Annual report pursuant to Section 13 and 15(d)

Stock-based compensation

v3.7.0.1
Stock-based compensation
 12 Months Ended
Dec. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-based compensation
Stock-based compensation:
In October 2013, the board of directors approved the 2013 Employee, Director and Consultant Equity Incentive Plan (the “2013 Plan”) pursuant to which the Company may issue options, warrants, restricted stock or other stock-based awards to directors, officers, key employees and other key individuals performing services for the Company. The 2013 Plan has reserved 4,773,992 shares of common stock for issuance. All awards will be approved by the board of directors or a committee of the board of directors to be established for such purpose.
 
The Company’s outstanding stock options and restricted stock have maximum contractual terms of up to ten years, principally vest on a quarterly basis ratably over five years and were granted at exercise prices equal to the market price of the Company’s common stock on the date of grant. The Company’s outstanding stock options are exercisable into shares of the Company’s common stock. The Company measures the cost of employee services received in exchange for an award of equity instruments, including grants of employee stock options and restricted stock awards, based on the fair value of the award at the date of grant. The Company uses the Black-Scholes model for purposes of determining the fair value of stock options granted and recognizes compensation costs ratably over the requisite service period, net of estimated forfeitures. For restricted stock awards, the grant-date fair value is the quoted market price of the stock. 

In October 2013, in connection with their employment agreements, Messrs. Segal and Goldfinger were granted options to purchase 1,022,104 and 511,052, shares, respectively, of common stock at an exercise price of $5.00 per share. Of these options, 50% vest over time and 50% will vest based on the achievement of targeted annual milestones which have been set by the board of directors.

On February 27, 2016 in connection with the expiration of the Company's warrants Messrs. Segal and Goldfinger forfeited 228,088 and 114,044, respectively, of their options granted to them.

There were no options granted during 2015. During 2016, the Company granted the following options which vest over time except where noted:
Date
 
Number of shares
 
Exercise price
April 1
 
250,000

(1)
$2.83
April 8
 
1,000,000

(2)
$2.73
September 6
 
30,000

 
$2.61
September 19
 
30,000

 
$2.39

Included in the above grants are the following options that vest upon the achievement of certain milestones (1) 125,000 shares and (2) 625,000 shares.

In April, 2016 the Company granted 787,500 restricted stock units to certain employees which vest in April 2021.

For the years ended December 31, 2016 and 2015 the Company recognized $837,995 and $811,658, respectively, of non-cash stock-based compensation expense related to options, restricted stock awards and unrestricted stock grants in general and administrative expense in the consolidated statements of operations and comprehensive income (loss). Included in stock based compensation for the years ended December 31, 2016 and 2015 is $160,000 of unrestricted stock granted to directors which immediately vested in in August 2016 and May 2015, respectively.

As of December 31, 2016 and 2015, there was approximately $2.4 million and $1.9 million of total unrecognized compensation cost related to unvested share-based compensation grants, which is expected to be amortized over a weighted-average period of 2.60 years.
 
The fair value of each option grant is estimated on the date of grant using the Black-Scholes model with the following weighted-average assumptions:

 
December 31,
 
 
 
2016
 
 
Expected life (in years)
7.45 years

 
 
Risk-free interest rate
1.41
%
 
 
Volatility
37
%
 
 
Dividend yield
0
%
 
 

 
A summary of the status of time based stock option awards and changes during the year ended December 31, 2016 are presented below:
 
 
 Shares
 
Weighted
Average
Exercise
 Price
 
Weighted
Average
Remaining
Contractual
 Life (Years)
 
 Intrinsic
Value
Outstanding at December 31, 2015
1,672,578

 
5.05

 
 
 
 

2016 Grants
560,000

 
2.72

 
 
 
 

 
 
 
 
 
 
 
 
Exercised
—

 
—

 
 
 
 

Cancelled, expired, or forfeited
(375,566
)
 
5.01

 
 
 
 

Outstanding at December 31, 2016
1,857,012

 
4.28

 
7.80
 
—

Exercisable at December 31, 2016
832,442

 
4.71

 
7.35
 
—


 
The weighted-average grant-date fair value of option awards outstanding at December 31, 2016 and 2015 was $1.65 and $1.86, respectively. The fair value of options vested at December 31, 2016 and 2015 was $1,460,228 and $918,424, respectively.

The Company also has 1,137,082 milestone based options granted to key executives outstanding at December 31, 2016, these options vest based on the achievement of company and individual objectives as set by the Board of Directors.

A summary of the status of restricted stock awards and changes during the year ended December 31, 2016 are presented below:

 
Shares
 
Weighted Average
Grant Date Fair Value
 
 
 
 
Outstanding at December 31, 2015
—

 
 
Granted
787,500

 
$
2.73

Cancelled, expired, or forfeited
(71,250
)
 
$
2.73

Outstanding at December 31, 2016
716,250

 
$
2.73

 
 
 
 
Exercisable at December 31, 2016
—