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Stockholders' Equity | 9 Months Ended
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Sep. 30, 2019
Equity [Abstract] |
STOCKHOLDERS' EQUITY |
12. | STOCKHOLDERS' EQUITY
On October 28, 2015, we filed a registration statement on Form S-3 (File No. 333-207635) with the Securities and Exchange Commission (SEC) for the potential issuance of up to $10,000,000 in equity securities (subject to certain limitations). This registration statement became effective on November 10, 2015. Under this form of registration statement, we were limited within a twelve-month period to raising gross proceeds of no more than one-third of the market capitalization of our common stock (as determined by the high price of our common stock within the preceding 60 days leading up to a sale of securities) held by non-affiliates (non-insiders) of the Company. Having raised $10,000,000 in gross proceeds under the February 2016, July 2017 and December 2017 equity transactions, described below, no additional equity securities can be issued under this registration statement. On February 3, 2016, we sold 1,123,810 shares of common stock at a price to the public of $5.25 per share in an underwritten public offering pursuant to our effective shelf registration statement on Form S-3, raising gross proceeds of approximately $5,900,000 and resulting in net proceeds to the Company of approximately $5,313,000 (after deducting underwriting discounts and offering expenses incurred in connection with the equity financing). On October 21, 2016, we closed on a private placement of 659,880 shares of common stock to nineteen institutional and accredited investors at $5.25 per share, raising gross proceeds of approximately $3,464,000 and resulting in net proceeds to the Company of approximately $3,161,000 (after deducting placement agent fees and other expenses incurred in connection with the equity financing). On July 27, 2017, we issued 200,000 shares of our common stock at a price of $5.25 per share in a public, registered sale pursuant to our effective shelf registration statement on Form S-3, raising gross proceeds of $1,050,000 and resulting in net proceeds of approximately $1,034,000 (after deducting expenses incurred in connection with the equity financing). On December 21, 2017, we sold 417,807 shares of common stock at a price to the public of $7.30 per share in an underwritten public offering pursuant to our effective shelf registration statement on Form S-3, raising gross proceeds of approximately $3,050,000 and resulting in net proceeds to the Company of approximately $2,734,000 (after deducting underwriting discounts and offering expenses incurred in connection with the equity financing). On November 20, 2018, we filed a registration statement on Form S-3 (File No. 333-228479) with the SEC for the potential issuance of up to $20,000,000 in equity securities (subject to certain limitations). This registration statement became effective on November 29, 2018. Under this form of registration statement, we are limited within a twelve-month period to raising gross proceeds of no more than one-third of the market capitalization of our common stock (as determined by the high price of our common stock within the preceding 60 days leading up to a sale of securities) held by non-affiliates (non-insiders) of the Company. On March 29, 2019, we sold 1,636,364 shares of common stock at a price to the public of $5.50 per share in an underwritten public offering pursuant to our effective shelf registration statement on Form S-3, raising gross proceeds of approximately $9,000,000 and resulting in net proceeds to the Company of approximately $8,303,000 (after deducting underwriting discounts and offering expenses incurred in connection with the equity financing). At the June 15, 2016 Annual Meeting of Stockholders, we reported that our stockholders voted to approve an amendment to the Company's Certificate of Incorporation to increase the number of shares of common stock authorized for issuance from 8,000,000 to 10,000,000. After careful consideration, we determined that the method of voting instructions described in our Proxy Statement was not consistent with the way the votes were actually recorded in accordance with stock exchange rules. Therefore, during the second quarter of 2017, we elected to treat the amendment as ineffective, and there was no increase in our authorized common stock. At the June 14, 2018 Annual Meeting of Stockholders, our stockholders voted to approve an amendment to the Company's Certificate of Incorporation to increase the number of shares of common stock authorized for issuance from 8,000,000 to 11,000,000. In June 2000, our stockholders approved the 2000 Stock Option and Incentive Plan (the "2000 Plan") pursuant to the provisions of the Internal Revenue Code of 1986, under which employees and certain service providers may be granted options to purchase shares of the Company's common stock at i) no less than fair market value on the date of grant in the case of incentive stock options and ii) no less than 85% of fair market value on the date of grant in the case of non-qualified stock options. Vesting requirements are determined by the Compensation and Stock Option Committee of the Board of Directors on a case by case basis. Originally, 250,000 shares of common stock were reserved for issuance under the 2000 Plan. The stockholders of the Company approved an increase in this number to 500,000 shares in June 2001. All options granted under the 2000 Plan expire no later than ten years from the date of grant. The 2000 Plan expired in February 2010, after which date no further options could be granted under the 2000 Plan. However, outstanding