Indaptus Therapeutics, Inc.
For the period ended Dec 31, 2025. Filed Mar 17, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Mar 17, 2026
INDP$3.32+5.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-03-13.
0001493152-25-010136
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-03-17.
0001493152-26-010585
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 59 previous paragraphs and 59 current paragraphs.
33 unchanged; 19 reworded; 7 added; 7 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 4 previous and 2 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (7)
Current report
Lazar Investment Transaction
Current report
On December 22, 2025, we entered into the Purchase Agreement with Mr. Lazar pursuant to which he purchased from the Company 300,000 shares of Series AA Convertible Preferred Stock and 700,000 shares of Series AAA Convertible Preferred Stock of the Company at a purchase price of $6.00 per share of Preferred Stock for aggregate gross proceeds of $6.0 million. As part of the Investment Transaction, the Company plans to pursue a strategic transaction involving either an investment in or acquisition of a Target Company. Should such a transaction be approved and successfully finalized, we anticipate that combining with a Target Company will create future growth opportunities for both the Company and its stockholders. For further information, see “Part I. Item 1. Business – Recent Developments.”
Current report
Currently, we have discontinued further enrollment to the Combination Study and there are no participants remaining in the study. We do not have any current plans to initiate a new clinical trial. As a result, we expect our research and development expenses to decrease in the short term.
Current report
With the discontinuation and winding down of the Combination Study, we expect our general and administrative expenses to decrease in the short term however this may be offset by additional costs related to any acquisition of a Target Company.
Current report
Liquidity and Capital Resources
Current report
On December 22, 2025, the Company entered into the Purchase Agreement with Mr. Lazar, pursuant to which he agreed to purchase from the Company series of Preferred Stock at a purchase price of $6.00 per share of Preferred Stock for aggregate gross proceeds of $6.0 million, subject to the terms and conditions thereunder. The offering closed on December 23, 2025.
Current report
In June 2025, we completed a private placement (the “June 2025 Financing”) of convertible notes to certain investors, including our then Chief Executive Officer, which automatically converted in July 2025 into 501,566 shares of our common stock and pre-funded warrants to purchase 190,795 shares of our common stock at a conversion price of $8.302 per share. In connection with the offering, we also issued to the investors warrants to purchase 1,384,722 shares of our common stock, exercisable at $8.302 per share and expiring on July 27, 2030. The total gross proceeds were approximately $5.7 million and placement agent fees and other offering expenses were approximately $0.8 million As of the date hereof, all pre-funded warrants have been exercised into an aggregate of 190,795 shares of common stock.
Removed paragraphs (7)
Previous report
Liquidity and Resources
Previous report
In November 2024, we completed a registered direct offering, pursuant to which we sold and issued to certain investors 1,817,017 shares of our common stock in a registered direct offering. In addition, in a concurrent private placement, we issued to the investors unregistered warrants to purchase 1,817,017 shares of common. The combined purchase price for one share of common stock and one warrant was $1.175, resulting in gross proceeds of approximately $2.135 million.
Previous report
In August 2024, we completed a registered direct offering, pursuant to which we sold and issued to certain investors, 1,643,837 shares of common stock. In addition, in a concurrent private placement, we issued to the investors unregistered warrants to purchase 1,643,837 shares of common stock. The combined purchase price for one share of common stock and one warrant was $1.825, resulting in gross proceeds of approximately $3.0 million.
Previous report
Our operating expenses increased in 2024 and are expected to continue to increase in the future in connection with our ongoing activities, particularly as we expect to continue to ramp up our clinical development activities and incur expenses associated with hiring additional personnel to support our research and development efforts. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution. Furthermore, we expect to continue to incur significant costs associated with operating as a public company.
Previous report
Our future capital requirements will depend on many factors, including, but not limited to:
Previous report
Contractual Obligations
Previous report
Operating lease liabilities represent our commitment for future rent made under a non-cancelable lease for our offices in San Diego, CA. The total future payments for our operating lease obligation on December 31, 2024 were approximately $0.1 million and are due in the next twelve months. For additional details regarding our lease, see Note 7 to our consolidated financial statements included in this Annual Report.
