Quarterly report pursuant to Section 13 or 15(d)

NOTE 9 - OPTIONS, RESTRICTED STOCK UNITS AND WARRANTS

v3.7.0.1
NOTE 9 - OPTIONS, RESTRICTED STOCK UNITS AND WARRANTS
6 Months Ended
Jun. 30, 2017
Disclosure Text Block Supplement [Abstract]  
Shareholders' Equity and Share-based Payments [Text Block]
NOTE 9 – OPTIONS, RESTRICTED STOCK UNITS AND WARRANTS

Options

On October 19, 2012, the Company’s Board of Directors approved the 2012 Equity Incentive Plan (“the “Plan) and terminated the Long-Term Incentive Plan (the “2011 Plan”). The Plan provides for the issuance of options to purchase up to 15,186,123 (as amended) shares of the Company’s common stock to officers, directors, employees and consultants of the Company (as amended). Under the terms of the Plan the Company may issue Incentive Stock Options as defined by the Internal Revenue Code to employees of the Company only and nonstatutory options. The Board of Directors of the Company or a committee thereof administers the Plan and determines the exercise price, vesting and expiration period of the grants under the Plan.

However, the exercise price of an Incentive Stock Option should not be less than 110% of fair value of the common stock at the date of the grant for a 10% or more stockholder and 100% of fair value for a grantee who is not 10% stockholder. The fair value of the common stock is determined based on the quoted market price or in absence of such quoted market price, by the administrator in good faith.

Additionally, the vesting period of the grants under the Plan will be determined by the administrator, in its sole discretion, with an expiration period of not more than ten years.

The following table presents information related to stock options at June 30, 2017:

Options Outstanding
 
Options Exercisable
 
       
Weighted
     
       
Average
 
Exercisable
 
Exercise
 
Number of
 
Remaining Life
 
Number of
 
Price
 
Options
 
In Years
 
Options
 
 
$
1.01-2.00
     
2,294,642
     
5.7
     
1,865,142
 
   
2.01-3.00
     
5,650,548
     
3.3
     
5,108,076
 
   
3.01-4.00
     
300,000
     
7.8
     
300,000
 
           
8,245,190
     
4.1
     
7,273,218
 

A summary of the stock option activity and related information for the 2012 Plan for the six months ended June 30, 2017 is as follows:

 
             
Weighted-Average
       
 
       
Weighted-Average
   
Remaining
   
Aggregate
 
 
 
Shares
   
Exercise Price
   
Contractual Term
   
Intrinsic Value
 
Outstanding at December 31, 2016
   
8,245,190
   
$
2.24
     
5.8
   
$
-
 
Grants
   
-
             
0
   
$
-
 
Exercised
   
-
                         
Canceled
   
-
                         
Outstanding at June 30, 2017
   
8,245,190
   
$
2.24
     
4.1
   
$
26,200
 
Exercisable at June 30, 2017
   
7,273,218
   
$
2.27
     
2.3
   
$
22,350
 

The aggregate intrinsic value in the preceding tables represents the total pretax intrinsic value, based on options with an exercise price less than the Company’s stock price of $1.47 as of June 30, 2017, which would have been received by the option holders had those option holders exercised their options as of that date.

Option valuation models require the input of highly subjective assumptions. The fair value of stock-based payment awards was estimated using the Black-Scholes option model with a volatility figure derived from an index of historical stock prices of comparable entities until sufficient data exists to estimate the volatility using the Company’s own historical stock prices. Management determined this assumption to be a more accurate indicator of value. The Company accounts for the expected life of options based on the contractual life of options for non-employees.

For employees, the Company accounts for the expected life of options in accordance with the “simplified” method, which is used for “plain-vanilla” options, as defined in the accounting standards codification. The risk-free interest rate was determined from the implied yields of U.S. Treasury zero-coupon bonds with a remaining life consistent with the expected term of the options.  The fair value of stock-based payment awards during the six months ended June 30, 2017 and 2016 was estimated using the Black-Scholes pricing model.

The fair value of all options vesting during the three and six months ended June 30, 2017 of $54,243 and $97,227, respectively and during the three and six months ended June 30, 2016 of $1,597,152 and $2,294,801, respectively, was charged to current period operations.  Unrecognized compensation expense of $189,284 and $310,817 at June 30, 2017 and December 31, 2016, respectively, will be expensed in future periods.

Restricted Stock

The following table summarizes the restricted stock activity for the two years ended December 31, 2016:

Total restricted shares issued as of December 31, 2016
   
135,000
 
Granted
   
-
 
Vested
   
(90,000
)
Vested restricted shares as of June 30, 2017
   
-
 
Unvested restricted shares as of June 30, 2017
   
45,000
 

Stock based compensation expense related to restricted stock grants was $26,869 and $90,882 for the three and six months ended June 30, 2017; $3,302 and $53,386 for the three and six months ended June 30, 2016.  As of June 30, 2017, the stock-based compensation relating to restricted stock of $5,680 remains unamortized.

