Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2014 |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | 6. Stock-Based Compensation |
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The Company grants stock options as incentive compensation to directors and as compensation for the services of independent contractors and consultants of the Company. |
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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 common 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 condition, as determined by the Company’s Board of Directors. As of December 31, 2014, stock options for 650,000 shares had been issued under the 2007 Plan, and stock options for 1,850,000 were available for issuance under the 2007 Plan. |
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The fair value of each option awarded is estimated on the date of grant and subsequent measurement dates using the Black-Scholes option-pricing model. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company’s stock options have characteristics significantly different from those of traded options, and because changes in the subjective assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its stock options. The expected dividend yield assumption is based on the Company’s expectation of dividend payouts. 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. Expected life of the options is the average of the vesting term and the full contractual term of the options. |
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For options granted during the year ended December 31, 2014, the fair value of each option award was estimated using the Black-Scholes option-pricing model with the following assumptions: |
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Risk-free interest rate | | | 1.15% to 1.75 | % | | | | | | | | |
Expected dividend yield | | | 0 | % | | | | | | | | |
Expected volatility | | | 173% to 380 | % | | | | | | | | |
Expected life | | | 4-5 years | | | | | | | | | |
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For options granted during the year ended December 31, 2013, the fair value of each option award was estimated using the Black-Scholes option-pricing model with the following assumptions: |
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Risk-free interest rate | | | 1.51 | % | | | | | | | | |
Expected dividend yield | | | 0 | % | | | | | | | | |
Expected volatility | | | 262 | % | | | | | | | | |
Expected life | | | 5 years | | | | | | | | | |
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On June 30, 2011, the Company granted to Dr. Philip F. Palmedo, a director of the Company, stock options to purchase 200,000 shares of common stock, exercisable for a period of five years from the date of grant at $0.98 per share, which was the fair market value of the Company’s common stock on such date. The options vest ratably in equal quarterly installments of 25,000 shares beginning July 1, 2011. The fair value of these options, as calculated pursuant to the Black-Scholes option-pricing model, was initially determined to be $196,000 ($0.98 per share). During the years ended December 31, 2014 and 2013, the Company recorded charges to operations of $-0- and $48,530, respectively, with respect to these options. |
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On June 30, 2011, the Company granted to Dr. Iwao Ojima, a member of the Company’s Scientific Advisory Committee, stock options to purchase 50,000 shares of common stock, exercisable for a period of five years from the date of grant at $0.98 per share, which was the fair market value of the Company’s common stock on such date. The options vest ratably in equal quarterly installments of 6,250 shares beginning July 1, 2011. The fair value of these options, as calculated pursuant to the Black-Scholes option-pricing model, was initially determined to be $49,000 ($0.98 per share). During the years ended December 31, 2014 and 2013, the Company charged operations of $-0- and $3,357, respectively, with respect to these options. |
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On January 28, 2014, the Company approved a second amendment to the Company’s consulting agreement with Gil Schwartzberg, a significant stockholder of and consultant to the Company, dated September 12, 2007 to extend it for an additional four years to January 28, 2019 and granted to Mr. Schwartzberg stock options to purchase an additional aggregate of 4,000,000 shares of common stock, exercisable for a period of the earlier of five years from the grant date or the termination of the consulting agreement at $0.50 per share, with one-half of the options (2,000,000 shares) vesting immediately and one-half of the options (2,000,000 shares) vesting on January 28, 2015. The fair value of these options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $596,400 ($0.15 per share) on January 28, 2014, of which $298,200 was attributed to the options fully-vested on January 28, 2014 and as such was charged to operations on that date. The remaining unvested portion of the fair value of the options is being charged to operations ratably from January 28, 2014 through January 28, 2015. During the year ended December 31, 2014, the Company recorded a charge to operations of $434,499 with respect to the remaining unvested portion of the options. |
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Effective May 1, 2011, in connection with his election to the Company’s Board of Directors, Dr. Robert B. Royds was granted stock options to purchase 200,000 shares of the Company’s common stock, vesting 25,000 shares on May 1, 2011, and 25,000 shares quarterly thereafter until all of the shares are vested, exercisable for a period of five years from each tranche’s vesting date, at $0.98 per share, which was the fair market value of the Company’s common stock on such date. The fair value of these options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $196,000 ($0.98 per share), and was charged to operations ratably from May 2, 2011 through February 1, 2013. During the year ended December 31, 2013, the Company recorded a charge to operations of $8,548 with respect to these options. Dr. Royds died on March 23, 2013 and the stock options expired unexercised on March 23, 2014. |
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Effective September 16, 2012, in connection with her election to the Company’s Board of Directors, Dr. Kathleen P. Mullinix was granted stock options to purchase 200,000 shares of the Company’s common stock, vesting 25,000 shares on September 16, 2012, and 25,000 shares quarterly thereafter until all of the shares are vested, exercisable for a period of five years from the date of grant at $0.65 per share, which was the fair market value of the Company’s common stock on such date. The fair value of these options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $118,000 ($0.59 per share), and was being charged to operations from September 16, 2012 through June 16, 2014. During the years ended December 31, 2014 and 2013, the Company recorded charges to operations of $26,899 and $58,690, respectively, with respect to these options. |