Reworded paragraphs (19)
Previous wording
You should read the following discussion and analysis of our financial condition and results of operations along with our consolidated financial statements and the related notes and other financial information included elsewhere in this Annual Report. The following discussion contains forward-looking statements that are subject to risks, uncertainties and assumptions. You should review the sections titled “Summary Risk Factors” and Part I, Item 1A. “Risk Factors” in this Annual Report for a discussion of important factors that could cause actual results to differ materially from the results described below.
Current wording
You should read the following discussion and analysis of our financial condition and results of operations along with our consolidated financial statements and the related notes and other financial information included elsewhere in this Annual Report. The following discussion contains forward-looking statements that are subject to risks, uncertainties and assumptions. You should review the sections titled “Summary Risk Factors” and Part I, Item 1A. “Risk Factors” in this Annual Report for a discussion of important factors that could cause actual results to differ materially from the results described below. Please also see the “Cautionary Note Regarding Forward-Looking Statements” section in the forepart of this Annual Report.
Previous wording
We are a clinical biotechnology company developing a novel and patented systemically-administered anti-cancer and anti-viral immunotherapy. We have evolved from more than a century of immunotherapy advances. Our approach is based on the hypothesis that efficient activation of both innate and adaptive immune cells and associated anti-tumor and anti-viral immune responses will require a multi-targeted package of immune system activating signals that can be administered safely intravenously. Our patented technology is composed of single strains of attenuated and killed, non-pathogenic, Gram-negative bacteria, designed to have reduced i.v. toxicity, but largely uncompromised ability to prime or activate many of the cellular components of innate and adaptive immunity. This approach has led to broad anti-tumor and anti-viral activity in preclinical models, including durable anti-tumor response synergy observed with each of four different classes of existing agents, including NSAIDs, checkpoint therapy, targeted antibody therapy and low-dose chemotherapy. Tumor eradication by our technology has demonstrated activation of both innate and adaptive immunological memory and, importantly, did not require provision of or targeting a tumor antigen in preclinical models. In 2023, we initiated a Phase 1 clinical trial with our lead clinical candidate, Decoy20, in patients with advanced solid tumors where currently approved therapies have failed. For further information regarding our business and operations, see “Part I. Item 1. Business.”
Current wording
We are a clinical biotechnology company developing a novel and patented systemically-administered anti-cancer and anti-viral immunotherapy. We have evolved from more than a century of immunotherapy advances. Our approach is based on the hypothesis that efficient activation of both innate and adaptive immune cells and associated anti-tumor and anti-viral immune responses will require a multi-targeted package of immune system activating signals that can be administered safely intravenously. Our patented technology is composed of single strains of attenuated and killed, non-pathogenic, Gram-negative bacteria, designed to have reduced i.v. toxicity, but largely uncompromised ability to prime or activate many of the cellular components of innate and adaptive immunity. This approach has led to broad anti-tumor and anti-viral activity in preclinical models, including durable anti-tumor response synergy observed with each of four different classes of existing agents, including NSAIDs, checkpoint therapy, targeted antibody therapy and low-dose chemotherapy. Tumor eradication by our technology has demonstrated activation of both innate and adaptive immunological memory and, importantly, did not require provision of or targeting a tumor antigen in preclinical models. In 2023, we initiated a Phase 1 clinical trial with our lead clinical candidate, Decoy20, in patients with advanced solid tumors where currently approved therapies have failed. In May 2025, we decided to conclude enrollment in the dosing of Decoy20 as a monotherapy and focus on the Combination Study. As of the date of this Annual Report on Form 10-K, we have discontinued further enrollment in the Combination Study and there are no participants remaining inthe study. We do not have any current plans to initiate a new clinical trial. For further information regarding our business and operations, see “Part I. Item 1. Business.”
