Quarterly report pursuant to Section 13 or 15(d)

Employee Stock Options

v3.19.1
Employee Stock Options
3 Months Ended
Mar. 31, 2019
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
EMPLOYEE STOCK OPTIONS

11. EMPLOYEE STOCK OPTIONS

 

For the three months ended March 31, 2019

 

On March 20, 2019, the Company’s board of directors approved option grants to two employees outside its 2015 Equity Plan. One grant, relating to the option to purchase 30,000 shares of the Company’s common stock, vests after one year, and one grant, relating to the option to purchase 100,000 shares of the Company’s common stock, vests after two years. These stock options have an exercise price of $1.06 per share and expire on March 20, 2023. During the three months ended March 31, 2019, $1,670 in compensation expense was recognized on these two options with a remaining balance of $87,548 to be recognized over the vesting period as of March 31, 2019.

 

On March 28, 2018, upon approval of the Company’s board of directors, the Company granted to Robert Guerra, a newly appointed director, an option to purchase 100,000 shares of the Company’s common stock outside its 2015 Equity Plan. The option vests 50% one year after the date of grant and the remaining 50% two years after the date of grant provided the director is still actively involved with the Company. The option has an exercise price of $1.00 per share and expires on March 28, 2022. During the three months ended March 31, 2019 and 2018, $7,013 and $190 in compensation expense was recognized, respectively, on this option with a remaining balance of $9,642 to be recognized over the vesting period as of March 31, 2019.

 

On May 16, 2018, upon approval of the Company’s board of directors, the Company granted options to purchase shares of its common stock outside its 2015 Equity Plan to four employees. Reginald Brown, Jr. was issued an option to purchase 200,000 shares of common stock, and Kendall Carpenter, the Company’s Executive Vice President and Chief Financial Officer, was issued an option to purchase 130,000 shares of common stock. These options were immediately vested, have an exercise price of $1.00 per share and expire May 16, 2022. Two engineers received options to purchase an aggregate of 130,000 shares of common stock. These options vest 50% after one year and the remaining 50% after two years, have an exercise price of $1.00 per share and expire May 16, 2022. One of the engineers terminated during the first quarter of 2019, before his option relating to 40,000 shares vested, and $7,376 in previously recognized 2018 expense was reversed due to option expiration. During the three months ended March 31, 2019, $6,664 compensation expense was recognized on the remaining option to purchase 90,000 shares, with a remaining balance of $12,265 to be recognized over the vesting period as of March 31, 2019.

 

On December 13, 2017, upon approval of the Company’s board of directors the Company issued outside its 2015 Equity Plan, 100,000 options each to two newly-appointed directors, or a total of 200,000 options. These options vest 50% after one year and the remaining 50% after two years provided the director is still actively involved with the Company. The options are exercisable at an exercise price of $1.00 per share and expire on December 13, 2021. During the three months ended March 31, 2019 and 2018, $6,712 and $18,213 compensation expense was recognized, respectively, on these 200,000 options with a remaining balance of $18,835 to be recognized over the vesting period as of March 31, 2019.

 

The Company used the Black-Scholes option pricing model to estimate the fair value on the date of grant of the options to purchase 130,000 shares of common stock granted during the three months ended March 31, 2019.

 

The following table summarizes the assumptions used to estimate the fair value of stock options granted during the three months ended March 31, 2019 on the date of the grant:

 

    2019  
Expected dividend yield     0 %
Expected volatility     90 %
Risk-free interest rate     2.40-2.47 %
Expected life of options     4.0 years  

  

Under the Black-Scholes option pricing model, the fair value of the options to purchase an aggregate of 130,000 shares of common stock granted during the three months ended March 31, 2019 is estimated at $89,217 on the date of grant. During the three months ended March 31, 2019, $1,670 compensation expense was recognized on these options with a total of $87,547 to be recognized over the vesting periods.

  

The following table represents stock option activity as of and for the three months ended March 31, 2019:

 

    Number of Options     Weighted
Average
Exercise Price per Share
    Weighted
Average
Contractual
Life in
Years
    Aggregate Intrinsic
Value
 
Outstanding – December 31, 2018     13,990,000     $ 0.61       3.15          
Exercisable – December 31, 2018     13,610,000     $ 0.59       3.16     $ 0  
Granted     130,000     $ 1.06                  
Cancelled or Expired     (50,000 )   $ 0.90                  
Outstanding – March 31, 2019     14,070,000     $ 0.61       2.92          
Exercisable – March 31, 2019     13,700,000     $ 0.60       2.91     $ 6,340,000  

  

For the three months ended March 31, 2018

 

During 2016, the Company granted 10,000 options to an employee with two-year vesting and an exercise price of $3.00 and an expiration date of December 6, 2019. The Company recognized $1,104 in compensation for the three months ended March 31, 2018.

 

On June 1, 2015, the Company issued an option award to an employee for 37,500 shares vesting over three years with an exercise price of $10.80 and expiration date of May 4, 2019. During the three months ended March 31, 2018, $8,620 compensation expense was recognized on these 37,500 options.

 

On January 9, 2017, the Company issued an option to purchase 100,000 shares of common stock with an exercise price of $2.90 per share to a director. The option vests 50,000 after one year from grant date and another 50,000 two years from grant date with an expiration date of four years from grant date provided that the Director is still providing service to the Company. During the three months ended March 31, 2018, $11,278 compensation expense was recognized on these 100,000 options.

 

The following table summarizes the assumptions used to estimate the fair value of the 100,000 stock options granted during the three months ended March 31, 2018 on the date of grant.

 

    2018  
       
Expected dividend yield     0 %
Expected volatility     83-86 %
Risk-free interest rate     2.49 %
Expected life of options     2.50-3.00 years  

 

Under the Black-Scholes option pricing model, the fair value of the 100,000 options granted during the three months ended March 31, 2018 is estimated at $31,322 on the date of grant. During the three months ended March 31, 2018, $190 compensation expense was recognized on these 100,000 options.

  

The following table represents stock option activity as of and for the three months ended March 31, 2018:

 

    Number of Options     Weighted
Average
Exercise Price per Share
    Weighted Average Contractual Life in Years     Aggregate Intrinsic
Value
 
Outstanding – December 31, 2017     7,945,000     $ 1.38       3.50          
Exercisable – December 31, 2017     7,627,500     $ 1.35       3.50     $       0  
Granted     100,000     $ 1.00                  
Cancelled or Expired     -     $ .00                  
Outstanding – March 31, 2018     8,045,000     $ 1.37       3.27     $ 0  
Exercisable – March 31, 2018     7,677,500     $ 1.36       3.25     $ 0