Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.5.0.2
Stock-Based Compensation
 9 Months Ended
Sep. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-Based Compensation
11. Stock-Based Compensation

Equity Incentive Plans – The Company adopted the 2013 Equity Compensation Plan under which the Company reserved 62,500 shares of common stock 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 subsequently amended the plan to increase the number of authorized shares of common stock under the plan to 225,000 shares, which the Company’s stockholders approved on June 3, 2015.
  
Stock Options

The following table summarizes the Company’s stock option activity for the nine months ended September 30, 2016:
 
 
  
Number of
Options
    
Weighted
Average
Exercise
Price
    
Weighted
Average
Remaining
Contractual
Life
(in Years)
    
Aggregate
Intrinsic
Value
  
Outstanding - December 31, 2015
    
19,653
    
$
30.00
      
8.0
    
$
-
  
Granted
    
57,500
      
8.19
                  
Exercised
    
-
      
-
                  
Forfeited/Canceled/Expired
    
(4,287
)
    
(31.81
)
                
Outstanding – September 30, 2016
    
72,866
    
$
12.69
      
9.5
    
$
-
  
 
                                
Exercisable – September 30, 2016
    
30,264
    
$
16.29
      
9.2
    
$
-
  
 
A summary of the changes in the Company’s unvested stock options is as follows: 
 
  
Number of
Options
    
Weighted
Average
Grant
Date Fair
Value
  
Unvested - December 31, 2015
    
13,571
    
$
13.76
  
Granted
    
57,500
      
4.01
  
Vested
    
(27,552
)
    
(7.07
)
Forfeited/Canceled/Expired
    
(917
)
    
(13.83
)
Unvested – September 30, 2016
    
42,602
    
$
4.93
  

As discussed in Note 9, the Company granted 57,500 stock options to Ms. Butkevich in connection with her Employment Agreement. These options had a fair value of $230,575, using the Black-Scholes option-pricing model with the following assumptions:

Risk-free interest rate
 
 
1.14
%
Expected dividend yield
 
 
0.00
%
Expected volatility
 
 
53.96
%
Expected term
 
5.5 years
 
The options are exercisable at an exercise price of $8.19 per share over a ten-year term and vest over three years. The Company recorded $77,000 as compensation expense during the three and nine months ended September 30, 2016 pertaining to this grant.

The Company recorded non-cash compensation expense of approximately $90,000 and $31,000 for the three months ended September 30, 2016 and 2015, respectively, and approximately $135,000 and $74,000 for the nine months ended September 30, 2016 and 2015, respectively, pertaining to stock options.

Total unrecognized compensation expense related to unvested stock options at September 30, 2016 amounts to approximately $182,000 and is expected to be recognized over a remaining weighted average period of 1.4 years.
 
Warrants

The following table summarizes the Company’s warrant activity for the nine months ended September 30, 2016:
 
 
  
Number of
Warrants
    
Weighted
Average
Exercise
Price
    
Weighted
Average
Remaining
Contractual
Life
(in Years)
    
Aggregate
Intrinsic
Value
  
Outstanding – December 31, 2015
    
45,314
    
$
66.72
      
3.5
    
$
-
  
Granted
    
468,750
      
6.80
                  
Exercised
    
-
      
-
                  
Forfeited/Canceled/Expired
    
-
      
-
                  
Outstanding – September 30, 2016
    
514,064
    
$
12.09
      
4.7
    
$
2,127,813
  
 
                                
Exercisable – September 30, 2016
    
389,064
    
$
9.54
      
4.5
    
$
2,127,813
  
 
As discussed in Note 6, on June 30, 2016, the Company granted warrants to purchase 468,750 shares of common stock. The fair value of the warrants issued of $783,458 has been recorded as a direct deduction from the carrying amount of Master Credit Facility.
 
A summary of the changes in the Company’s unvested warrants is as follows: 
 
  
Number of
Warrants
    
Weighted
Average
Grant
Date Fair
Value
  
Unvested – December 31, 2015
    
-
    
$
-
  
Granted
    
468,750
      
1.67
  
Vested
    
(468,750
)
    
(1.67
)
Forfeited/Canceled/Expired
    
-
      
-
  
Unvested – September 30, 2016
    
-
    
$
-
  

On November 7, 2016, warrants to purchase an aggregate of 343,750 shares of common stock were exercised for an aggregate exercise price of $687,500.

Restricted Stock

As of September 30, 2016 and December 31, 2015, there were 5,556 shares of unvested restricted stock outstanding.

The Company recorded non-cash compensation expense of approximately $28,000 and $83,000 for the three months ended September 30, 2016 and 2015, respectively, and approximately $83,000 and $277,000 for the nine months ended September 30, 2016 and 2015, respectively, pertaining to restricted stock. 
     
Total unrecognized compensation expense related to unvested restricted stock at September 30, 2016 amounts to approximately $129,000 and is expected to be recognized over a weighted average period of 1.2 years.