Annual report pursuant to Section 13 and 15(d)

Share-based Compensation

v3.7.0.1
Share-based Compensation
12 Months Ended
Dec. 31, 2016
Share-based Compensation [Abstract]  
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]
18.
Share-based compensation
 
2008 Omnibus Incentive Plan
 
The 2008 Omnibus Incentive Plan (the "2008 Plan") was approved by the Company’s Board of Directors on October 29, 2008 and approved of the Company’s stockholders on December 11, 2008. The 2008 Plan has a ten-year term. The 2008 Plan reserves two million shares of common stock for issuance, subject to adjustment in the event of a recapitalization in accordance with the terms of the 2008 Plan.
 
The 2008 Plan authorizes the issuance of awards including stock options, restricted stock units (RSUs), restricted stock, unrestricted stock, stock appreciation rights (SARs) and other equity and/or cash performance incentive awards to employees, directors, and consultants of the Company. Subject to certain restrictions, the Compensation Committee of the Board of Directors has broad discretion to establish the terms and conditions for awards under the 2008 Plan, including the number of shares, vesting conditions and the required service or performance criteria. Options and SARs may have a contractual term of up to ten years and generally vest over three to five years with an exercise price equal to the fair market value on the date of grant. Incentive stock options (ISOs) granted must have an exercise price equal to or greater than the fair market value of the Company’s common stock on the date of grant. Repricing of stock options and SARs is permitted without stockholder approval. If a particular award agreement so provides, certain change in control transactions may cause such awards granted under the 2008 Plan to vest at an accelerated rate, unless the awards are continued or substituted for in connection with the transaction. As of December 31, 2016, 801,363 shares of common stock remained available for issuance pursuant to awards granted under the 2008 Plan.
 
Options Granted to Employees
 
 
 
 
 
Weighted
 
Remaining
 
 
 
Number of
 
Average Exercise
 
Contractual
 
 
 
Shares
 
Price
 
Term in Years
 
 
 
 
 
$
 
 
 
Outstanding, January 1, 2015
 
 
760,286
 
 
2.92
 
 
7.78
 
 
 
 
 
 
 
 
 
 
 
 
Granted
 
 
75,000
 
 
4.43
 
 
-
 
Exercised
 
 
(16,933)
 
 
2.63
 
 
-
 
Forfeited
 
 
(26,336)
 
 
2.63
 
 
-
 
Canceled
 
 
(5,091)
 
 
2.63
 
 
-
 
Outstanding, December 31, 2015
 
 
786,926
 
 
3.08
 
 
6.90
 
Exercisable, December 31, 2015
 
 
587,407
 
 
3.16
 
 
6.56
 
 
 
 
 
 
Weighted
 
Remaining
 
 
 
Number of
 
Average Exercise
 
Contractual
 
 
 
Shares
 
Price
 
Term in Years
 
 
 
 
 
$
 
 
 
Outstanding, January 1, 2016
 
 
786,926
 
 
3.08
 
 
6.90
 
 
 
 
 
 
 
 
 
 
 
 
Granted
 
 
190,000
 
 
2.66
 
 
-
 
Exercised
 
 
(13,312)
 
 
2.63
 
 
-
 
Forfeited
 
 
(41,678)
 
 
2.15
 
 
-
 
Canceled
 
 
(366,544)
 
 
3.47
 
 
-
 
Outstanding, December 31, 2016
 
 
555,392
 
 
2.70
 
 
7.39
 
Exercisable, December 31, 2016
 
 
381,392
 
 
2.76
 
 
6.67
 
 
Intrinsic value is calculated as the amount by which the current market value of a share of common stock exceeds the exercise price multiplied by the number of option shares. The aggregate intrinsic value of options vested and expected to vest as of December 31, 2016 and December 31, 2015 was approximately $8,000 and $178,000, respectively. The aggregate intrinsic value of options exercised during the years ended December 31, 2016 and 2015 was approximately $5,000 and $36,000, respectively. In 2016, the Company received $35,010 in cash from the exercise of stock options. In 2015, of the 16,933 shares exercised, 9,467 were withheld from the option holders to cover the exercise price of the awards being exercised.
 
During the year ended December 31, 2016, the Company granted options to purchase 190,000 shares to two employees at a weighted-average grant-date fair value of $2.66 per share. Four employees exercised their option to purchase 13,312 shares of the Company’s common stock. Thirteen employees resigned and their options to purchase a total of 41,678 shares of the Company’s common stock were forfeited. These employees had resigned with 386,920 shares vested, which if not exercised with 90 days after termination, will be cancelled. Of these vested shares 13,312 shares were exercised and 366,544 shares were cancelled in the period, and 7,064 were outstanding and exercisable as of December 31, 2016.
 
During the year ended December 31, 2015, the Company granted options to purchase 75,000 shares to two employees at a weighted-average grant-date fair value of $3.12 per share. Nine employees exercised their option to purchase 16,933 shares of the Company’s common stock. Six employees had resigned and their options to purchase a total of 26,336 shares of the Company’s common stock were forfeited. These employees had resigned with 20,166 shares vested, which if not exercised with 90 days after termination they will be cancelled. Of these vested shares 7,735 were exercised and 5,091 were cancelled in the period, and 7,340 were outstanding and exercisable as of December 31, 2015.
 
The estimated fair value of share-based compensation to employees is recognized as a charge against income on a ratable basis over the requisite service period, which is generally the vesting period of the award. The fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option pricing model under the following assumptions:
 
 
 
For the years ended December 31,
 
 
2016
 
 
2015
Dividend yield
 
 
-
 
 
 
-
Risk-free interest rate
 
 
1.21%-1.4%
 
 
 
1.54%-1.71%
Expected term (in years)
 
 
5-6.05
 
 
 
5.0-6.05
Volatility
 
 
76.98%-79.55%
 
 
 
78.57%-89.73%
 
Total Share-based Compensation Expense
 
As of December 31, 2016, the gross amount of unrecognized share-based compensation expense relating to unvested share-based awards held by employees was approximately $215,000, which the Company anticipates recognizing as a charge against income over a weighted average period of 2.09 years.
 
In connection with the grant of stock options to employees the Company recorded stock-based compensation charges in general and administrative expenses of $317,946 and $653,000, respectively, for the years ended December 31, 2016 and 2015. No stock-based compensation charges were recorded for non-employees for the years ended December 31, 2016 and 2015.