Annual report pursuant to Section 13 and 15(d)

Share-based Payments

v3.7.0.1
Share-based Payments
 12 Months Ended
Dec. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Share-based Payments

Note 13 - Share-based Payments

 

    On January 23, 2014, upon effectiveness of the registration statement filed with the SEC, the Company adopted the 2013 Stock Incentive Plan (the “Plan”) which will provide for the issuance of up to 400,000 shares. The purpose of the Plan is to provide additional incentive to those officers, employees, consultants and non-employee directors of the Company and its parents, subsidiaries and affiliates whose contributions are essential to the growth and success of the Company’s business.
     
    On January 9, 2015, the Board of Directors of the Company approved, upon recommendation from the Compensation Committee of the Board, by unanimous written consent the Amended and Restated 2013 Incentive Stock and Award Plan (the “Amended Plan”), which increases the number of authorized shares of common stock subject to the Plan to 800,000 shares.
     
    On September 30, 2016, the Board of Directors increased the number of authorized shares of common stock subject to the Amended Plan to 830,000 shares. As of December 31, 2016, under the 2013 Amended Plan, grants of restricted stock and options to purchase 277,333 shares of common stock have been issued and are unvested or unexercised and 13,292 shares of common stock remain available for grants.
     
    The Amended Plan may be administered by the board or a board-appointed committee. Eligible recipients of option awards are employees, officers, consultants or directors (including non-employee directors) of the Company or of any parent, subsidiary or affiliate of the Company. The board has the authority to grant to any eligible recipient any options, restricted stock or other awards valued in whole or in part by reference to, or otherwise based on, the Company’s common stock.
     
    Qualified option holders may exercise their options at their discretion. Each option granted may be exchanged for a prescribed number of shares of common stock.
     
    On December 30, 2015, the Company approved the issuance of 30,000 options to purchase common shares to key employees at an exercise price of $1.23 per common share and 15,500 options to purchase common shares for services at a weighted average exercise price of $3.70 per common share. All options are immediately exercisable and carry a five-year expiration.
     
    On January 1, 2016, the Company approved the issuance of 12,500 options to purchase common shares to a key consultant for services at an exercise price of $3.70 per common share with vesting over one year. The options carry a five-year expiration.
     
    On August 9, 2016 the Company approved the issuance of 26,000 options to purchase common shares to two key employees at an exercise price of $3.25 per common share with vesting over two years. The options carry a five-year expiration.

 

    The options and warrants issued under the above plan were valued using a Black Scholes option pricing model. The assumptions utilized in calculating the value of the issued options under Black Scholes are as follows:

 

    2016     2015  
Expected option term     5 yrs        5 yrs  
Expected volatility     95.02 %     82.86 %
Expected divident yeild     0.00 %     0.00 %
Risk free interest rate     1.16 %     1.73 %

 

    The following table summarizes the option activities for the years ended December 31, 2016 and 2015:

 

                  Weighted        
                  Average        
            Weighted     Remaining     Aggregate  
      Number of     Average     Contractual     Intrinsic  
      Shares     Exercise Price     Term (years)     Value  
Balance at December 31, 2014       175,000     $ 4.98       4.50     $ 600  
Granted       45,500       2.07       5.00       -  
Exercised       -       -       -       -  
Forfeited       -       -       -       -  
Canceled/Expired       -       -       -       -  
Balance at December 31, 2015       220,500     $ 4.38       3.81     $ -  
Exercisable as of December 31, 2015       220,500     $ 4.38       3.81     $ -  
                                   
Balance at December 31, 2015       220,500     $ 4.38       3.81     $ -  
Granted       38,500       3.40       4.43       -  
Exercised       -       -       -       -  
Forfeited       -       -       -       -  
Canceled/Expired       -       -       -       -  
Balance at December 31, 2016       259,000     $ 4.23       3.05     $ 20,100  
Exercisable as of December 31, 2016       239,167     $ 4.31       2.92     $ 20,100  

 

    The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing stock price of $1.90 and $1.21 for our common shares on December 31, 2016 and 2015.
     
    The weighted-average fair value of stock options granted for the years ended December 31, 2016 and 2015 was $1.98 and $0.70, respectively. A summary of the Company’s non-vested shares as of December 31 2016 and the changes during the year then ended are as follows:

 

Non-Vested Shares     Shares     Weighted
Average
Grant Date
Fair Value 		 
Non-vested at January 1, 2016       -     $ -  
Granted       38,500       1.98  
Vested       (18,666 )     1.90  
Forfieted       -       -  
Non-vested at December 31, 2016       19,834     $ 2.36  

 

    Unrecognized compensation cost related to non-vested employee stock options totaled $33,296 and $- as of December 31, 2016 and 2015. The cost is to be recognized over a weighted average period of 1.63 years.
     
    During the years ended December 31, 2016 and 2015, the Company incurred stock options expenses totaling $51,653 and $52,356, respectively.