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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 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 options, as calculated pursuant to the Black-Scholes option-pricing model, was initially determined to be $12,960 ($0.13 per share), and is being charged to operations from December 24, 2013 through June 24, 2017. During the year ended December 31, 2014, the Company recorded a charge to operations of $8,901 with respect to these options. |
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On June 26, 2014, the Company granted to Francis Johnson, a consultant to the Company and a co-owner of Chem-Master International, Inc., a vendor of the Company, immediately vesting stock options to purchase 500,000 shares of common stock, exercisable for a period of five years from the grant date at $0.25 per share. The fair value of these options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $118,650 ($0.24 per share), which was charged to operations on that date. The options were granted to Mr. Johnson as compensation for his contributions to the Company’s compound development activities. |
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On July 15, 2014, Gil Schwartzberg assigned fully-vested stock options to acquire 1,000,000 shares of the Company’s common stock to Daniel Von Hoff, a member of the Company’s Scientific Advisory Committee. The options assigned included options to acquire 500,000 shares that had been previously granted to Mr. Schwartzberg on October 15, 2009, were exercisable at $1.00 per share, and expired on October 15, 2014, and options for 500,000 shares that had been previously granted to Mr. Schwartzberg on October 5, 2011, are exercisable at $1.00 per share, and expire on October 5, 2016. As Mr. Schwartzberg is considered an affiliate of the Company for accounting and securities purposes, the fair value of the stock options assigned by Mr. Schwartzberg to Mr. Von Hoff for the benefit of the Company was recorded as a contribution to capital and a charge to operations. The fair value of the stock options assigned, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $43,500 (average of $0.04 per share), and such amount was charged to operations on July 15, 2014. The remaining unexpired stock options to acquire 500,000 shares were transferred back to Mr. Schwartzberg on February 23, 2015. |
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On October 7, 2014, the Company entered into an Advisory Agreement with Andrew Robell for consultation and advice with respect to identifying and assessing potential licensing and strategic opportunities through September 30, 2016. In connection with the agreement, the Company’s Board of Directors granted stock options to Mr. Robell to purchase 200,000 shares of the Company’s common stock, vesting 100,000 shares on October 7, 2014 and 100,000 shares on October 7, 2015, exercisable for a period of five years from the date of grant at $0.50 per share. The fair value of these options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $20,000 ($0.10 per share), of which $10,000 is attributed to the options fully-vested on October 7, 2014 and as such was charged to operations on that date. The remaining unvested portion of the fair value of the options will be charged to operations ratably from October 7, 2014 through October 7, 2015. During the year ended December 31, 2014, the Company recorded a charge to operations of $15,526 with respect to these options. |
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A summary of stock option activity is presented in the tables below. |
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| | | | | | | | Weighted | |
| | | | | | | | Average | |
| | | | | Weighted | | | Remaining | |
| | Number | | | Average | | | Contractual | |
| | Of | | | Exercise | | | Life | |
| | Shares | | | Price | | | (in Years) | |
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Options outstanding at December 31, 2012 | | | 3,750,000 | | | $ | 0.87 | | | | | |
Granted | | | 100,000 | | | | 0.13 | | | | | |
Exercised | | | — | | | | — | | | | | |
Expired | | | (700,000 | ) | | | 1.045 | | | | | |
Options outstanding at December 31, 2013 | | | 3,150,000 | | | | 0.818 | | | | | |
Granted | | | 4,700,000 | | | | 0.473 | | | | | |
Exercised | | | — | | | | — | | | | | |
Expired | | | (1,000,000 | ) | | | 0.803 | | | | | |
Options outstanding at December 31, 2014 | | | 6,850,000 | | | $ | 0.582 | | | | 3.57 | |
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Options exercisable at December 31, 2013 | | | 3,000,000 | | | $ | 0.843 | | | | | |
Options exercisable at December 31, 2014 | | | 4,675,000 | | | $ | 0.626 | | | | 2.84 | |
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Total deferred compensation expense for the outstanding value of unvested stock options was approximately $69,000 at December 31, 2014, which is being recognized subsequent to December 31, 2014 over a weighted-average period of approximately nine months. |
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The exercise prices of common stock options outstanding and exercisable are as follows at December 31, 2014: |
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| | | Options | | | Options | | | |
Exercise | | | Outstanding | | | Exercisable | | | |
Prices | | | (Shares) | | | (Shares) | | | |
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$ | 0.13 | | | | 100,000 | | | | 25,000 | | | |
$ | 0.25 | | | | 500,000 | | | | 500,000 | | | |
$ | 0.5 | | | | 4,300,000 | | | | 2,200,000 | | | |
$ | 0.65 | | | | 700,000 | | | | 700,000 | | | |
$ | 0.98 | | | | 250,000 | | | | 250,000 | | | |
$ | 1 | | | | 1,000,000 | | | | 1,000,000 | | | |
| | | | | 6,850,000 | | | | 4,675,000 | | | |
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The intrinsic value of exercisable but unexercised in-the-money stock options at December 31, 2014 was approximately $2,750, based on a fair market value of $0.24 per share on December 31, 2014. |
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Based on a fair market value of $0.13 per share on December 31, 2013, there were no exercisable but unexercised in-the-money stock options on that date. Accordingly, there was no intrinsic value attributed to exercisable but unexercised stock options at December 31, 2013. |
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Outstanding options to acquire 2,175,000 shares of the Company’s common stock had not vested at December 31, 2014. |
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The Company expects to satisfy such stock obligations through the issuance of authorized but unissued shares of common stock. |