options under the 2000 Plan may be exercised in accordance with their terms. In June 2010, our stockholders approved the 2010 Stock Option and Incentive Plan (the "2010 Plan") pursuant to the provisions of the Internal Revenue Code of 1986, under which employees and certain service providers may be granted options to purchase shares of the Company's common stock at no less than fair market value on the date of grant. At that time, 300,000 shares of common stock were reserved for issuance under the 2010 Plan and subsequently no additional shares have been reserved for the 2010 Plan. Vesting requirements are determined by the Compensation and Stock Option Committee of the Board of Directors on a case by case basis. All options granted under the 2010 Plan expire no later than ten years from the date of grant. The 2010 Plan expires in June 2020, after which date no further options could be granted under the 2010 Plan. However, options outstanding under the 2010 Plan at that time could be exercised in accordance with their terms. In June 2017, our stockholders approved the 2017 Stock Option and Incentive Plan (the "2017 Plan") pursuant to the provisions of the Internal Revenue Code of 1986, under which employees and certain service providers may be granted options to purchase shares of the Company's common stock at no less than fair market value on the date of grant. At that time, 300,000 shares of common stock were reserved for issuance under the 2017 Plan and subsequently no additional shares have been reserved for the 2017 Plan. Vesting requirements are determined by the Compensation and Stock Option Committee of the Board of Directors on a case by case basis. All options granted under the 2017 Plan expire no later than ten years from the date of grant. The 2017 Plan expires in March 2027, after which date no further options could be granted under the 2017 Plan. However, options outstanding under the 2017 Plan at that time could be exercised in accordance with their terms. Activity under the stock option plans described above was as follows:
|  | 2000 Plan |  |  | 2010 Plan |  |  | 2017 Plan |  |  | Weighted Average Exercise Price |  |  | Aggregate Intrinsic Value(1) |
Outstanding at December 31, 2017 |  |  | 117,500 |  |  |  | 242,500 |  |  |  | — |  |  | $ | 4.58 |  |  | $ | 1,513,980 |
Grants |  |  | — |  |  |  | 48,500 |  |  |  | 122,500 |  |  | $ | 7.38 |  |  |  |  |
Terminations |  |  | — |  |  |  | (19,000 | ) |  |  | (11,000 | ) |  | $ | 6.63 |  |  |  |  |
Exercises |  |  | (105,000 | ) |  |  | (2,000 | ) |  |  | — |  |  | $ | 1.89 |  |  |  |  |
Outstanding at December 31, 2018 |  |  | 12,500 |  |  |  | 270,000 |  |  |  | 111,500 |  |  | $ | 6.37 |  |  | $ | 266,020 |
Grants |  |  | — |  |  |  | 10,000 |  |  |  | 10,000 |  |  | $ | 7.03 |  |  |  |  |
Terminations |  |  | — |  |  |  | (26,000 | ) |  |  | (3,000 | ) |  | $ | 6.05 |  |  |  |  |
Exercises |  |  | — |  |  |  | (15,000 | ) |  |  | — |  |  | $ | 4.80 |  |  |  |  |
Outstanding at September 30, 2019 |  |  | 12,500 |  |  |  | 239,000 |  |  |  | 118,500 |  |  | $ | 6.50 |  |  | $ | (344,100 | )
Vested at September 30, 2019 |  |  | 12,500 |  |  |  | 65,500 |  |  |  | — |  |  | $ | 5.74 |  |  | $ | (13,300 | )
Vested and expected to vest at |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
September 30, 2019 |  |  | 12,500 |  |  |  | 239,000 |  |  |  | 118,500 |  |  | $ | 6.50 |  |  | $ | (344,100 | )
Reserved for future grants |  |  | — |  |  |  | 17,000 |  |  |  | 181,500 |  |  |  |  |  |  |  |  |
(1) | Intrinsic value is the difference between the fair market value as of the date indicated and as of the date of the option grant.
The following table displays additional information about the stock option plans described above:
|  | Number of Shares |  |  | Weighted Average Fair Value at Grant Date |  |  | Weighted Average Exercise Price |
Non-vested stock options as of January 1, 2019 |  |  | 334,000 |  |  | $ | 3.63 |  |  | $ | 6.64 |
Non-vested stock options as of September 30, 2019 |  |  | 292,000 |  |  | $ | 3.58 |  |  | $ | 7.25 |
Stock options granted during the nine-month period ended September 30, 2019 |  |  | 20,000 |  |  | $ | 3.31 |  |  | $ | 7.03 |
Stock options that vested during the nine-month period ended September 30, 2019 |  |  | 34,000 |  |  | $ | 4.09 |  |  | $ | 6.87 |
Stock options that were forfeited during the nine-month period ended September 30, 2019 |  |  | 29,000 |  |  | $ | 3.39 |  |  | $ | 6.05 |
During the nine-month period ended September 30, 2019, one director exercised stock options covering 15,000 shares by the surrender of 10,731 shares of common stock with a fair market value of $71,998 at the time of exercise and the payment of $2 in cash. During the nine-month period ended September 30, 2018, five employees exercised stock options covering 12,000 shares. Four thousand of these options were exercised for cash, resulting in total proceeds of $15,490, and 8,000 of these options were exercised by the surrender of 3,469 shares of common stock with a fair market value of $25,040 at the time of exercise and the payment of $10 in cash. The weighted average remaining life of the options outstanding under the 2000 Plan, the 2010 Plan and the 2017 plan as of September 30, 2019 was approximately 6 years and 1 month. The weighted average remaining life of the options exercisable under these plans as of September 30, 2019 was approximately 4 years and 3 months. The exercise prices of the options outstanding as of September 30, 2019 ranged from $3.15 to $8.90 per share. The 20,000 stock options granted during the nine-month period ended September 30, 2019 had exercise prices between $6.50 and $7.50 per share. The 167,000 stock options granted during the nine-month period ended