Quarterly report pursuant to Section 13 or 15(d)

Stock-based compensation

v3.5.0.2
Stock-based compensation
 9 Months Ended
Sep. 30, 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 are granted at exercise prices equal to the market price of the Company’s common stock on the date of grant. All equity awards immediately vest upon a liquidation or a change in control event. The Company’s outstanding stock options and restricted stock 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 in accordance with the modified prospective method. 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.

As of September 30, 2016, all 1,879,012 options and 765,000 shares of restricted stock outstanding, respectively, were excluded from the calculation of dilutive earnings per share as their effect would have been anti-dilutive as the exercise price of these grants are above the average market price.
  
For the three months ended September 30, 2016 and 2015, the Company recognized $343,505 and $162,850, respectively, and for the nine months ended September 30, 2016 and 2015, the Company recognized $723,433 and $666,853, 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.
 
As of September 30, 2016, there was approximately $1.7 million of total unrecognized compensation cost related to unvested share-based option compensation grants, which is expected to be amortized over a weighted-average period of 3.9 years.
   
A summary of the status of stock option awards and changes during the nine months ended September 30, 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

 
$
5.01

 
 
 
 
Granted
560,000

 
2.73

 
 
 
 
Cancelled, expired, or forfeited
(353,566
)
 
$
5.01

 
 
 
 
Outstanding at September 30, 2016
1,879,012

 
$
4.29

 
7.86
 
$
—

Exercisable at September 30, 2016
765,311

 
$
4.77

 
7.12
 
$
—


  
The weighted-average grant-date fair value of option awards vested and non-vested during the nine months ended September 30, 2016 was $1.12.

A summary of the weighted-average assumptions utilized in the Black-Scholes option-pricing model to value the stock options granted during the nine months ended September 30, 2016 are presented below:

Expected volatility
37
%
Risk-free rate of return
1.37
%
Expected life (in years)
7.16 years

Dividend yield
—

Weighted-average fair value
$
1.12




A summary of the status of restricted stock awards and changes during the nine months ended September 30, 2016 are presented below:


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

 
 
Granted
795,000

 
$
2.73

Cancelled, expired, or forfeited
(30,000
)
 
$
2.73

Outstanding at September 30, 2016
765,000

 
$
2.73

 
 
 
 
Exercisable at September 30, 2016
—

 
 
 
 
 
 



On August 11, 2016, the Company granted four board members each a grant of 15,267 shares of common stock, which shares vested immediately as of the date thereof. The closing stock price was $2.62. The Company recorded compensation expense related to these awards of $160,000 for the three and nine months ended September 30, 2016.