Stockholders' Equity | 9. Stockholders Equity Common Stock On July 24, 2015 we entered into a securities purchase agreement and subscription agreement, pursuant to which we issued and sold for cash an aggregate of 2,105,919 shares of our common stock at a purchase price of $1.21 per share. We derived gross proceeds of $2,550,500 from this placement. During 2015, we granted 57,911 options to purchase common stock to our Chief Financial Officer at a weighted average exercise price of $1.80 per share. During 2015, we awarded 15,000 shares of restricted common stock to employees. The valuation of the restricted common stock awards was based on the closing fair market value of our common stock on the grant date. For the awards made to employees, such fair market value ranged from $1.95 to $2.40 per share. On January 7, 2014, we issued and sold for cash an aggregate 753,333 shares of our common stock at a purchase price of $4.50 per share in the 2014 Transaction that resulted in gross proceeds of $3,390,000 (See Note 4). Gross cash proceeds $ 3,390,000 Less: gross proceeds allocated to warrants liability investors (1,356,000 ) Gross proceeds allocated to additional paid-in capital and common stock 2,034,000 Less: cash issuance costs legal fees (20,000 ) Recorded in additional paid-in capital and common stock $ 2,014,000 In conjunction with the 2014 Transaction, we recorded a warrant liability of $1,356,000 as of January 7, 2014 on our Balance Sheet (See Note 8). During 2014, the Company granted 160,000 options to purchase common stock to three directors and our Chief Executive Officer at a weighted average exercise price of $2.40 per share, and 3,333 to employees at an exercise price of $1.95 per share. We repriced stock options of 20,000 shares from exercised price $5.55 per share to $2.40 per share and 46,667 shares from $5.55 per share to $1.80 per share for two directors. Also, the Company issued 17,121 shares of common stock as a result of the exercise of employee stock options, at an average exercise price of $2.85 per share, which resulted in $3,187 of proceeds to the Company. During 2014, the Company awarded 291,300 shares of restricted common stock to employees, and 167 to a consultant. Restricted shares vest ratably over a 33-month period commencing in the fourth month after the grant date. Upon a grantees termination of service to us prior to full vesting any unvested shares will be cancelled. The fair market value of the awards made to employees ranged from $1.65 to $5.10 per share, and the fair market value of the awards made to consultant at $3.00. During 2014, the Company issued 66,667 shares of common stock as a result of the exercise of warrants, at an average exercise price of $3.90, which resulted in $260,000 of proceeds to the Company. Stock Repurchase Program During the years ended December 31, 2015 and 2014, the Company did not repurchase any of its common stock under the terms of its Board-approved $1,000,000 stock repurchase program (stock repurchase program). On November 18, 2015, our Board of Directors decided to terminate this program. At the time of termination, approximately $782,600 remained available for future purchases under this program. Stock-Based Compensation Plans Active Plans 2012 Equity Incentive Plan In the case of a restricted stock award, the entire number of shares subject to such award would be issued at the time of the grant and subject to vesting provisions based on time or other conditions specified by the Board or an authorized committee of the Board. For awards based on time, should the grantees service to the Company end before full vesting occurred, all unvested shares would be forfeited and returned to the Company. In the case of awards granted with vesting provisions based on specific performance conditions, if those conditions were not met, then all shares would be forfeited and returned to the Company. Until forfeited, all shares issued under a restricted stock award would be considered outstanding for dividend, voting and other purposes. Under the 12 Plan, the exercise price of non-qualified stock options granted is to be no less than 100% of the fair market value of the Companys common stock on the date the option is granted. The exercise price of incentive stock options granted is to be no less than 100% of the fair market value of the Companys common stock on the date the option is granted provided, however, that if the recipient of the incentive stock option owns greater than 10% of the voting power of all shares of the Companys capital stock then the exercise price will be no less than 110% of the fair market value of the Companys common stock on the date the option is granted. The purchase price of the restricted stock issued under the 12 Plan shall also not be less than 100% of the fair market value of the Companys common stock on the date the restricted stock is granted. All options granted under the 12 Plan are immediately exercisable by the optionee; however, there is a vesting period for the options. The options (and the shares of common stock issuable upon exercise of such options) vest, ratably, over a 33-month period; however, no options (and the underlying shares of common stock) vest until after three months from the date of the option grant. The exercise price is immediately due upon exercise of the option. The maximum term of options issued under the 