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Capital Stock, Stock Plans and Stock-Based Compensation | 9 Months Ended
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Sep. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
Capital Stock, Stock Plans and Stock-Based Compensation |
4. | Capital Stock, Stock Plans and Stock-Based Compensation
Stock Plans The Company adopted the 2017 Stock Option Plan (“2017 Plan”), which was approved by the Company’s stockholders at the Company’s Annual Meeting of Stockholders held on July 27, 2017 (the “Annual Meeting”). The 2017 Plan authorizes the grant of options to officers and employees of the Company, including any employee who is also a member of the Board of Directors (the “Board”), as well as to consultants of the Company. The 2017 Plan authorizes an aggregate grant of 540,000 non-qualified stock options (“NQSOs”) and incentive stock options (“ISOs”), which includes a rollover of 140,000 shares remaining available for issuance under the 2010 Stock Option Plan (the “2010 Plan”). As a result of the approval of the 2017 Plan, no further options will be granted under the 2010 Plan. In all other respects, the 2010 Plan will remain in full force and effect with respect to all outstanding options issued and unexercised under the 2010 Plan, which stands at 60,000. Consultants of the Company can only be granted NQSOs. The term of each stock option granted under the 2017 Plan shall be fixed by the Compensation and Stock Option Committee (the “Compensation Committee”), but no stock options will be exercisable more than ten years after the grant date, or in the case of an ISO granted to a 10% stockholder, five years after the grant date. The exercise price of any ISO granted under the 2017 Plan to an individual who is not a 10% stockholder at the time of the grant shall not be less than the fair market value of the shares at the time of the grant, and the exercise price of any incentive stock option granted to a 10% stockholder shall not be less than 110% of the fair market value at the time of grant. The exercise price of any NQSOs granted under the plan shall not be less than the fair market value of the shares at the time of grant. At the Annual Meeting, the Company’s shareholders also approved an amendment to the 2003 Outside Directors Stock Plan (“2003 Plan”) which authorizes the issuance of an additional 300,000 shares of the Company’s common stock under the plan. Immediately prior to the approval of this amendment by the Company’s shareholders, the 2003 Plan had available for issuance approximately 99,868 shares. Stock Options to Employees and Outside Directors On January 13, 2017, the Company granted 6,000 NQSOs from the Company’s 2003 Plan to a new director elected by the Company’s Board to fill the vacancy left by Mr. Jack Lahav who retired from the Board in October 2016. The options granted were for a contractual term of ten years with a vesting period of six months. The exercise price of the NQSO was $3.79 per share, which was equal to our closing stock price the day preceding the grant date, pursuant to the 2003 Plan. On July 27, 2017, the Company granted 12,000 NQSOs from the Company’s 2003 Plan to five of the six re-elected directors at the Annual Meeting. Dr. Louis F. Centofanti, who is a member of the Board, is not eligible to receive options under the 2003 Plan since he is also an employee of the Company, pursuant to the 2003 Plan. The NQSOs granted to the five directors were for a contractual term of ten years with a vesting period of six months. The exercise price of the NQSO was $3.55 per share, which was equal to our closing stock price the day preceding the grant date, pursuant to the 2003 Plan. On July 27, 2017, the Company granted ISOs from the 2017 Plan (following the approval of the 2017 Plan by the Company’s stockholders as discussed above) to the named executive officers as follows: 50,000 ISOs to our Chief Executive Officer (“CEO”) (Louis F. Centofanti); 100,000 ISOs to our Executive Vice President (“EVP”)/Chief Operating Officer (“COO”) (Mr. Mark Duff); and 50,000 ISOs to our Chief Financial Officer (“CFO”) (Mr. Ben Naccarato). Effective September 8, 2017, Mr. Duff succeeded Dr. Centofanti as the CEO with Dr. Centofanti serving as EVP of Strategic Initiatives and continues to serve as a member of the Board (see “Note 12 – Related Party Transaction for further detail of this transition”). The ISOs granted were for a contractual term of six years with one-fifth yearly vesting over a five year period. The exercise price of the ISO was $3.65 per share, which was equal to the fair market value of the Company’s common stock on the date of grant. On May 15, 2016, the Company granted 50,000 ISOs from the Company’s 2010 Plan to Mr. Duff. The ISOs granted were for a contractual term of six years with one-third yearly vesting over a three year period. The exercise price of the ISO was $3.97 per share, which was equal to the fair market value of the Company’s Common Stock on the date of grant. On July 28, 2016, the Company granted an aggregate of 12,000 