Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.7.0.1
Stock-Based Compensation
3 Months Ended
Mar. 31, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]
5. Stock-Based Compensation
 
Stock Incentive Plan
 
On March 20, 2007, the Company’s Board of Directors approved the 2007 Stock Incentive Plan (the “2007 Stock Plan”) for the issuance of up to 2,500,000 shares of common stock to be granted through incentive stock options, nonqualified stock options, stock appreciation rights, dividend equivalent rights, restricted stock, restricted stock units and other stock-based awards to officers, directors, other employees and consultants of the Company and its subsidiaries. This plan was approved by the stockholders on November 2, 2007. The exercise price of stock options under the 2007 Stock Plan is determined by the compensation committee of the Board of Directors, and may be equal to or greater than the fair market value of the Company’s common stock on the date the option is granted. The total number of shares of stock with respect to which stock options and stock appreciation rights may be granted to any one employee of the Company or a subsidiary during any one-year period under the 2007 Stock Plan shall not exceed 250,000. Options become exercisable over various periods from the date of grant, and generally expire ten years after the grant date. As of March 31, 2017, there were 743,924 options issued and outstanding under the 2007 Stock Plan.
 
On November 2, 2010, the Board of Directors and stockholders adopted the 2010 Stock Incentive Plan (“2010 Stock Plan”) for the issuance of up to 3,000,000 shares of common stock to be granted through incentive stock options, nonqualified stock options, stock appreciation rights, dividend equivalent rights, restricted stock, restricted stock units and other stock-based awards to officers, directors, other employees and consultants of the Company and its subsidiaries. On October 22, 2013, the stockholders approved and adopted an amendment to the 2010 Stock Plan to increase the number of shares of the Company’s common stock reserved for issuance under the 2010 Stock Plan from 3,000,000 to 6,000,000. On May 15, 2015, the stockholders approved and adopted an amendment to the 2010 Stock Plan to increase the number of shares of the Company’s common stock reserved for issuance under the 2010 Stock Plan from 6,000,000 to 8,000,000. On August 25, 2016, the stockholders approved and adopted an amendment to the 2010 Stock Plan to increase the number of shares of the Company’s common stock reserved for issuance under the 2010 Stock Plan from 8,000,000 to 14,000,000. The exercise price of stock options under the 2010 Stock Plan is determined by the compensation committee of the Board of Directors, and may be equal to or greater than the fair market value of the Company’s common stock on the date the option is granted. There is no limit on the number or the value of the shares with respect to which stock options and stock appreciation rights may be granted to any one employee of the Company or a subsidiary during any one-year period. Options become exercisable over various periods from the date of grant, and generally expire between five to ten years after the grant date. As of March 31, 2017, there were 10,745,591 options issued and outstanding under the 2010 Stock Plan.
 
In the event of an employee’s termination, the Company will cease to recognize compensation expense for that employee. There is no deferred compensation recorded upon initial grant date, instead, the fair value of the stock-based payment is recognized ratably over the stated vesting period.
 
The Company has applied fair value accounting for all stock-based payment awards since inception. The fair value of each option or warrant granted is estimated on the date of grant using the Black-Scholes option pricing model. The Black-Scholes assumptions used in the three months ended March 31, 2017 and 2016 are as follows:
 
 
 
Three months ended March 31,
 
 
 
2017
 
2016
 
Exercise price
 
 
$0.83-$0.87
 
 
$1.08-$1.31
 
Expected dividends
 
 
0%
 
 
0%
 
Expected volatility
 
 
89.93%-91.82%
 
 
117%
 
Risk free interest rate
 
 
1.67%-1.75%
 
 
1.40%-1.46%
 
Expected life of option
 
 
4.24-4.29
 
 
7 years
 
  
The Company records stock-based compensation based upon the stated vested provisions in the related agreements. The vesting provisions for these agreements have various terms as follows:
 
 
·
immediate vesting;
 
·
half vesting immediately and remaining over three years;
 
·
quarterly over three years;
 
·
annually over three years;
 
·
one-third immediate vesting and remaining annually over two years;
 
·
one half immediate vesting and remaining over nine months;
 
·
one quarter immediate vesting and remaining over three years;
 
·
one quarter immediate vesting and remaining over 33 months; and
 
·
monthly over three years.
 
During the three months ended March 31, 2017, the Company granted 543,927 options to employees having an approximate fair value of $308,000 based upon the Black-Scholes option pricing model. During the same period in 2016, the Company granted 150,000 options to employees having an approximate fair value of $153,000 million based upon the Black-Scholes option pricing model.
 
A summary of stock option activities as of March 31, 2017, and for the year ended December 31, 2016, is as follows:
 
 
 
 
 
Weighted
 
Weighted Average
 
Aggregate
 
 
 
 
 
Average Exercise
 
Remaining
 
Intrinsic
 
 
 
Options
 
Price
 
Contractual Life
 
Value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance - December 31, 2015
 
 
8,941,930
 
$
2.14
 
5.67 years
 
$
2,900,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Granted
 
 
3,861,425
 
 
0.98
 
 
 
 
 
 
Exercised
 
 
(445,334)
 
 
1.83
 
 
 
 
137,488
 
Expired
 
 
(338,529)
 
 
1.96
 
 
 
 
 
 
Forfeited
 
 
(383,265)
 
 
2.26
 
 
 
 
 
 
Balance - December 31, 2016
 
 
11,636,227
 
 
1.77
 
5.49 years
 
$
194,355
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Granted
 
 
543,927
 
 
0.85
 
 
 
 
 
 
Exercised
 
 
(418,773)
 
 
0.40
 
 
 
 
163,050
 
Expired
 
 
(271,866)
 
 
1.84
 
 
 
 
 
 
Forfeited
 
 
-
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance -March 31, 2017 - outstanding
 
 
11,489,515
 
$
1.77
 
5.73 years
 
$
17,427
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance - March 31, 2016 - exercisable
 
 
6,177,207
 
$
2.11
 
4.94 years
 
$
17,427
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Grant date fair value of options granted - March 31, 2017
 
 
 
 
$
308,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average grant date fair value - March 31, 2017
 
 
 
 
$
0.57
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Grant date fair value of options granted - December 31, 2016
 
 
 
 
$
3,091,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average grant date fair value - December 31, 2016
 
 
 
 
$
0.80
 
 
 
 
 
 
 
Stock-based compensation expense included in general and administrative expenses and research and development expenses related to stock options issued to employees and consultants for the three months ended March 31, 2017 and 2016 was $1.1 million.
 
As of March 31, 2017, total unrecognized stock-based compensation expense related to stock options was $5.6 million, which is expected to be expensed through February 2020.