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Share Based Compensation

6 Months Ended

Jun. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share Based Compensation

7. SHARE BASED COMPENSATION

The Company accounts for the issuance of equity awards to employees in accordance with ASC Topic 718 and 505, which requires that the cost resulting from all share based payment transactions be recognized in the financial statements. These pronouncements establish fair value as the measurement objective in accounting for share based payment arrangements and requires all companies to apply a fair value based measurement method in accounting for all share based payment transactions with employees.

All stock-based compensation is included in operating expenses for the periods as follows:

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2015				2014				2015				2014
Compensation cost recognized:
General & Administrative		$	158,437			$	1,029			$	245,515			$	1,999
Research & Development			20,446				1,266				21,893				2,582
		$	178,883			$	2,295			$	267,408			$	4,581

The Company uses the Black-Scholes option pricing model to value the options. The table below presents the weighted average expected life of the options in years. The expected life computation is based on the time to option expiration. Volatility is determined using changes in historical stock prices. The interest rate for periods within the expected life of the award is based on the U.S. Treasury yield curve in effect at the time of grant.

The fair value of share-based payment units was estimated using the Black-Scholes option pricing model with the following assumptions and weighted average fair values as follows:

		Six Months Ended
		June 30, 2015
Valuation assumptions:
Stock price			$1.38 - $1.56
Exercise price			$1.38 - $1.56
Expected dividend yield			0%
Expected volatility			98.9% - 99.2%
Expected life (in years)			5
Risk-free interest rate			1.37% - 1.57%

Stock option activity under the 1998, 1999, 2001, 2003, 2006 and 2015 Stock Option Plans (collectively, the “Plans”) during the periods indicated below were as follows:

		Number of Shares Subject to Issuance				Weighted- average Exercise Price				Weighted- average Remaining Contractual Term				Aggregate Intrinsic Value

Outstanding at December 31, 2014			235,478			$	5.95				4.44 years			$	-

Granted			146,757				1.46				-				-
Forfeited or expired			(10,874	)			20.77				-				-
Exercised			(313	)			3.12				-				-
Outstanding at June 30, 2015			371,048			$	3.74				4.43 years			$	-

Exercisable at June 30, 2015			139,485			$	4.70				4.38 years				-

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had they all exercised their options on June 30, 2015. This amount changes based upon the fair market value of the Company’s stock.

As of June 30, 2015, the Company had 1,861,856 options available for future grants under the Plans.

Restricted Stock Units

The Company issues Restricted Stock Units (“RSUs”) which are equity-based instruments that may be settled in shares of common stock of the Company. During the six months ended June 30, 2015, the Company issued RSUs to certain directors as compensation. RSU agreements vest with the passage of time. The vesting of all RSUs is contingent on continued board services.

The compensation expense incurred by the Company for RSUs is based on the closing market price of the Company’s common stock on the date of grant and is amortized ratably on a straight-line basis over the requisite service period and charged to general and administrative expense with a corresponding increase to additional paid-in capital. During the three and six months ended June 30, 2015, charges associated with RSUs were $76,125 and $105,500, respectively. There were no charges associated with RSUs for the three and six month periods ended June 30, 2014.

		Number of Shares				Weighted Average Grant Date Fair Value				Aggregate Intrinsic Value

Outstanding at December 31, 2014			31,807			$	3.93			$	-
Granted			67,678				1.46				-
Vested and Settled in Shares			(44,205	)			2.83				-

Outstanding at June 30, 2015			55,280			$	1.78			$	-

As of June 30, 2015, there was $41,125 of total unrecognized compensation cost related to non-vested share-based compensation arrangements from previously granted RSUs. That cost is expected to be recognized over a weighted-average period of approximately seven months.

As of June 30, 2015, there was $488,863 of total unrecognized compensation cost, net of estimated forfeitures, related to all unvested stock options and restricted stock units, which is expected to be recognized over a weighted average period of approximately 3.25 years.

Warrants

All previously granted warrants were issued with an exercise price that was equal to or above the fair market value of the Company’s common stock on the date of grant. As of June 30, 2015, the Company had 64,981 remaining warrants outstanding exercisable through 2019. No warrants were exercised for the six months ended June 30, 2015.