NQSOs from the 2003 Plan to five of the seven re-elected directors at our Annual Meeting of Stockholders held on July 28, 2016. Two of the directors were not eligible to receive options under the 2003 Stock Plan as they were employees of the Company or its subsidiaries. The NQSOs granted were for a contractual term of ten years with a vesting period of six months. The exercise price of the NQSOs was $4.60 per share, which was equal to the Company’s closing stock price the day preceding the grant date, pursuant to the 2003 Plan. The Company estimates the fair value of stock options using the Black-Scholes valuation model. Assumptions used to estimate the fair value of stock options granted include the exercise price of the award, the expected term, the expected volatility of the Company’s stock over the option’s expected term, the risk-free interest rate over the option’s expected term, and the expected annual dividend yield. The fair value of the options granted during the nine months ended September 30, 2017 and 2016 and the related assumptions used in the Black-Scholes option model used to value the options granted were as follows:
|  | Employee Stock Option Granted |
|  | July 27, 2017 |  |  | May 15, 2016 |
Weighted-average fair value per share |  | $ | 1.88 |  |  | $ | 2.00 |
Risk -free interest rate (1) |  |  | 1.98 | % |  |  | 1.27 | %
Expected volatility of stock (2) |  |  | 53.15 | % |  |  | 53.12 | %
Dividend yield |  |  | None |  |  |  | None |
Expected option life (3) |  |  | 6.0 years |  |  |  | 6.0 years |
|  | Outside Director Stock Options Granted |
|  | January 13, 2017 |  |  | July 27, 2017 |  |  | July 28, 2016 |
Weighted-average fair value per share |  | $ | 2.63 |  |  | $ | 2.48 |  |  | $ | 3.00 |
Risk -free interest rate (1) |  |  | 2.40 | % |  |  | 2.32 | % |  |  | 1.52 | %
Expected volatility of stock (2) |  |  | 56.32 | % |  |  | 57.21 | % |  |  | 55.99 | %
Dividend yield |  |  | None |  |  |  | None |  |  |  | None |
Expected option life (3) |  |  | 10.0 years |  |  |  | 10.0 years |  |  |  | 10.0 years |
(1) The risk-free interest rate is based on the U.S. Treasury yield in effect at the grant date over the expected term of the option. (2) The expected volatility is based on historical volatility from our traded Common Stock over the expected term of the option. (3) The expected option life is based on historical exercises and post-vesting data. The following table summarizes stock-based compensation recognized for the three and nine months ended September 30, 2017 and 2016 for our employee and director stock options.
|  | Three Months Ended |  |  | Nine Months Ended |
Stock Options |  | September 30, |  |  | September 30, |
|  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
Employee Stock Options |  | $ | 22,000 |  |  | $ | 12,000 |  |  | $ | 43,000 |  |  | $ | 42,000 |
Director Stock Options |  |  | 12,000 |  |  |  | 13,000 |  |  |  | 32,000 |  |  |  | 27,000 |
Total |  | $ | 34,000 |  |  | $ | 25,000 |  |  | $ | 75,000 |  |  | $ | 69,000 |
As of September 30, 2017, the Company has approximately $436,000 of total unrecognized compensation cost related to unvested employee and director options, of which $42,000 is expected to be recognized in remaining 2017, $112,000 in 2018, $87,000 in 2019, $75,000 in 2020, $75,000 in 2021, with the remaining $45,000 in 2022. Stock Options to Consultant Mr. Robert Ferguson (“Ferguson”) is a consultant to the Board and a consultant to the Company in connection with the Company’s Test Bed Initiative (“TBI”) at its Perma-Fix Northwest Richland, Inc. (“PFNWR”) facility. For Ferguson’s consulting work with the Board, he has been receiving monthly compensation of $4,000. For Ferguson’s consulting work in connection with the Company’s TBI, on July 27, 2017 (“grant date”), the Company granted Ferguson a stock option from the Company’s 2017 Plan (see above for a discussion of the 2017 Plan) for the purchase of up to 100,000 shares of the Company’s common stock at an exercise price of $3.65 a share, which was the fair market value of the Company’s common stock on the date of grant (“Ferguson Stock Option”). The vesting of the Ferguson Stock Option is subject to the achievement of the following milestones (“waste” as noted below is defined as liquid law (“low activity waste”) and/or liquid TRU (“transuranic waste”)):
| ● | Upon treatment and disposal of three gallons of waste at the PFNWR facility by January 27, 2018, 10,000 shares of the Ferguson Stock Option shall become exercisable;
| ● | Upon treatment and disposal of 2,000 gallons of waste at the PFNWR facility by January 27, 2019, 30,000 shares of the Ferguson Stock Option shall become exercisable; and
| ● | Upon treatment and disposal of 50,000 gallons of waste at the PFNWR facility and assistance, on terms satisfactory to the Company, in preparing certain justifications of cost and pricing data for the waste and obtaining a long-term commercial contract relating to the treatment, storage and disposal of waste by January 27, 2021, 60,000 shares of the Ferguson Stock Option shall become exercisable.
