Quarterly report pursuant to Section 13 or 15(d)

Employee Stock Options

v3.5.0.2
Employee Stock Options
9 Months Ended
Sep. 30, 2016
Employee Stock Options [Abstract]  
EMPLOYEE STOCK OPTIONS
9.   EMPLOYEE STOCK OPTIONS

  

On October 29, 2015, a 1:40 reverse split of the Company stock occurred and the effect has been applied retroactively for disclosure purposes.

 

On April 27, 2016, the Company issued 50,000 options from the 2015 Equity Plan to two employees for services provided. These options immediately vested and were granted with an exercise price of $2.91, which was the closing price of the Company’s common stock on the grant date, and expiration date of April 27, 2019.

 

On July 28, 2016, the Company issued 5,000 options from the 2015 Equity Plan to one employee as an employment bonus. These options were immediately vested and were granted with an exercise price of $3.77, which was the closing price of the Company’s common stock on the grant date, and the expiration date of July 28, 2019.

 

The Company used the Black-Scholes option pricing model to estimate the fair value on the date of grant of the 55,000 options granted during the nine months ended September 30, 2016.

 

The following table summarizes the assumptions used to estimate the fair value of the 55,000 stock options granted during the nine months ended September 30, 2016 on the date of grant. 

 

      2016  
         
  Expected dividend yield     0 %
  Expected volatility     108 %
  Risk-free interest rate     0.93 %
  Expected life of options     3 years  

 

Under the Black-Scholes option pricing model, the fair value of the 55,000 options granted during the nine months ended September 30, 2016 is estimated at $107,941 on the date of grant. During the nine months ended September 30, 2016, $107,941 compensation expense was recognized on these 55,000 options.

 

During 2015, the Company granted 842,500 common stock options to employees and a director for service provided. Of those 842,500 options, 250,000 options immediately vested and were granted with an exercise price of $6.00 and expiration date of May 18, 2018. Another 105,000 options immediately vested and were granted with an exercise price of $5.00 and expiration date of December 10, 2018. Another 250,000 options vest over two years or upon the up-listing of the Company’s common stock and were granted with an exercise price of $6.00 and expiration date of June 1, 2018. These 250,000 options were surrendered and cancelled on September 4, 2015. A director received two option awards. The first was for 75,000 shares vesting over two years and was granted with an exercise price of $10.00 and expiration date of June 1, 2018. The second was for 125,000 shares with vesting tied to performance and was granted with an exercise price of $10.00 and expiration date of June 1, 2018. These two director option awards were surrendered and cancelled on September 4, 2015. Stock based compensation was reversed for costs previously recognized on the total 450,000 surrendered and cancelled unvested options. Another option award for 37,500 shares vesting over three years was granted with an exercise price of $10.80 and expiration date of May 4, 2019.

 

The Company used the Black-Scholes option pricing model to estimate the fair value on the date of grant of the 37,500 stock-based awards that continue to vest during the nine months ended September 30, 2016. 

 

The following table summarizes the assumptions used to estimate the fair value of the 37,500 stock options granted during 2015 on the date of grant:

 

      2015  
         
  Expected dividend yield     0 %
  Expected volatility     129 %
  Risk-free interest rate     0.79 – 1.05 %
  Expected life of options     2.43 – 3.43 years  

  

Under the Black-Scholes option price model, fair value of the 37,500 options granted during 2015 is estimated at $293,954 on the date of grant. During the nine months ended September 30, 2016, $101,141 compensation expense was recognized on these 37,500 options.

 

The following table represents stock option activity as of and for the period ended September 30, 2016:

 

      Number of Options     Weighted
Average
Exercise Price
per Share
    Weighted Average Contractual Life in Years     Aggregate Intrinsic
Value
 
  Outstanding – December 31, 2015     392,500     $ 6.19     2.62          
  Exercisable – December 31, 2015     355,000     $ 5.70     2.55     $ 0  
  Granted     55,000     $ 2.99                  
  Exercised or Vested         $ 0.00                  
  Cancelled or Expired         $ 0.00                  
  Outstanding – September 30, 2016     447,500     $ 5.80       1.96     $ 0  
  Exercisable – September 30, 2016     422,500     $ 5.50       1.92     $ 24,000