Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.7.0.1
Stock-Based Compensation
6 Months Ended
Jun. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-Based Compensation
10. Stock-Based Compensation

Equity Incentive Plans – The Company’s 2013 Equity Compensation Plan (the “2013 Plan”) was adopted for the purpose of providing equity incentives to employees, officers, directors and consultants including options, restricted stock, restricted stock units, stock appreciation rights, other equity awards, annual incentive awards and dividend equivalents. The Company amended the 2013 Plan to increase the number of authorized shares of common stock under the Plan by 390,000 shares, which the Company’s stockholders approved on June 26, 2017. The Company is now authorized to issue 615,000 shares under the amended 2013 Plan.
 
Stock Options

The following table summarizes the Company’s stock option activity for the six months ended June 30, 2017:
 
 
 
Number of
Options
   
Weighted
Average
Exercise
Price
   
Weighted
Average
Remaining
Contractual
Life
(in Years)
   
Aggregate
Intrinsic
Value
 
Outstanding - December 31, 2016
   
69,950
   
$
12.07
     
9.0
   
$
156,975
 
Granted
   
240,000
     
10.72
                 
Exercised
   
-
     
-
                 
Forfeited/Canceled/Expired
   
(5,886
)
   
(32.63
)
               
Outstanding – June 30, 2017
   
304,064
   
$
10.61
     
9.5
   
$
-
 
 
                               
Exercisable – June 30, 2017
   
124,897
   
$
10.83
     
9.4
   
$
-
 
 
As discussed in Note 8, the Company granted 210,000 and 30,000 stock options to Messrs. Wang and Xiao, respectively, in connection with their employment agreements. These options had an aggregate fair value of $1,060,800, using the Black-Scholes option-pricing model with the following assumptions:

Risk-free interest rate
 
 
2.13
%
Expected dividend yield
 
 
0.00
%
Expected volatility
 
 
41.78
%
Expected term
 
5.5 years
 
 
The options are exercisable at an exercise price of $10.72 per share over a ten-year term and vest over two years, with one-third vested upon grant. The Company recorded $88,000 and $471,000 as compensation expense during the three and six months ended June 30, 2017, respectively, pertaining to these grants.

Total non-cash compensation expense for grants recorded by the Company amounted to approximately $114,000 and $15,000 for the three months ended June 30, 2017 and 2016, respectively, and $530,000 and $44,000 for the six months ended June 30, 2017 and 2016, respectively, as a component of general and administrative expenses in the accompanying condensed consolidated statements of operations and comprehensive loss pertaining to stock options.

Total unrecognized compensation expense related to unvested stock options at June 30, 2017 amounts to approximately $666,000 and is expected to be recognized over a remaining weighted average period of 1.6 years.
 
Warrants

As of June 30, 2017, there were 170,314 warrants outstanding and exercisable, with a weighted average exercise price of $32.44 per share. The weighted average remaining contractual life of the warrants at June 30, 2017 and December 31, 2016 was 3.8 and 4.3 years, respectively, and the aggregate intrinsic value was $0.

The Company did not grant any warrants to purchase shares of common stock during the six months ended June 30, 2017.

No compensation cost was recognized for the three and six months ended June 30, 2017 and 2016 pertaining to warrants.
 
Restricted Stock and Restricted Stock Units

On June 26, 2017, the Company granted 15,544 restricted stock units (“RSUs”) to certain Board members. The RSUs vest 100% on June 28, 2018, subject to continued service on the vesting date. The RSUs have no voting or dividend rights. The fair value of the common stock on the date of grant was $7.72 per share, based upon the closing market price on the grant date. The aggregate grant date fair value of the combined awards amounted to $120,000.

A summary of the restricted stock award activity for the six months ended June 30, 2017 is as follows:
 
 
 
Number of
Shares
 
 
     
Unvested Outstanding at December 31, 2016
   
2,778
 
Granted
   
15,544
 
Forfeited
   
-
 
Vested
   
-
 
Unvested Outstanding at June 30, 2017
   
18,322
 
 
The Company recorded non-cash compensation expense of approximately $28,000 for the three months ended June 30, 2017 and 2016, and approximately $55,000 for the six months ended June 30, 2017 and 2016. 
     
Total unrecognized compensation expense related to unvested restricted stock and unvested restricted stock units at June 30, 2017 amounts to approximately $166,000 and is expected to be recognized over a weighted average period of 0.9 years.