Note 18 - Stock-based Compensation

In October 2013, the Board approved the 2013 Employee, Director and Consultant Equity Incentive Plan (the “2013 Equity Plan”). The 2013 Equity Plan provides for the granting of stock options, warrants, restricted stock or other stock-based awards to directors, officers, key employees and other key individuals performing services for the Company. All awards are required to be approved by the Board or a committee of the Board to be established for such purpose. The 2013 Equity Plan will terminate automatically in October 2023, unless terminated by the Board at an earlier date. The Board has the authority to amend, modify or terminate the 2013 Equity Plan, subject to any required approval by the Company’s stockholders under applicable law or upon advice of counsel. No such action may affect any options previously granted under the 2013 Equity Plan without the consent of the holders.

The 2013 Equity Plan provides for the issuance of up to 4,773,992 shares of common stock. Options are generally granted with an exercise price equal to fair market value on the date of grant and have a contractual life of ten years. Vesting can either be based on the passage of time or on the achievement of performance goals. As of December 31, 2017, there were 473,041 shares remaining available for issuance under the 2013 Equity Plan.

Stock Based Compensation Cost

Stock-based compensation cost for 2017 and 2016 was $1.1 million and $0.8 million, respectively, and is included in general and administrative expenses in the consolidated statement of operations and comprehensive loss. Included in stock-based compensation cost is $0.2 million of unrestricted stock granted to directors for each of the years ended December 31, 2017 and 2016. Such grants were awarded consistent with the Board’s compensation practices.

The fair value of options granted during 2017 and 2016 was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions by grant year:

The weighted-average fair value of stock options issued was $0.77 and $1.19 for 2017 and 2016, respectively.

Stock Option Activity

Changes in outstanding stock options for 2017 were as follows:

A summary of the status of the Company’s non-vested stock options as of December 31, 2017 and changes during the year then ended, is presented below:

The fair value of options that vested during 2017 was $0.4 million and $1.5 million. During 2017, the Company granted no options that vest upon the achievement of certain milestones. As of December 31, 2017, there are 579,402 milestone-based options outstanding. These options vest based on the achievement of Company and individual objectives as set by the Board.

As of December 31, 2017, there is approximately $1.4 million of total unrecognized compensation cost related to non-vested awards, which will be recognized over a weighted-average period of 3.1 years.

Restricted Stock Award Activity

The Company issues restricted stock awards under the 2013 Equity Plan. The fair value of these awards is determined based upon the closing fair market value of the Company’s common stock on the grant date.

A summary of the status of restricted stock awards and changes during the year ended December 31, 2017 are presented below:

During 2017, the Company granted 375,000 restricted shares of stock to employees and officers of the Company. These shares vest based on the achievement of certain EBITDA and stock price thresholds. As of December 31, 2017, 100,000 shares vested and 75,000 shares were forfeited. As of December 31, 2017, 200,000 restricted shares subject to performance-based milestones were still outstanding.