Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.8.0.1
Stock-Based Compensation
9 Months Ended
Sep. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-Based Compensation

Note 5 – Stock-based compensation

 

The Company recorded approximately $142,000 and $409,000 of stock-based compensation related to employee stock options for the three and nine months ended September 30, 2017. For the three and nine months ended September 30, 2016, stock option expense was a ($1,138,000) and $297,000, respectively. During the third quarter of 2016, the Company reversed $1,392,000 in stock option expenses related to non-vested options issued to two executives that left the organization. Expense for the remaining employees were only $254,000, resulting in the negative stock option expense for the three months ended September 30, 2016.

 

As of September 30, 2017, there was $643,000 of unrecognized compensation cost related to outstanding options that is expected to be recognized as a component of the Company’s operating expenses over a weighted average period of 1.50 years.

 

The administrator of the Company’s stock option plans determines the times when an option may become exercisable at the time of grant. Vesting periods of options granted to date have not exceeded five years. The options generally will expire, unless previously exercised, no later than ten years from the grant date. The Company is using unissued shares for all shares issued for options and restricted share awards.

 

The following schedule presents activity in the Company’s outstanding stock options for the nine months ended September 30, 2017 (in thousands, except per share amounts):

 

   

Number of shares available

for grant

   

Total

options outstanding

   

Weighted Average Exercise

Price

   

Aggregate Intrinsic

Value

 
Balance at December 31, 2016     48,368       24,351     $ 0.30     $ 5,457  
Exercised     -       (1,707 )     0.05       -  
Granted     -       -       -       -  
Cancelled     1,300       (1,300 )     0.96          
Balance at September 30, 2017     49,668       21,344     $ 0.28     $ 2,874  

 

As of September 30, 2017, options to purchase 21,344,222 shares of common stock, with an aggregate intrinsic value of $2,874,000, were outstanding that were fully vested or expected to vest with a weighted average remaining contractual term of 4.1 years. As of September 30, 2017, options to purchase 20,464,222 shares of common stock with a weighted average exercise price of $0.24 per share and a weighted average remaining contractual term of 3.6 years were fully vested with an intrinsic value of $2,874,000.

 

The aggregate intrinsic value of outstanding and exercisable options at September 30, 2017 was calculated based on the closing price of the Company’s common stock as reported on the OTCQB market on September 29, 2017 of $0.27 per share less the exercise price of the options. The aggregate intrinsic value is calculated based on the positive difference between the closing fair market value of the Company’s common stock and the exercise price of the underlying options.