Note 5. Stock-Based Compensation
Restricted Shares
Pursuant
to an agreement with a consultant for professional services, Opexa
granted 50,305 restricted shares of common stock which were
accounted for on March 19, 2011 pursuant to the relevant accounting
rules. These shares vested immediately and were issued on
April 8, 2011 and have a fair value of $87,028 based on the share
price at the grant date, which was recognized as share-based
compensation expense for the six months ended June 30,
2011.
Stock Options
The 2010 Stock Incentive
Plan (the “2010 Plan”) provides for the grant of equity
incentive awards to employees, directors and consultants of Opexa
in the form of either incentive stock options or nonqualified stock
options, as well as restricted stock, stock appreciation rights,
restricted stock units and performance awards that may be settled
in cash, stock or other property. The 2010 Plan is the
successor to and continuation of Opexa’s June 2004
Compensatory Stock Option Plan (the “2004 Plan”). A
total of 2,500,000 shares of common stock are authorized to be
issued for awards made under the 2010 Plan through September 2020,
plus (i) the number of shares subject to stock options outstanding
under the 2004 Plan that are forfeited or terminate prior to
exercise and would otherwise be returned to the share reserves
under the 2004 Plan and (ii) any reserved shares under the 2004
Plan that were not issued or subject to outstanding
grants. In addition, shares subject to awards granted
under the 2010 Plan that terminate or expire before being exercised
or settled will become available for grant under the 2010 Plan. As
of June 30, 2011, options to purchase an aggregate of 1,739,072
shares were issued and outstanding.
Opexa
accounts for share-based compensation, including options and
nonvested shares, according to the provisions of FASB ASC 718,
"Share Based Payment.” During the six months ended June 30,
2011, Opexa recognized share-based compensation expense of
$291,873. Unamortized stock compensation expense as of June 30,
2011 amounted to $549,350.
Stock Option Activity
A
summary of stock option activity for the six months ended June 30,
2011 is
presented below:
|
|
Number of
Shares
|
|
|
Wtd. Avg.
Exercise Price
|
|
|
Wtd. Avg.
Remaining
Contract Term
(# years)
|
|
|
Intrinsic
Value
|
|
Outstanding
at January 1, 2011
|
|
|
1,542,072 |
|
|
$ |
2.15 |
|
|
|
|
|
|
|
Granted
|
|
|
272,000 |
|
|
|
1.64 |
|
|
|
|
|
|
|
Exercised
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
Forfeited
and canceled
|
|
|
(75,000 |
) |
|
|
5.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at June 30, 2011
|
|
|
1,739,072 |
|
|
$ |
1.94 |
|
|
|
7.6 |
|
|
$ |
689,579 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable
at June 30, 2011
|
|
|
1,382,655 |
|
|
$ |
1.99 |
|
|
|
7.2 |
|
|
$ |
683,417 |
|
Option
awards are granted with an exercise price equal to the market price
of Opexa’s stock at the date of issuance, generally have a
ten-year life, and have various vesting dates that range from no
vesting or partial vesting upon date of grant to full vesting on a
specified date. Opexa estimates the fair value of stock options
using the Black-Scholes option-pricing model and records the
compensation expense ratably over the service period.
Employee Options
During
the six months ended June 30, 2011, options to purchase an
aggregate of 175,000 shares were granted to employees, based on
2010 performance objectives, at an exercise price of $1.56. These
options have terms of 10 years and have a vesting schedule of three
years. Fair value of $268,451 was calculated using the
Black-Scholes option-pricing model. Variables used in
the Black-Scholes option-pricing model for the options issued
during the six month period ended June 30, 2011 include (1)
discount rate of 3.36%, (2) expected term of 6 years, (3) expected
volatility of 192.44% and (4) zero expected dividends.
Non-Employee Options
During
the six months ended June 30, 2011, options to purchase an
aggregate of 82,000 shares were granted to non-employee directors
for service on Opexa’s Board at an exercise price of $1.78.
Options to purchase an aggregate of 40,000 shares have terms
of 10 years, with 50% of the shares vesting immediately and 50%
vesting in one year from the date of grant. Options to purchase the
remaining 42,000 shares will expire on the earlier of 10 years or a
change in control of the Company, with 50% of the shares vesting
immediately and 50% vesting on December 31, 2011. Fair value of
$142,877 was calculated using the Black-Scholes option-pricing
model.
During
the six months ended June 30, 2011, an option to purchase 15,000
shares was granted to a consultant at an exercise price of $1.78.
This option has a term of 10 years, with 50% of the shares vesting
immediately and 50% vesting on December 31, 2011. Fair value of
$26,136 was calculated using the Black-Scholes option-pricing
model.
Variables
used in the Black-Scholes option-pricing model for the options
issued during the six months ended June 30, 2011 include (1)
discount rate of 3.50%, (2) expected term of 5.3 years, (3)
expected volatility of 198.22% and (4) zero expected
dividends.
Warrant Activity
A
summary of warrant activity for the six months ended June 30,
2011 is
presented below:
|
|
Number of
Shares
|
|
|
Wtd. Avg.
Exercise Price
|
|
|
Wtd. Avg.
Remaining
Contract Term
(# years)
|
|
|
Intrinsic
Value
|
|
Outstanding
at January 1, 2011
|
|
|
11,459,576 |
|
|
$ |
2.75 |
|
|
|
|
|
|
|
Granted
|
|
|
1,658,600 |
|
|
|
2.61 |
|
|
|
|
|
|
|
Exercised
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
Forfeited
and canceled
|
|
|
(2,687,890 |
) |
|
|
5.93 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at June 30, 2011
|
|
|
10,430,286 |
|
|
$ |
1.90 |
|
|
|
2.3 |
|
|
$ |
1,528,849 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable
at June 30, 2011
|
|
|
10,430,286 |
|
|
$ |
1.90 |
|
|
|
2.3 |
|
|
$ |
1,528,849 |
|
In
connection with Opexa’s February 2011 public offering, as
disclosed in Note 4, Opexa issued warrants to purchase an aggregate
of 1,658,600 shares of common stock to the investors at an exercise
price of $2.61 per share. These warrants have a term of five years
and are immediately exercisable.