September 30, 2018 had exercise prices between $6.81 and $8.43 per share. The aggregate intrinsic value of options exercised during the nine-month periods ended September 30, 2019 and 2018 approximated $28,641 and $46,790, respectively. The weighted-average grant date fair values of options granted during the nine-month periods ended September 30, 2019 and 2018 were $3.31 and $4.21 per share, respectively. As of September 30, 2019, total unrecognized stock-based compensation related to non-vested stock options aggregated $395,071, which will be recognized over a weighted average period of 1 year and 4 months. The fair value of each stock option grant has been estimated on the date of grant using the Black-Scholes option pricing model, for the purpose discussed in Note 2(n), with the following weighted-average assumptions for the three-month and nine-month periods ended September 30, 2019 and 2018:
|  | During the Three-Month Periods Ended September 30, |  |  | During the Nine-Month Periods Ended September 30, |
|  | 2019 |  |  | 2018 |  |  | 2019 |  |  | 2018 |
Risk-free interest rate |  |  | n/a |  |  |  | 2.9 | % |  |  | 2.20 | % |  |  | 2.6 | %
Dividend yield |  |  | 0 | % |  |  | 0 | % |  |  | 0 | % |  |  | 0 | %
Expected volatility |  |  | n/a |  |  |  | 55 | % |  |  | 52 | % |  |  | 57 | %
Expected life |  |  | n/a |  |  |  | 6.5 years |  |  |  | 5.3 years |  |  |  | 5.4 years |
The risk-free interest rate is based on U.S. Treasury yields for a maturity approximating the expected option term, while the other assumptions are derived from averages of our historical data. Common Stock Rights Plan In September 1995, our Board of Directors adopted a Common Stock Rights Plan (the "Rights Plan") and declared a dividend of one common share purchase right (a "Right") for each of the then outstanding shares of the common stock of the Company. Each Right entitles the registered holder to purchase from the Company one share of common stock at an initial purchase price of $70.00 per share, subject to adjustment. The description and terms of the Rights are set forth in a Rights Agreement between the Company and American Stock Transfer & Trust Co., as Rights Agent. The Rights (as amended) become exercisable and transferable apart from the common stock upon the earlier of i) 10 days following a public announcement that a person or group (Acquiring Person) has, without the prior consent of the Continuing Directors (as such term is defined in the Rights Agreement), acquired beneficial ownership of 20% or more of the outstanding common stock or ii) 10 days following commencement of a tender offer or exchange offer the consummation of which would result in ownership by a person or group of 20% or more of the outstanding common stock (the earlier of such dates being called the Distribution Date). Upon the Distribution Date, the holder of each Right not owned by the Acquiring Person would be entitled to purchase common stock at a discount to the initial purchase price of $70.00 per share, effectively equal to one half of the market price of a share of common stock on the date the Acquiring Person becomes an Acquiring Person. If, after the Distribution Date, the Company should consolidate or merge with any other entity and the Company were not the surviving company, or, if the Company were the surviving company, all or part of the Company's common stock were changed or exchanged into the securities of any other entity, or if more than 50% of the Company's assets or earning power were sold, each Right would entitle its holder to purchase, at the Rights' then-current purchase price, a number of shares of the acquiring company's common stock having a market value at that time equal to twice the Right's exercise price. At any time after a person or group becomes an Acquiring Person and prior to the acquisition by such person or group of 50% or more of the outstanding common stock, the Board of Directors of the Company may exchange the Rights (other than Rights owned by such person or group which have become void), in whole or in part, at an exchange ratio of one share of common stock per Right (subject to adjustment). At any time prior to 14 days following the date that any person or group becomes an Acquiring Person (subject to extension by the Board of Directors), the Board of Directors of the Company may redeem the then outstanding Rights in whole, but not in part, at a price of $0.005 per Right, subject to adjustment. At various times over the years, our Board of Directors has voted to authorize amendments of the Rights Agreement to extend the Final Expiration Date, which is currently September 19, 2022. Our Board of Directors also has voted to authorize amendments to increase the ownership threshold for determining "Acquiring Person" status to 20%. During the second quarter of 2015, our Board of Directors also voted to authorize an amendment to remove a provision that prevented a new group of directors elected following the emergence of an Acquiring Person (an owner of more than 20% of our stock) from controlling the Rights Plan by maintaining exclusive authority over the Rights Plan with pre-existing directors. We did this because such provisions have come to be viewed with disfavor by Delaware courts. Each time that we made such amendments we entered into amendments to the Rights Agreement with the Rights Agent reflecting such extensions, threshold increases or provision changes. No other changes have been made to the terms of the Rights or the Rights Agreement.

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- Definition The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI http://asc.fasb.org/topic&trid=2208762 + Details
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