Previous wording
We expect our research and development expenses to increase substantially for the foreseeable future as we continue to ramp up our clinical development activities and incur expenses associated with hiring additional personnel to support our research and development efforts. Our expenditures on future nonclinical and clinical development programs are subject to numerous uncertainties in timing and cost to completion. The duration, costs and timing of preclinical studies and clinical trials and development of product candidates will depend on a variety of factors, including:
Current wording
Our expenditures on future nonclinical and clinical development programs are subject to numerous uncertainties in timing and cost to completion. The duration, costs and timing of preclinical studies and clinical trials and development of product candidates will depend on a variety of factors, including:
Previous wording
The process of conducting the necessary clinical research to obtain FDA and other regulatory approval is costly and time consuming and the successful development of product candidates is highly uncertain. These risks and uncertainties associated with our research and development projects are discussed more fully in Part I. Item 1A. “Risk Factors -We expect to continue to incur significant research and development expenses and other operating expenses, which may make it difficult for us to attain profitability.” As a result of these risks and uncertainties, we are unable to determine with any degree of certainty the duration and completion costs of our research and development projects, or if, when, or to what extent we will generate revenues from the commercialization and sale of any of our product candidates that obtain regulatory approval. We may never succeed in achieving regulatory approval for any of our product candidates.
Current wording
The process of conducting the necessary clinical research to obtain FDA and other regulatory approval is costly and time consuming and the successful development of product candidates is highly uncertain. These risks and uncertainties associated with our research and development projects are discussed more fully in Part I. Item 1A. “Risk Factors -We may incur significant research and development expenses and other operating expenses, which may make it difficult for us to attain profitability.” As a result of these risks and uncertainties, we are unable to determine with any degree of certainty the duration and completion costs of our research and development projects, or if, when, or to what extent, we will generate revenues from the commercialization and sale of any of our product candidates that obtain regulatory approval. We may never succeed in achieving regulatory approval for any of our product candidates.
Previous wording
We expect our general and administrative expenses to increase for the foreseeable future as we continue to increase our headcount to support our research and development activities and operations generally, the growth of our business and, if any of our product candidates receive marketing approval, commercialization activities. We also expect to continue to incur additional expenses as a result of operating as a public company, including expenses related to compliance with the rules and regulations of the SEC, additional director and officer insurance expenses, investor relations activities, and other administrative and professional services.
Current wording
General and administrative expenses also include additional expenses as a result of operating as a public company, including expenses related to compliance with the rules and regulations of the Nasdaq Capital Market and the SEC, additional director and officer insurance expenses, investor relations activities, and other administrative and professional services.
Previous wording
Our research and development expenses for the year ended December 31, 2024 amounted to approximately $7.2 million, a decrease of approximately $0.4 million, or approximately 4.9%, compared with approximately $7.6 million for the year ended December 31, 2023. This decrease was attributable primarily to a decrease of approximately $1.3 million for the development of our manufacturing processes of Decoy20 that were mainly conducted in 2023 and was offset by an increase of approximately $0.9 million in costs associated with our Phase 1 clinical trial.
Current wording
Our research and development expenses for the year ended December 31, 2025 amounted to approximately $9.3 million, an increase of approximately $2.1 million, or approximately 28.8%, compared with approximately $7.2 million for the year ended December 31, 2024. This increase was attributable primarily to higher clinical trial costs of approximately $1.5 million related to our Phase 1 study and to higher payroll and related expenses of approximately $0.6 million following entering into the Modification Agreements, as described in Item 11.
Previous wording
Our general and administrative expenses for the year ended December 31, 2024 amounted to approximately $8.1 million, a decrease of approximately $0.7 million, or approximately 7.3%, compared with approximately $8.8 million for the year ended December 31, 2023. This decrease was attributable primarily to a decrease of approximately $1.3 million in legal fees, recruitment costs, payroll and related expenses, franchise tax, and directors’ and officers’ insurance expenses, and was offset by an increase of approximately $0.6 million in investor relations and business development expenses.
Current wording
Our general and administrative expenses for the year ended December 31, 2025 amounted to approximately $10.5 million, an increase of approximately $2.4 million, or approximately 29.3%, compared with approximately $8.1 million for the year ended December 31, 2024. This increase was attributable primarily to higher payroll and related expenses of approximately $1.9 million following entering into the Modification Agreements, as described in Item 11, and increase of approximately $1.4 million in transaction-related expenses associated with the private placement of convertible notes and warrants completed in June 2025, professional fees and franchise tax. This increase was partially offset by a decrease of approximately $0.9 million in D&O insurance premium, investor relations and board fees.
Previous wording
During the year ended December 31, 2024, our other income, net was approximately $0.3 million, which represented a decrease of approximately $0.6 million, or approximately 64.0%, as compared to the year ended December 31, 2023. The other income generated in the period consists primarily of income earned on the Company’s cash and cash equivalent accounts, the balances of which were lower during the year ended December 31, 2024 compared to the year ended December 31, 2023.