12 Plan is ten years. Shares issued upon exercise of options are subject to the Companys repurchase, which right lapses as the shares vest. The 12 Plan will terminate no later than November 7, 2022. During the year ended December 31, 2015, options to purchase 57,911 shares of common stock, with a weighted average grant date fair value of $1.80, were granted under the 12 Plan, 15,000 shares of restricted common stock, with a weighted average grant date fair value of $2.35 were granted, no options had been exercised and 189,609 shares of common stock remained available for issuance under the 12 Plan. No options previously issued under the 12 Plan were exercised during the year ended December 31, 2015. Grant to Consultant Inactive Plans The following table summarizes options outstanding as of December 31, 2015 and 2014 that were granted from stock based compensation plans that are inactive. As of December 31, 2015 such plans can no longer grant options. Options Outstanding Year Beginning of Year Granted Exercised Cancelled End of Year 2008 Stock Option Plan 2015 430,000 (6,000 ) (28,455 ) 395,545 2005 Equity Incentive Plan 2015 17,333 (3,333 ) 14,000 Supplemental Stock Option Agreement 2015 333 333 447,666 (6,000 ) (31,788 ) 409,878 2008 Stock Option Plan 2014 641,255 (16,455 ) (194,800 ) 430,000 2005 Equity Incentive Plan 2014 64,833 (667 ) (46,833 ) 17,333 1998 Stock Option/Stock Issuance Plan 2014 Supplemental Stock Option Agreement 2014 333 333 706,421 (17,122 ) (241,633 ) 447,666 Summary All Plans A summary of the status of all of the options outstanding under all of the Companys stock option plans, and non-plan grants to consultants, as of December 31, 2015 and 2014, and changes during the years then ended, is presented in the following table: 2015 2014 Shares Weighted Average Exercise Price Shares Weighted Average Exercise Price Beginning 685,867 $ 2.70 801,289 $ 3.15 Granted 57,911 $ 1.80 230,000 $ 2.10 Exercised (6,000 ) $ 0.79 (17,121 ) $ 2.85 Forfeited or expired (31,788 ) $ 3.26 (328,301 ) $ 3.60 Ending 705,990 $ 2.63 685,867 $ 2.70 Exercisable at year-end 705,990 2.63 685,867 $ 2.70 Vested or expected to vest at year-end 704,763 $ 2.64 676,299 $ 2.70 Weighted average fair value of options granted during the period $ 2.63 $ 2.70 As of December 31, 2015 and 2014, of the options exercisable, 526,648 and 414,184 were vested, respectively. The following table summarizes information about stock options outstanding as of December 31, 2015: Options Outstanding Options Exercisable Range of Exercise Price Number Outstanding Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercise Price $0.75-$1.80 104,111 7.10 $ 1.35 58,789 $ 1.01 $1.82-$1.82 93,333 8.42 $ 1.82 37,475 $ 1.82 $2.06-$2.40 73,000 6.67 $ 2.28 70,778 $ 2.29 $2.48-$2.48 7,333 1.04 $ 2.48 7,333 $ 2.48 $2.54-$2.54 113,333 8.92 $ 2.54 37,778 $ 2.54 $2.55-$3.00 80,667 6.04 $ 2.71 80,667 $ 2.71 $3.03-$3.30 45,600 5.32 $ 3.08 45,600 $ 3.08 $3.45-$3.45 106,412 5.83 $ 3.45 106,412 $ 3.45 $4.20-44.20 80,000 5.69 $ 4.20 80,000 $ 4.20 $5.70-$6.88 2,201 5.97 $ 6.38 1,816 $ 6.32 $0.75-$6.68 705,990 6.87 $ 2.63 526,648 $ 2.81 As of December 31, 2015, there were outstanding options to purchase 705,990 shares of common stock with a weighted average exercise price of $2.63 per share, a weighted average remaining contractual term of 6.87 years and an aggregate intrinsic value of $4,710. Of the options outstanding as of December 31, 2015, 526,648 were vested, 178,114 were estimated to vest in future periods and 1,228 were estimated to be forfeited or to expire in future periods. As of December 31, 2015, there was approximately $165,200 of total unrecognized compensation cost, net of estimated forfeitures, related to unvested options. That cost is expected to be recognized over a weighted-average period of approximately twelve months. During 2015, the Company awarded 15,000 shares of restricted common stock, which vest ratably, over a 33-month period; however, no shares vest until after three months from the date of the restricted stock award. The Company includes the common stock underlying the restricted stock award in shares outstanding once the common stock underlying the restricted stock award has vested and the restriction has been removed (releases or released). A summary of the status of all of the Companys unreleased restricted stock awards as of December 31, 2015 and 2014 and changes during the years then ended, is summarized in the following table. 2015 2014 Shares Weighted Average Fair Value Shares Weighted Average Fair Value Beginning unreleased 287,666 $ 2.66 262,562 $ 4.20 Awarded 15,000 $ 2.35 291,467 $ 2.46 Released (116,500 ) $ 3.09 (98,319 ) $ 3.75 Forfeited (79,580 ) $ 2.42 (168,044 ) $ 3.75 Ending unreleased 106,586 $ 2.31 287,666 $ 2.70 Of the restricted stock awards unreleased at December 31, 2015, 77,062 were estimated to be released in future periods and 29,524 were estimated to be forfeited in future periods. The aggregate fair market value of the unreleased restricted stock awards at December 31, 2015, based on the closing price of our stock as of such date of $0.90 was $95,900. As of December 31, 2015, there was approximately $213,000 of total unrecognized compensation cost, net of estimated forfeitures, related to unreleased restricted stock awards. That cost is expected to be recognized over a weighted-average period of approximately two years. |