v3.5.0.2
Stock-Based Compensation
 9 Months Ended
Sep. 30, 2016
Equity [Abstract]  
Stock-Based Compensation

NOTE 2. Stock-Based Compensation

The Company has two stock-based compensation plans: the 2006 Equity Incentive Plan (“2006 Plan”) and the 2015 Equity Incentive Plan (“2015 Plan”), both of which were approved by our stockholders. As of September 30, 2016, options to purchase 814,000 and 277,000 shares were outstanding under the 2006 Plan and the 2015 Plan, respectively, and a total of 1,064,000 shares were available for grant under the 2015 Plan. No options are available for grant under the 2006 Plan.

The Company’s stock options vest on an annual or a monthly basis. Stock options generally are exercisable for up to seven years after grant, subject to continued employment or service. The Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period of the award, which is generally the option vesting term. Such amount may change as a result of additional grants, forfeitures, modifications in assumptions and other factors. Income tax effects of share-based payments are recognized in the financial statements for those awards which will normally result in tax deductions under existing tax law. During the three and nine months ended September 30, 2016, we recorded an expense of $70,000 and $225,000, respectively, related to options previously granted. During the three and nine months ended September 30, 2015, we recorded an expense of $54,000 and $156,000, respectively, related to options previously granted. Under current U.S. federal tax law, we receive a compensation expense deduction related to non-qualified stock options only when those options are exercised and vested shares are received. Accordingly, the financial statement recognition of compensation expense for non-qualified stock options creates a deductible temporary difference that results in a deferred tax asset and a corresponding deferred tax benefit in our consolidated statements of operations.

During the nine months ended September 30, 2016, the Company did not grant any stock options. As of September 30, 2016, there was $176,000 of total unrecognized compensation expense related to non-vested stock options. That expense is expected to be recognized over the remaining weighted-average period of 1.06 years. During the nine months ended September 30, 2015, the Company granted a stock option for 20,000 shares. The fair value of the option grant was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions: risk-free interest rate of 1.86% based on the U.S. Treasury yields in effect at the time of grant; expected dividend yield of 0% as the Company has not, and does not intend to, declare dividends; and an expected life of 6 years based upon the historical life of options. The expected volatility used in the calculation was 96.6% based on the Company’s historical stock price fluctuations for a period matching the expected life of the option.

A summary of option activity under both the 2006 Plan and the 2015 Plan as of September 30, 2016 and changes during the nine months then ended is presented in the table below (shares in thousands):

 

 

 

Shares

 

 

Wtd. Avg.

Exercise Price

 

 

Wtd. Avg.

Remaining

Contractual

Life in Years

 

Outstanding at December 31, 2015

 

 

1,257

 

 

$

1.04

 

 

 

4.51

 

Granted

 

 

—

 

 

$

—

 

 

 

 

 

Exercised

 

 

—

 

 

$

—

 

 

 

 

 

Expired

 

 

(108

)

 

$

0.51

 

 

 

 

 

Forfeited

 

 

(58

)

 

$

1.81

 

 

 

 

 

Outstanding at September 30, 2016

 

 

1,091

 

 

$

1.05

 

 

 

4.07

 

Vested and expected to vest

 

 

1,051

 

 

$

1.03

 

 

 

4.03

 

Exercisable at September 30, 2016

 

 

884

 

 

$

0.94

 

 

 

3.65

 

 

A summary of the status of the Company’s non-vested options at September 30, 2016 and changes during the nine months then ended is presented below (shares in thousands):

 

 

 

Shares

 

 

Weighted-average

grant-date fair value

 

Non-vested at December 31, 2015

 

 

450

 

 

$

1.16

 

Granted

 

 

—

 

 

$

—

 

Vested

 

 

(211

)

 

$

1.10

 

Forfeited

 

 

(31

)

 

$

1.59

 

Non-vested at September 30, 2016

 

 

208

 

 

$

1.15

 

 

The Company’s share-based compensation is classified in the same expense line item as cash compensation. Information about share-based compensation included in the unaudited results of operations for the three and nine months ended September 30, 2016 and 2015 is as follows (in thousands):

 

 

 

For the Three Months Ended

September 30,

 

 

For the Nine Months Ended

September 30,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Officer compensation

 

$

33

 

 

$

24

 

 

$

99

 

 

$

70

 

Non-employee directors

 

 

16

 

 

 

11

 

 

 

48

 

 

 

34

 

Sales, general and administrative

 

 

21

 

 

 

19

 

 

 

78

 

 

 

52

 

Total stock option/warrant expense, included in

   total operating expenses

 

$

70

 

 

$

54

 

 

$

225

 

 

$

156