Current wording
During the year ended December 31, 2025, our other income, net was approximately $0.14 million, which represented a decrease of approximately $0.2 million, or approximately 59.8%, as compared to the year ended December 31, 2024. The other income generated in the period consists primarily of income earned on the Company’s cash and cash equivalent accounts, the balances of which were lower during the year ended December 31, 2025 compared to the year ended December 31, 2024.
Previous wording
In June 2022, we entered into an At The Market Offering Agreement (the “ATM Agreement”) which was amended on September 1, 2022 with H.C. Wainwright & Co., LLC, as sales agent (“Wainwright”), pursuant to which we may offer and sell, from time to time through Wainwright, shares of our common stock, par value $0.01 per share, for aggregate gross proceeds of up to $3.7 million. The issuance and sale of common stock by us under the ATM Agreement is being made pursuant to our effective “shelf” registration statement on Form S-3 filed with the SEC on September 1, 2022 and declared effective on September 9, 2022. In 2024, we sold 152,000 shares of our common stock for aggregate gross proceeds of approximately $0.4 million. On August 6, 2024, we filed a prospectus supplement to reduce the amount of shares registered under the prospectus for the ATM to $0.00 and to suspend the ATM program, but the ATM Agreement remains in full force and effect.
Current wording
In June 2022, we entered into the ATM Agreement with Wainwright, which was amended on September 1, 2022, pursuant to which we may offer and sell, from time to time through Wainwright, shares of our common stock for aggregate gross proceeds of up to $6.3 million. The issuances and sales of common stock by us under the ATM Agreement were being made pursuant to “shelf” registration statements on Form S-3 filed with the SEC on September 1, 2022 and declared effective on September 9, 2022 and most recently on August 13, 2025 and declared effective on August 20, 2025. As of the date of this Annual Report, we have sold 525,428 shares of our common stock for aggregate gross proceeds of approximately $2.7 million.
Previous wording
In February 2025, we entered into a SEPA with Yorkville pursuant to which we have the right, but not the obligation, to sell up to $20.0 million of our common stock during a 36 month period, subject to the restrictions and satisfaction of the conditions in the SEPA. Upon execution of the SEPA, we issued to Yorkville 305,960 commitment shares. No shares of common stock have been sold under the SEPA.
Current wording
In February 2025, we entered into the SEPA with Yorkville, pursuant to which we have the right, but not the obligation, to sell up to $20.0 million of our common stock during a 36 months period, subject to the restrictions and satisfaction of the conditions in the SEPA. Upon execution of the SEPA, we issued to Yorkville 10,927 commitment shares. As of March 16, 2026, we sold and issued 89,902 shares of common stock under the SEPA for aggregate net proceeds of approximately $1.74 million, after deducting offering expenses in the amount of approximately $0.1 million. Effective March 11, 2026, we terminated the SEPA with Yorkville, and the SEPA is no longer in effect.
Previous wording
In January 2025, we completed a private placement for the sale and issuance by us of an aggregate of: (i) 2,109,383 shares of our common stock and (ii) warrants to purchase 2,109,383 shares of common stock. The shares and warrants were sold on a combined basis for consideration of $1.065 for one share and a warrant for aggregate gross proceeds of approximately $2.25 million.
Current wording
In January 2025, we completed a private placement (the “January 2025 Financing”) for the sale and issuance by us of an aggregate of: (i) 75,335 shares of our common stock and (ii) warrants to purchase 75,335 shares of common stock. The shares and warrants were sold on a combined basis for consideration of $29.82 for one share and one warrant for aggregate gross proceeds of approximately $2.25 million.
Previous wording
We believe that the cash and cash equivalents of approximately $5.8 million that we had as of December 31, 2024 together with net proceeds of $2.0 million from our January 2025 financing, will enable us to fund our operating expenses and capital expenditure requirements into the second quarter of 2025. We will need to increase our capital resources through equity or debt financings, and we may need to do so sooner than we expect. We may also seek to finance our cash needs through collaborations, strategic alliances, or license agreements with third parties. If sources of financing are available, they may result in substantial dilution to our stockholders. We cannot provide any assurance that new financing will be available to us on commercially acceptable terms or in the amounts required, if at all. If we are unable to consummate a financing or other transaction, we may need to delay, reduce, or eliminate our research and development programs, which could adversely affect our business prospects, or cease operations. These conditions raise substantial doubt regarding our ability to continue as a going concern within one year after the date of this prospectus. For additional information, see Note 1 to our consolidated financial statements included elsewhere in this Annual Report. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect.
