Stock Options

On June 7, 2016 stockholders of the Company approved amendments to the Innodata Inc. 2013 Stock Plan. The Innodata Inc. 2013 Stock Plan as amended and restated effective June 7, 2016 is referred to herein as the “Plan.” The number of shares of common stock of Innodata Inc. (“Stock”) that may be delivered, purchased or used for reference purposes (with respect to stock appreciation rights or stock units) for awards granted under the Plan after June 7, 2016 is 5,858,892 (the “Share Reserve”). Shares subject to an option or stock appreciation right granted under the Plan after June 7, 2016 shall count against the Share Reserve as one share for every share granted, and shares subject to any other type of award granted under the Plan after June 7, 2016 shall count against the Share Reserve as two shares for every share granted. Any award, or portion of an award, under the Plan or under the 2009 Stock Plan (as amended and restated (the “Prior Plan”)) that expires or terminates unexercised, becomes unexercisable or is forfeited or otherwise terminated, surrendered or canceled as to any shares without delivery of shares or other consideration shall be added back to the Share Reserve as one share for each such share that was subject to an option or stock appreciation right granted under the Plan or the Prior Plan, and two shares for each such share that was subject to an award other than an option or stock appreciation right granted under the Plan or the Prior Plan. If any shares are withheld, tendered or exchanged by a participant in the Plan as full or partial payment to Innodata of the exercise price under an option under the Plan or the Prior Plan or in satisfaction of a participant’s tax withholding obligations with respect to any award under the Plan or the Prior Plan, there shall be added back to the Share Reserve one share for each such share that was withheld, tendered or exchanged in respect of an option or stock appreciation right granted under the Plan or the Prior Plan, and two shares for each such share that was withheld, tendered or exchanged in respect of an award other than an option or stock appreciation right granted under the Plan or the Prior Plan.

The fair value of stock options is estimated on the date of grant using the Black-Scholes option pricing model. The weighted average fair values of the options granted and weighted average assumptions are as follows:

	Number of Options		Weighted - Average Exercise Price		Weighted- Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding at January 1, 2016		3,970,146	$	3.02
Granted		710,000		2.67
Exercised		-		-
Forfeited/Expired		(124,033)		3.19
Outstanding at June 30, 2016		4,556,113	$	2.96		5.56	$	28,800

Exercisable at June 30, 2016		2,343,062	$	3.14		4.04	$	2,376

Vested and Expected to Vest at June 30, 2016		4,556,113	$	2.96		5.56	$	28,800

	Six Months Ended
	June 30,
	2016			2015
Weighted average fair value of options granted	$	1.09		$	-

Risk-free interest rate		1.38% - 1.73%			-
Expected life (years)		5-6			-
Expected volatility factor		49	%		-
Expected dividends		-			-

The total compensation cost related to non-vested stock awards not yet recognized as of June 30, 2016 totaled approximately $1.7 million. The weighted-average period over which these costs will be recognized is twenty six months.

The stock-based compensation expense related to the Company’s various stock awards was allocated as follows (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2016		2015		2016		2015

Direct operating costs	$	74	$	104	$	164	$	195
Selling and administrative expenses		169		170		358		364
Total stock-based compensation	$	243	$	274	$	522	$	559

There were no options exercised in the six months ended June 30, 2016.