Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.10.0.1
Stock-Based Compensation
9 Months Ended
Sep. 30, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]
4. Stock-Based Compensation
 
Stock Incentive Plans
 
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 71,429 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, other employees, directors 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 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 September 30, 2018, there were 19,885 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 (the “2010 Stock Plan”) for the issuance of up to 85,714 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, other employees, directors 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 Plan from 85,714 to 171,429. 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 Plan from 171,429 to 228,571. 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 228,571 to 400,000. On September 7, 2017, 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 400,000 to 500,000. On September 24, 2018, 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 500,000 to 1,000,000.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. Options become exercisable over various periods from the date of grant and expire between five and ten years after the grant date. As of September 30, 2018, there were 327,402 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 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 is estimated on the date of grant using the Black-Scholes option pricing model. There were no options granted during the three and nine months ended September 30, 2018. The assumptions used for the nine months ended September 30, 2017 are as follows:
 
Exercise price     $29.05-$30.45
Expected dividends     0%
Expected volatility     90%-92%
Risk free interest rate     1.67%-1.75%
Expected life of option     4.2-4.3 years
 
The Company records stock-based compensation based upon the stated vesting 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;
· in full on one-year anniversary date of grant date;
· 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 nine months ended September 30, 2018, the Company did not grant options to employees. During the same period in 2017, the Company granted 15,541 options to employees having an approximate fair value of $308,000 based upon the Black-Scholes option pricing model.
 
A summary of stock option activities for the nine months ended September 30, 2018 is as follows:
 
   
Options
   
Weighted 
Average Exercise
Price
   
Weighted Average
Remaining
Contractual Life
 
Aggregate
Intrinsic
Value
 
                       
Balance - December 31, 2016     332,561     $ 61.87     5.49 years   $ 194,355  
                             
Granted     90,286     $ 20.12              
Exercised     (11,966 )   $ 13.89         $ 163,050  
Expired     (19,091 )   $ 77.46              
Forfeited     (32,714 )   $ 42.21              
Balance - December 31, 2017     359,076     $ 53.93     4.60 years   $ 1,800  
                             
Granted     -     $ -              
Exercised     -     $ -         $ -  
Expired     (8,124 )   $ 53.27              
Forfeited     (3,187 )   $ 27.28              
                             
Balance - September 30, 2018 - outstanding     347,765     $ 54.19     3.90 years   $ -  
                             
Balance - September 30, 2018 - exercisable     257,985     $ 64.63     3.21 years   $ -  
                             
Grant date fair value of options granted - September 30, 2018           $ -              
                             
Weighted average grant date fair value - September 30, 2018           $ -              
 
Stock-based compensation expense included in operating expenses related to stock options issued to employees and consultants for the three months ended September 30, 2018 and 2017 was $475,000 and $900,000 respectively, and $1.7 million and $2.9 million for the nine months ended September 30, 2018 and 2017, respectively.
 
As of September 30, 2018, total unrecognized stock-based compensation expense related to stock options was $1,070,000, which is expected to be expensed through January 2020.