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Stockholders' Equity

3 Months Ended

Mar. 31, 2018

Equity [Abstract]

Stockholders' Equity

6.	Stockholders’ Equity

The PeerStream, Inc. Amended and Restated 2011 Long-Term Incentive Plan (the “2011 Plan”) was terminated as to future awards on May 16, 2016. A total of 181,604 shares of the Company’s common stock may be delivered pursuant to outstanding options awarded under the 2011 Plan; however, no additional awards may be granted under such plan. The PeerStream, Inc. 2016 Long-Term Incentive Plan (the “2016 Plan”) was adopted by the Company’s stockholders on May 16, 2016 and permits the Company to award stock options (both incentive stock options and non-qualified stock options), stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalent rights, and other stock-based awards and cash-based incentive awards to its employees (including an employee who is also a director or officer under certain circumstances), non-employee directors and consultants. The maximum number of shares of common stock that may be issued pursuant to awards under the 2016 Plan is 1,300,000 shares, 100% of which may be issued pursuant to incentive stock options. In addition, the maximum number of shares of common stock that may be issued under the 2016 Plan may be increased by an indeterminate number of shares of common stock underlying outstanding awards issued under the 2011 Plan that are forfeited, expired, cancelled or settled in cash. As of March 31, 2018, there were 432,697 shares available for future issuance under the 2016 Plan.

Stock Options

The following table summarizes the assumptions used in the Black-Scholes pricing model to estimate the fair value of the options granted during the following periods:

		Three Months Ended
		March 31,
		2018
Expected volatility			159.0-160.0	%
Expected life of option			5.2-6.3
Risk free interest rate			2.3-2.7	%
Expected dividend yield			0.0	%

The expected life of the options is the period of time over which employees and non-employees are expected to hold their options prior to exercise. The expected life of options has been determined using the “simplified” method as prescribed by Staff Accounting Bulletin 110, which uses the midpoint between the vesting date and the end of the contractual term. The volatility of the Company’s common stock is calculated using the Company’s historical volatilities beginning at the grant date and going back for a period of time equal to the expected life of the award. The Company estimates potential forfeitures of stock awards and adjusts recorded stock-based compensation expense accordingly. The Company estimates pre-vesting forfeitures primarily based on the Company’s historical experience and is adjusted to reflect actual forfeitures as the stock based awards vest.

The following tables summarize stock option activity during the three months ended March 31, 2018:

						Weighted
		Number of				Average Exercise
		Options				Price
Stock Options:
Outstanding at January 1, 2018			980,588			$	5.02
Granted			70,830				6.09
Expired or canceled, during the period			-				-
Forfeited, during the period			(1,717	)			3.67
Outstanding at March 31, 2018			1,049,701			$	5.10
Exercisable at March 31, 2018			463,939			$	6.59

On March 31, 2018, the aggregate intrinsic value of stock options that were outstanding and exercisable was $2,458,362 and $920,452, respectively. On March 31, 2017, the aggregate intrinsic value of stock options that were outstanding and exercisable was $61,478 and $35,154, respectively. The intrinsic value for stock options is calculated based on the exercise price of the underlying awards and the fair value of such awards as of the period-end date.

During the three months ended March 31, 2018, the Company granted options to employees to purchase an aggregate 70,830 shares of common stock at exercise prices ranging from $5.70 to $6.99. The options vest between one, three and four years and have a term of ten years.

The aggregate fair value for the options granted during the three months ended March 31, 2018 was $422,550. The aggregate fair value for the options granted during the three months ended March 31, 2017 was $206,064.

Stock-based compensation expense for the Company’s stock options included in the condensed consolidated statements of operations is as follows:

		Three Months Ended
		March 31,
		2018				2017
Cost of revenue		$	690			$	4,426
Sales and marketing expense			1,252				1,700
Product development expense			6,387				15,568
General and administrative expense			195,512				102,634
Total stock compensation expense		$	203,841			$	124,328

At March 31, 2018, there was $1,791,468 of total unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted average period of 2.5 years.

Restricted Stock Awards

The following table summarizes restricted stock award activity for the three months ended March 31, 2018:

						Weighted
						Average
		Number of				Grant Date
		RSAs				Fair Value
Restricted Stock Awards:
Outstanding at January 1, 2018		$	158,571			$	20.29
Granted			-				-
Expired or canceled, during the period			-				-
Forfeited, during the period			-				-
Outstanding at March 31, 2018		$	158,571			$	20.29

At March 31, 2018, there was $1,112,243 of total unrecognized compensation expense related to unvested restricted stock awards, which is expected to be recognized over a weighted average period of 1.5 years.

Stock-based compensation expense relating to restricted stock awards for the three months ended March 31, 2018 was $185,374, as compared to $185,374 for the three months ended March 31, 2017.