Quarterly report pursuant to Section 13 or 15(d)

9. STOCK-BASED COMPENSATION

v3.7.0.1
9. STOCK-BASED COMPENSATION
6 Months Ended
Jun. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
STOCK-BASED COMPENSATION

The Company’s Amended 2013 Plan provides for the granting of stock options, restricted stock awards, RSU’s, stock bonus awards and performance-based awards. As of June 30, 2017, the Company had 4,552,002 authorized unissued shares reserved and available for issuance upon exercise and conversion of outstanding awards under the Amended 2013 Plan.

 

The stock options are exercisable at no less than the fair market value of the underlying shares on the date of grant, and restricted stock and restricted stock units are issued at a value not less than the fair market value of the common stock on the date of the grant. Generally, stock options awarded are vested in equal increments ranging from two to four years on the annual anniversary date on which such equity grants were awarded. The stock options generally have a maximum term of 10 years.

 

The Company recognized Selling, General and Administration expenses of $557,837 and $670,682, relating to stock options and RSU’s issued to employees, officers, directors and consultants for the three months ended June 30, 2017 and 2016, respectively. The Company recognized Selling, General and Administration expenses of $1,744,128 and $1,250,833, relating to stock options and RSU’s issued to employees, officers, directors and consultants for the six months ended June 30, 2017 and 2016, respectively. The Company recognized expenses of $0 and $258,125 relating to common stock issued to employees, officers, directors and consultants during the three months ended June 30, 2017 and 2016, respectively. The Company recognized expenses of $0 and $433,125 relating to common stock issued to employees, officers, directors and consultants during the six months ended June 30, 2017 and 2016, respectively.

 

As of June 30, 2017, total unrecognized compensation cost related to non-vested stock-based compensation arrangements granted to employees, officers, and directors was $1,795,520, which is expected to be recognized over a weighted-average period of 1.62 years.

  

The following table summarizes stock option activity for the Amended 2013 Plan during the six months ended June 30, 2017:

 

    Number of Shares     Weighted Average Exercise Price     Weighted Average Remaining Contract Term (Years)     Aggregate Intrinsic Value  
Outstanding - December 31, 2016     12,841,000     $ 1.57       8.54     $ 415,135  
Granted     9,147,000       0.37              
Exercised                        
Cancelled/Forfeited (1)     6,525,280       2.50              
Expired     14,722       0.69              
Outstanding - June 30, 2017     15,447,998       0.47       8.34       145,625  
                                 
Total exercisable - June 30, 2017     10,969,781       0.51       7.98       96,802  
Total unvested - June 30, 2017     4,478,217       0.37       9.22       48,823  
Total vested or expected to vest - June 30, 2017     15,447,998       0.47       8.34       145,625  

 

  (1) The number of options cancelled/forfeited includes options cancelled in connection with the Exchange Program (see below).

 

In March 2017, the Company completed an offer to exchange certain employee stock options under the Company’s amended 2013 Plan (the “Exchange Program”). Certain previously granted options were exchanged for new options with a lower exercise price granted on a one-for-one basis. Options for an aggregate of 6,090,000 shares were exchanged. Options granted pursuant to the Exchange Program have an exercise price of $0.38 per share, the closing price of the Company’s common stock on the date of the exchange grant. The Exchange Program resulted in a modification charge of $403,479 which is being recognized over the vesting period of the new options which range from zero months to approximately two years.

 

The following table summarizes unvested stock options for the Amended 2013 Plan during the six months ended June 30, 2017:

 

      Number of Shares     Weighted Average Fair Value Per Share on Grant Date  
               
  Unvested stock options - December 31, 2016        3,724,233     $ 0.63  
  Granted        9,147,000       0.17  
  Vested        (1,867,736     0.34  
  Cancellations        (6,525,280     0.46  
  Unvested stock options - June 30, 2017        4,478,217       0.44  

 

The following table summarizes stock option activity outside of the Amended 2013 Plan during the six months ended June 30, 2017:

 

    Number of Shares     Weighted Average Exercise Price     Weighted Average Remaining Contract Term (Years)     Aggregate Intrinsic Value  
                         
Outstanding - December 31, 2016     2,750,000     $ 0.37       9.77     $ 170,500  
Granted                        
Exercised                        
Forfeited                        
Expired                        
Outstanding - June 30, 2017     2,750,000       0.37       9.27        
                                 
Total exercisable - June 30, 2017     2,750,000       0.37       9.27        
Total unvested - June 30, 2017            –        –        –  
Total vested or expected to vest - June 30, 2017     2,750,000       0.37       9.27        

 

The following table summarizes RSU activity outside of the Amended 2013 Plan during the six months ended June 30, 2017:

 

    Number of Shares     Weighted Average Exercise Price     Weighted Average Remaining Contract Term (Years)     Aggregate Intrinsic Value  
Outstanding - December 31, 2016         $           $  
Granted     1,000,000                   400,000  
Exercised                        
Forfeited                        
Expired                        
Outstanding - June 30, 2017     1,000,000                   399,500  
                                 
Total exercisable - June 30, 2017     1,000,000                   399,500  
Total unvested - June 30, 2017     1,000,000                   399,500  
Total vested or expected to vest - June 30, 2017     1,000,000                   399,500  

 

The following table summarizes RSU activity outside of the Amended 2013 Plan during the six months ended June 30, 2017:

 

      Number of Shares     Weighted Average Fair Value Per Share on Grant Date  
  Unvested RSU's - December 31, 2016            $  
  Granted        1,000,000       0.40  
  Vested        (1,000,000 )     0.40  
  Cancellations               
  Unvested RSU's - June 30, 2017