remaining  
    Number     Average     Contractual  
    of     Exercise     Life  
    Shares     Price     (in Years)  
                   
Stock options outstanding at December 31, 2017     7,470,000     $ 0.545          
Granted                    
Exercised                    
Expired                    
Stock options outstanding at June 30, 2018     7,470,000     $ 0.545       1.41  
                         
Stock options exercisable at December 31, 2017     7,470,000     $ 0.545          
Stock options exercisable at June 30, 2018     7,470,000     $ 0.545       1.41  

 

There was no deferred compensation expense for the outstanding value of unvested stock options at June 30, 2018.

 

The exercise prices of common stock options outstanding and exercisable, including options issued in the form of warrants, are as follows at June 30, 2018:

 

      Options     Options  
Exercise     Outstanding     Exercisable  
Prices     (Shares)     (Shares)  
               
$ 0.120       450,000       450,000  
$ 0.130       100,000       100,000  
$ 0.150       320,000       320,000  
$ 0.160       200,000       200,000  
$ 0.200       500,000       500,000  
$ 0.250       500,000       500,000  
$ 0.500       4,400,000       4,400,000  
$ 1.000       500,000       500,000  
$ 2.000       500,000       500,000  
          7,470,000       7,470,000  

 

The intrinsic value of exercisable but unexercised in-the-money stock options at June 30, 2018 was approximately $203,460, based on a fair market value of $0.2780 per share on June 30, 2018.

 

All outstanding options to acquire shares of the Company’s common stock were vested at June 30, 2018.

 

The Company expects to satisfy such stock obligations through the issuance of authorized but unissued shares of common stock.