Current wording
We believe that our cash and cash equivalents of approximately $8.5 million as of December 31, 2025, which includes the net proceeds of $5.9 million from the Investment Transaction with Mr. Lazar, will enable us to fund our operating expenses and capital expenditure requirements into the second quarter of 2026. We will need to increase our capital resources through equity or debt financings, and we may need to do so sooner than we expect. If sources of financing are available, they may result in substantial dilution to our stockholders. We cannot provide any assurance that new financing will be available to us on commercially acceptable terms or in the amounts required, if at all. If we are unable to consummate a financing or other transaction, we may need to delay, reduce, or eliminate our research and development programs, which could adversely affect our business prospects, or cease operations. These conditions raise substantial doubt regarding our ability to continue as a going concern within one year after the date of this prospectus. For additional information, see Note 1 to our consolidated financial statements included elsewhere in this Annual Report. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect.
Previous wording
Net cash used in operating activities was approximately $12.3 million for the year ended December 31, 2024, compared with net cash used in operating activities of approximately $13.4 million for the year ended December 31, 2023. The approximately $1.1 million decrease in net cash used was primarily attributable to changes in operating assets and liabilities.
Current wording
Net cash used in operating activities was approximately $14.8 million for the year ended December 31, 2025, compared with net cash used in operating activities of approximately $12.3 million for the year ended December 31, 2024. The approximately $2.5 million increase in net cash used was primarily attributable to theincrease in the net loss that was partially offset by changes in operating assets and liabilities.
Previous wording
There was no net cash provided by or used in investing activities for the year ended December 31, 2024. Net cash provided by investing activities was approximately $17.1 million for the year ended December 31, 2023, which was related to the maturity of $24.0 million in marketable securities, offset by net investment of approximately $6.9 million in marketable securities.
Current wording
There was no net cash provided by or used in investing activities for the year ended December 31, 2025 and 2024.
Previous wording
Net cash provided by financing activities for the year ended December 31, 2024 was approximately $4.8 million, which was provided by issuance and sale of our common stock under the ATM Agreement and issuance and sale of our common stock and warrants in the August 2024 Offering and in the November 2024 Offering. There was no net cash provided by or used in financing activities for the year ended December 31, 2023.
Current wording
Net cash provided by financing activities for the year ended December 31, 2025 was approximately $17.5 million, which was provided by the issuance and sale of our common stock and warrants in the January 2025 Financing, the issuance and sale of our common stock under the SEPA, the issuance of convertible notes and warrants in the June 2025 Financing andissuance and sale of our common stock under the ATM Agreement. Net cash provided by financing activities for the year ended December 31, 2024 was approximately $4.7 million, which was provided by issuance and sale of our common stock under the ATM Agreement and issuance and sale of our common stock and warrants in the August 2024 Offering and in the November 2024 Offering.
Previous wording
We believe that our existing cash and cash equivalents and marketable securities as of December 31, 2024 are adequate to fund our ongoing activities into the second quarter of 2025.
Current wording
We believe that our existing cash and cash equivalents as of December 31, 2025 are adequate to fund our ongoing activities into the second quarter of 2026 and we expect to continue to incur operating expenses in the future in connection with our ongoing activities and our plans to pursue a strategic transaction involving either an investment in or acquisition of an operating business.
Previous wording
Identifying potential product candidates and conducting preclinical studies and clinical trials is a time-consuming, expensive and uncertain process that takes many years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of product candidates that we do not expect to be commercially available for the next couple of years, if at all. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all. For example, the trading prices for our and other biopharmaceutical companies’ stock have been highly volatile as a result of current macroeconomic conditions and market volatility. As a result, we may face difficulties raising capital through sales of our common stock on acceptable terms, if at all. If we are unsuccessful in securing sufficient financing, we may need to delay, reduce, or eliminate our research and development programs, which could adversely affect our business prospects, or cease operations. For additional information, see Note 1 to our consolidated financial statements included elsewhere in this Annual Report and “Risk Factors” in Item 1A. of this Annual Report.
