Stock-Based Compensation | 5. 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 December 31, 2018, unexpired stock options for 1,250,000 shares were issued and outstanding under the 2007 Plan. The fair value of each stock option awarded is calculated 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. For stock options requiring an assessment of value during the year ended December 31, 2018, the fair value of each stock option award was calculated using the Black-Scholes option-pricing model utilizing the following assumptions: Risk-free interest rate 2.44% to 3.01% Expected dividend yield 0% Expected volatility 170.32% Expected life 0.5 to 5.5 years For stock options requiring an assessment of value during the year ended December 31, 2017, the fair value of each stock option award was calculated using the Black-Scholes option-pricing model utilizing the following assumptions: Risk-free interest rate 1.18% to 2.47% Expected dividend yield 0% Expected volatility 308.51% to 332.63% Expected life 1.5 to 5.0 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-measured 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 year ended December 31, 2017, the Company recorded a charge to operations of $2,492 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 year ended December 31, 2017, the Company recorded a charge to operations of $29,528 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 the Company’s 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 options (100,000 shares) vested on May 13, 2016 and the remaining one-half of such stock options (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 year ended December 31, 2017, the Company recorded a charge to operations of $5,681 with respect to these stock options. Effective October 16, 2017, in connection with his continuing role as a member of the Company’s Board of Directors, Dr. Philip F. Palmedo was granted fully-vested stock options to purchase 50,000 shares of the Company’s common stock. The stock options are exercisable for a period of five years from the date of grant at $0.15 per share, which was the fair market value of the Company’s common stock on such date. The fair value of these stock options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $7,499 ($0.1500 per share), which was charged to operations on the date of grant. Effective October 16, 2017, in connection with his continuing role as a member of the Company’s Board of Directors, Dr. Stephen J. Forman was granted fully-vested stock options to purchase 50,000 shares of the Company’s common stock. The stock options are exercisable for a period of five years from the date of grant at $0.15 per share, which was the fair market value of the Company’s common stock on such date. The fair value of these stock options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $7,499 ($0.1500 per share), which was charged to operations on the date of grant. Effective August 4, 2018, in conjunction with their appointments as directors of the Company, the Company granted to Dr. Winson Sze Chun Ho and Dr. Yun Yen stock options for each person to purchase an aggregate of 200,000 shares of the Company’s common stock, exercisable for a period of five years from the vesting date at $0.28 per share, which was the approximate fair market value of the Company’s common stock on such date. One-half of such stock options (100,000 shares each) vested on August 4, 2018 and the remaining one-half of such stock options (100,000 shares each) will vest on August 4, 2019. The fair value of these stock options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $104,920 ($0.2623 per share), of which $52,460 was attributable to the stock options fully-vested on August 4, 2018 and was therefore was charged to operations on that date. The remaining unvested portion of the fair value of the stock options will be charged to operations ratably from August 4, 2018 through August 4, 2019. During the year ended December 31, 2018, the Company recorded a charge to operations of $73,874 with respect to these stock options. Total stock-based compensation expense was $785,612 and $70,695 for the years ended December 31, 2018 and 2017, respectively. The total stock-based compensation expense for the year ended December 31, 2018 of $785,612 includes $711,738 of costs associated with the extension of stock options previously granted to Gil Schwartzberg, as described at Note 4. A summary of stock option activity, including options issued in the form of warrants, during the years ended December 31, 2018 and 2017 is presented below. Weighted Average Weighted Remaining Number Average Contractual of Exercise Life Shares Price (in Years) Stock options outstanding at December 31, 2016 8,600,000 $ 0.583 Granted 220,000 0.150 Exercised (150,000 ) 0.120 Expired (1,200,000 ) 0.796 Stock options outstanding at December 31, 2017 7,470,000 0.545 Granted 400,000 0.280 Exercised (20,000 ) 0.150 Expired (100,000 ) 0.130 Stock options outstanding at December 31, 2018 7,750,000 $ 0.538 3.68 Stock options exercisable at December 31, 2017 7,470,000 $ 0.545 Stock options exercisable at December 31, 2018 7,550,000 $ 0.545 3.65 Total deferred compensation expense for the outstanding value of unvested stock options was approximately $31,000 at December 31, 2018, which will be recognized subsequent to December 31, 2018 over a weighted-average period of approximately seven months. The exercise prices of common stock options outstanding and exercisable, including options issued in the form of warrants, are as follows at December 31, 2018: Options Options Exercise Outstanding Exercisable Prices (Shares) (Shares) $ 0.120 450,000 450,000 $ 0.150 300,000 300,000 $ 0.160 200,000 200,000 $ 0.200 500,000 500,000 $ 0.250 500,000 500,000 $ 0.280 400,000 200,000 $ 0.500 4,400,000 4,400,000 $ 1.000 500,000 500,000 $ 2.000 500,000 500,000 7,750,000 7,550,000 The intrinsic value of exercisable but unexercised in-the-money stock options at December 31, 2018 was approximately $3,482,800, based on a fair market value of $0.93 per share on December 31, 2018. Outstanding options to acquire 200,000 shares of the Company’s common stock had not vested at December 31, 2018. The Company expects to satisfy such stock obligations through the issuance of authorized but unissued shares of common stock. |