Annual report pursuant to Section 13 and 15(d)

STOCK BASED COMPENSATION

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STOCK BASED COMPENSATION
12 Months Ended
Dec. 31, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
STOCK BASED COMPENSATION

NOTE 16: STOCK BASED COMPENSATION

 

Stock Options and Incentive Plan

 

On September 28, 2010, the Board of Directors approved the adoption of the 2010 Stock Option and Incentive Plan, or the (“2010 Plan”) to provide for the grant of equity-based awards to employees, officers, non-employee directors and other key persons providing services to the Company. Awards of incentive options may be granted under the 2010 Plan until September 2020. No other awards may be granted under the 2010 Plan after the date that is 10 years from the date of stockholder approval. An aggregate of 66,667 shares were initially reserved for issuance in connection with awards granted under the 2010 Plan and on May 18, 2016, an additional 133,333 shares were reserved for issuance under the 2010 Plan. On May 9, 2017, the stockholders approved an additional 1,500,000 shares for issuance under the 2010 Plan.

 

The following table presents the automatic additions to the 2010 Plan since inception pursuant to the “evergreen” terms of the 2010 Plan:

 

January 1,   Number of
shares
 
2012     30,018  
2013     34,452  
2014     49,532  
2015     65,557  
2016     220,419  
2017     151,477  
Total additional shares     551,455  

 

The Company granted options to purchase 1,716,323 shares of common stock to employees and directors during the year ended December 31, 2017. The weighted average grant date fair value of options granted during 2017 was $0.40. There are 100,456 options available for grant under the 2010 Plan as of December 31, 2017, and as a result of the evergreen provision contained in the 2010 Plan, an additional 1,272,910 shares were added to the 2010 Plan on January 1, 2018.

 

Compensation costs associated with the Company’s stock options are recognized, based on the grant-date fair values of these options, over the requisite service period, or vesting period. Accordingly, the Company recognized stock based compensation expense of $786,550 and $876,189 for the years ended December 31, 2017 and 2016, respectively, which was included in the following captions in the consolidated statements of operations.

 

    Year Ended December 31,  
    2017     2016  
             
General and administrative   $ 621,668     $ 850,378  
Research and development     164,882       25,811  
Total stock compensation expense   $ 786,550     $ 876,189  

 

The fair value of stock options granted for the years ended December 31, 2017 and 2016 was calculated using the Black-Scholes option-pricing model applying the following assumptions:

 

    Year ended December 31,  
    2017     2016  
             
Risk free interest rate     1.86% - 2.04%       1.48% - 1.55%  
Expected term     5.32- 6.36 years       5.58- 6.06 years  
                 
Dividend yield      %        %   
Expected volatility     112.86% - 114.19%       115.52% - 115.58  

 

Options issued and outstanding as of December 31, 2017 and their activities during the year then ended are as follows:

 

    Number of
Underlying
Shares
    Weighted-
Average
Exercise
Price Per
Share
    Weighted-
Average
Contractual
Life
Remaining
in
Years
    Aggregate
Intrinsic Value
 
Outstanding as of January 1, 2017     378,924     $ 26.25             $    
Granted     1,716,323       0.47                  
Forfeited     (3,167 )     15.00                  
Expired     (19,081 )     25.05                  
Outstanding as of December 31, 2017     2,072,999       4.10       9.041     $    
Exercisable as of December 31, 2017     608,040       11.77       8.348     $    
Vested and expected to vest     2,072,999     $ 4.10       9.041     $    

 

At December 31, 2017, there were 1,461,648 unvested options outstanding and the related unrecognized total compensation cost associated with these options was $976,606. This expense is expected to be recognized over a weighted-average period of 1.94 years.