Current wording
We will need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all. For example, the trading prices for our and other biopharmaceutical companies’ stock have been highly volatile as a result of current macroeconomic conditions and market volatility. As a result, we may face difficulties raising capital through sales of our common stock on acceptable terms, if at all. If we are unsuccessful in securing sufficient financing, we may need to delay, reduce, or eliminate our research and development programs, which could adversely affect our business prospects, or cease operations. For additional information, see Note 1 to our consolidated financial statements included elsewhere in this Annual Report and “Risk Factors” in Item 1A. of this Annual Report.
Previous wording
We record the costs associated with services provided by CROs and CMOs as they are incurred. Though the scope and timing of work are generally based on signed agreements, some judgement is involved in determining periodic expenses because payment flows do not always match the periods over which services and materials are provided to us. As a result, our management is required to make estimates of services received and efforts expended pursuant to agreements established with these third-parties at each period-end date. During the year ended December 31, 2024, we incurred approximately $7.2 million of research and development expenses, of which approximately $4.0 million were for services provided by our CROs and CMOs. As of December 31, 2024, we recorded an accrued liability of approximately $0.8 million for expenses incurred, but not yet invoiced, and prepaid expenses and non-current other assets of approximately $0.8 million for payments made that relate to future periods. Overestimating or underestimating the services received or efforts expended could cause us to overstate or understate research and development expenses incurred within a reporting period, and related accrued and prepaid expenses.
Current wording
We record the costs associated with services provided by CROs and CMOs as they are incurred. Though the scope and timing of work are generally based on signed agreements, some judgement is involved in determining periodic expenses because payment flows do not always match the periods over which services and materials are provided to us. As a result, our management is required to make estimates of services received and efforts expended pursuant to agreements established with these third parties at each period-end date. During the year ended December 31, 2025, we incurred approximately $9.3 million of research and development expenses, of which approximately $5.8 million were for services provided by our CROs and CMOs. As of December 31, 2025, we recorded an accrued liability of approximately $1.1 million for expenses incurred, but not yet invoiced, and prepaid expenses of approximately $0.4 million for payments made that relate to future periods. Overestimating or underestimating the services received or efforts expended could cause us to overstate or understate research and development expenses incurred within a reporting period, and related accrued and prepaid expenses.
Previous wording
Compensation expense related to stock options granted is measured at the grant date based on the estimated fair value of the award and is recognized over the requisite service period of the individual grant, generally equal to the vesting period, on a straight-line basis. We determine the estimated fair value of each stock option on the date of grant using the Black-Scholes valuation model which uses assumptions regarding a number of complex and subjective variables. The risk-free interest rate is based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant. Expected volatility is based on an analysis of the historical volatility of a peer group of companies. The expected term represents the period that we expect our stock options to be outstanding. The expected term assumption is estimated using the simplified method set forth in the U.S. Securities and Exchange Commission’s Staff Accounting Bulletin Topic 14, which is the mid-point between the option vesting date and the expiration date. We have never declared or paid dividends on our common stock and have no plans to do so in the foreseeable future. Changes in these assumptions may lead to variability with respect to the amount of stock compensation expense we recognize related to stock options.
Current wording
Compensation expense related to stock options granted is measured at the grant date based on the estimated fair value of the award and is recognized over the requisite service period of the individual grant, generally equal to the vesting period, on a straight-line basis. We determine the estimated fair value of each stock option on the date of grant using the Black-Scholes valuation model which uses assumptions regarding a number of complex and subjective variables. The risk-free interest rate is based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant. Expected volatility is based on an analysis of the historical volatility of a peer group of companies. The expected term represents the period that we expect our stock options to be outstanding. The expected term assumption is estimated using the simplified method set forth in the U.S. Securities and Exchange Commission’s Staff Accounting Bulletin Topic 14, which is the mid-point between the option vesting date and the expiration date. We have never declared or paid dividends on our common stock and have no plans to do so in the foreseeable future. Changes in these assumptions may lead to variability with respect to the amount of stock-based compensation expense we recognize related to stock options.