The term of the Ferguson Stock Option is seven (7) years from the grant date. Each of the milestones is exclusive of each other; therefore, achievement of any of the milestones above by Ferguson by the designated date will provide Ferguson the right to exercise the number of options in accordance with the milestone attained. The Company accounts for stock-based compensation issued to consultants in accordance with the provisions of ASC 505-50, “Equity-Based Payments to Non-Employees.” Measurement of stock-based payment transactions with consultants is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instrument issued. The measurement date for the fair value of the stock-based payment transaction is determined at the earlier of performance commitment date or performance completion date. In accordance with ASC 505-50, when it is appropriate for the Company to recognize the cost of a transaction during financial reporting periods prior to the measurement date, for purpose of recognition of costs during those periods, the equity instrument is measured at the then-current fair value at each of those interim financial reporting dates. The equity instrument is ultimately recorded at its fair value at its measurement date. Accordingly, at September 30, 2017, the Company has recorded approximately $21,000 in consulting expenses (included in selling, general and administrative expenses (“SG&A”)) and additional paid-in capital in connection with this transaction which amount was estimated to be the fair value of the 10,000 options in the first milestone at September 30, 2017 using the Black-Scholes valuation model with the following assumptions: 52.64% volatility, risk free interest rate of 2.12%, and an expected life of approximately 6.8 years and no dividends. Summary of Stock Option Plans The summary of the Company’s total Stock Option Plans as of September 30, 2017, as compared to September 30, 2016, and changes during the periods then ended, are presented below. The Company’s Plans consist of the 2010 and 2017 Plans and the 2003 Plan:
|  | Shares |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Term (years) |  |  | Aggregate Intrinsic Value (3) |
Options outstanding January 1, 2017 |  |  | 247,200 |  |  | $ | 6.69 |  |  |  |  |  |  |  |  |
Granted |  |  | 318,000 |  |  |  | 3.65 |  |  |  |  |  |  |  |  |
Exercised |  |  | ─ |  |  |  | ─ |  |  |  |  |  |  |  |  |
Forfeited/expired |  |  | (50,400 | ) |  |  | 8.95 |  |  |  |  |  |  |  |  |
Options outstanding end of period (1) |  |  | 514,800 |  |  | $ | 4.59 |  |  |  | 5.7 |  |  | $ | 65,490 |
Options exercisable at September 30, 2017(1) |  |  | 169,467 |  |  | $ | 6.45 |  |  |  | 4.8 |  |  | $ | 17,490 |
Options exercisable and expected to be vested at September 30, 2017 |  |  | 514,800 |  |  | $ | 4.59 |  |  |  | 5.7 |  |  | $ | 65,490 |
|  | Shares |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Term (years) |  |  | Aggregate Intrinsic Value (3) |
Options outstanding January 1, 2016 |  |  | 218,200 |  |  | $ | 7.65 |  |  |  |  |  |  |  |  |
Granted |  |  | 62,000 |  |  |  | 4.09 |  |  |  |  |  |  |  |  |
Exercised |  |  | ─ |  |  |  | ─ |  |  |  |  |  |  |  |  |
Forfeited/expired |  |  | (33,000 | ) |  |  | 8.14 |  |  |  |  |  |  |  |  |
Options outstanding end of period (2) |  |  | 247,200 |  |  | $ | 6.69 |  |  |  | 4.6 |  |  | $ | 126,267 |
Options exercisable at September 30, 2016 (2) |  |  | 181,867 |  |  | $ | 7.61 |  |  |  | 4.0 |  |  | $ | 69,516 |
Options exercisable and expected to be vested at September 30, 2016 |  |  | 239,750 |  |  | $ | 6.78 |  |  |  | 4.6 |  |  | $ | 118,542 |
(1) Options with exercise prices ranging from $2.79 to $13.35 (2) Options with exercise prices ranging from $2.79 to $14.75 (3) The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option. Stock Issuance for Services During the nine months ended September 30, 2017, the Company issued a total of 44,545 shares of its common stock under the 2003 Plan to its outside directors as compensation for serving on our Board. The Company has recorded approximately $175,000 in compensation expenses for the nine months ended September 30, 2017 (included in selling, general and administration expenses) in connection with the issuance of shares of its common stock to outside directors.

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -URI http://asc.fasb.org/subtopic&trid=2208855 + Details
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