Warrants

The following table summarizes information with respect to outstanding warrants to purchase common stock of the Company at June 30, 2017:

Exercise
   
Number
 
Expiration
Price
   
Outstanding
 
Date
$
0.001
     
383,320
 
January 2020
$
1.50
     
6,898,267
 
February 2018 to June2020
$
1.84
     
35,076
 
January 2020
$
1.95
     
1,689,026
 
October 2018 to September 2019
$
2.00
     
100,000
 
August 2018
$
2.02
     
30,755
 
January 2020
$
2.50
     
100,000
 
August 2018
$
2.75
     
228,720
 
August 2019 to September 2019
$
3.67
     
214,193
 
December 2018 to January 2019
$
3.75
     
1,340,556
 
April 2019 to March 2020
         
11,019,913
 
 

On February 9, 2017, the Company exchanged 38,572 warrants with an exercise price of $2.10 with 45,001 warrants with an exercise price of $1.50, all other terms and conditions the same, to 2016 investors to adjust offered terms in connection with the Company’s equity raise with other investors.

On February 10, 2017, the Company issued an aggregate of 300,628 warrants to purchase the Company’s common stock at $1.50 per share, expiring on February 10, 2020, in connection with the sale of the Company’s common stock.

On March 10, 2017, the Company issued an aggregate of 197,159 warrants to purchase the Company’s common stock at $1.50 per share, expiring on March 10, 2020, in connection with the sale of the Company’s common stock.

On March 15, 2017, the Company issued 630,000 warrants to purchase the Company’s common stock at $1.50 per share, expiring on March 15, 2020, to Mayo Foundation in connection with a know-how licensing agreement (See Note 10). The fair value of the of the issued warrants of $543,927, determined using the Black-Scholes option model with an estimated volatility of 105.22%, risk free rate of 1.599%, dividend yield of -0- and fair value of the Company’s common stock of $1.37, was charged to current period operations as acquired research and development.

On March 31, 2017, the Company issued an aggregate of 157,250 warrants to purchase the Company’s common stock at $1.50 per share, expiring on March 31, 2020, in connection with the sale of the Company’s common stock.

On April 6, 2017, the Company issued an aggregate of 288,300 warrants to purchase the Company’s common stock at $1.50 per share, expiring on April 6, 2020, in connection with the sale of the Company’s common stock.

On May 5, 2017, the Company issued an aggregate of 6,667 warrants to purchase the Company’s common stock at $1.50 per share, expiring on May 5, 2020, in connection with the sale of the Company’s common stock.

On May 17, 2017, the Company issued an aggregate of 186,957 warrants to purchase the Company’s common stock at $1.50 per share, expiring on May 17, 2020, for placement agent services in connection with the sale of the Company’s common stock.

On June 20, 2017, the Company issued 10,000 warrants to purchase the Company’s common stock at $1.50 per share, expiring on June 20, 2020, in connection with the sale of the Company’s common stock.

On June 30, 2017, the Company issued an aggregate of 108,334 warrants to purchase the Company’s common stock at $1.50 per share, expiring on June 20, 2020, in connection with the sale of the Company’s common stock.

Stock based compensation related to warrants issued for services was $0 for the three and six months ended June 30, 2017 and $19,883 and $56,288 for the three and six months ended June 30, 2016, respectively.

A summary of the warrant activity for the six months ended June 30, 2017 is as follows:

 
             
Weighted-Average
       
 
       
Weighted-Average
   
Remaining
   
Aggregate
 
 
 
Shares
   
Exercise Price
   
Contractual Term
   
Intrinsic Value
 
Outstanding at December 31, 2016
   
9,128,189
   
$
1.96
     
2.1
   
$
494,099
 
Grants
   
1,930,296
   
$
1.50
     
3.0
     
-
 
Exercised
   
-
                         
Canceled
   
(38,572
)
 
$
2.10
     
2.4
     
-
 
Outstanding at June 30, 2017
   
11,019,913
   
$
1.87
     
1.8
   
$
563,097
 
 
                               
Vested and expected to vest at June 30, 2017
   
11,019,913
   
$
1.87
     
1.8
   
$
563,097
 
Exercisable at June 30, 2017
   
11,019,913
   
$
1.87
     
1.8
   
$
563,097
 

The aggregate intrinsic value in the preceding tables represents the total pretax intrinsic value, based on warrants with an exercise price less than the Company’s stock price of $1.47 as of June 30, 2017, which would have been received by the warrant holders had those warrant holders exercised their warrants as of that date.