| Stock-Based Compensation | 9. Stock-Based Compensation Under the 2003 Plan, as
restated in June 2011, the Company was authorized to issue options covering up to 3,500,000 common stock shares. Effective June
1, 2011, the Company adopted the 2011 Equity Incentive Plan (the 2011 Plan). The maximum number of shares with respect
to which options may be granted under the 2011 Plan is 6,000,000 shares, which is offset and reduced by options previously granted
under the 2003 Plan. The option price is determined by the Board of Directors but cannot be less than the fair value of the shares
at the grant date. Generally, the options vest ratably over either four or five years and expire ten years from the grant date.
Both plans provide for accelerated vesting if there is a change of control, as defined in the plans. A summary of
stock option activity for the three months ended March 31, 2016 (unaudited) is presented below (in thousands, except per share
data).
Weighted Average
Weighted Remaining
Number of Average Contractual
Shares Exercise Price Life (in Years)
Options outstanding at December 31, 2015 3,472 $ 8.01 6.39
Granted 355 $ 4.20
Exercised (77 ) $ 5.00
Forfeited or expired (75 ) $ 8.70
Options outstanding at March 31, 2016 3,675 $ 7.69 6.71
Options exercisable at March 31, 2016 1,573 $ 5.57 3.73 The estimated aggregate
intrinsic value of stock options exercisable at March 31, 2016 was approximately $100,000. As of March 31, 2016, there was $8.7
million of total unrecognized compensation cost related to outstanding stock options that will be recognized over a weighted average
period of 3.09 years. On January 1, 2015, the
Companys current Chairman, who at the time was the Chief Executive Officer exercised stock options on a cashless basis
to purchase 59,063 shares of common stock at an exercise price of $4.75 per share. Based on the closing market price of the Companys
common stock of $10.26 on December 31, 2014, the Chief Executive Officer tendered 27,344 shares of common stock that he owned
to satisfy the aggregate exercise price and surrendered 12,055 shares of common stock to satisfy the related $123,684 income and
payroll tax withholding amounts related to the transaction. During the three months
ended March 31, 2016, the Company granted stock options to purchase 324,973 shares of common stock to certain employees. The options
are exercisable for a period of ten years from the date of grant at prices ranging from $4.10 to $4.18 per share, which was the
fair value of the Companys common stock on the respective grant dates. The options vest over a period of four years. The
fair value of these options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $645,000 ($1.98
to $2.03 per share). Assumptions used in the model were an expected term of 6.25 years, volatility of 48.2%, a risk-free interest
rate of 1.77% to 1.87%, and an expected dividend rate of 0%. During the three months
ended March 31, 2016, the Company granted stock options to purchase 30,000 shares of common stock to an outside attorney in connection
with his services relating to the Companys rights offering to shareholders. The options are exercisable for a period of
four years from the date of grant at a price of $5.23 per share, which was 125% of the fair value of the Companys common
stock on the grant date of January 14, 2016. As of March 31, 2016, 15,000 of the options have vested. The fair value of these options,
as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $53,000 ($1.77 per share). Assumptions used
in the model were an expected term of 6.25 years, volatility of 48.2%, a risk-free interest rate of 1.87%, and an expected dividend
rate of 0%. The cost of these shares is treated as an issuance cost of the offering and will be deducted from the gross
proceeds from the offering. During the three months
ended March 31, 2016, the Company recorded a charge of $55,000 to extend the exercise period of 98,681 vested options for one employee
who resigned and became a consultant for the Company. All unvested options for this employee were terminated when this employee
ceased full-time employment with the Company. On April 4, 2016, the Board
of Directors approved, subject to shareholder approval, amendments to Second Sight 2011 Equity Incentive Plan that will (i) increase
the maximum number of shares of common stock that may be issued under the Plan from 6.0 million shares to 7.5 million shares, (ii)
allow issuance of Restricted Stock Units, and (iii) permit repricing and exchanges of options at the discretion of the Board of
Directors. The Company adopted an
employee stock purchase plan in June, 2015 for all eligible employees. Under the plan, shares of the Company's common stock may
be purchased at six-month intervals at 85% of the lower of the closing fair market value of the common stock (i) on the first trading
day of the offering period or (ii) on the last trading day of the purchase period. An employee may purchase in any one calendar
year shares of common stock having an aggregate fair market value of up to $25,000 determined as of the first trading day of the
offering period. Additionally, a participating employee may not purchase more than 100,000 shares of common stock in any one offering
period. At March 31, 2016, 52,469 shares had been issued under the plan. The following table summarizes
Restricted Stock Unit (RSU) activity for the three months ended March 31, 2016 (in thousands, except per share data):
Number Weighted
Outstanding as of December 31, 2015 190 $ 12.43
Awarded - -
Vested - -
Forfeited/canceled - -
Outstanding as of March 31, 2016 190 $ 12.43 As of March 31, 2016, there
was $1,995,000 of total unrecognized compensation cost related to the outstanding RSUs that will be recognized over a weighted
average period of 3.38 years. The total stock-based compensation
recognized for stock-based awards granted under the 2003 Plan and the 2011 Plan in the condensed consolidated statements of operations
for the three months ended March 31, 2016 and 2015 (unaudited) is as follows (in thousands):
March 31, March 31,
2016 2015
Cost of sales $ 78 $ 99
Research and development 77 80
Clinical and regulatory 48 70
Selling and marketing 108 89
General and administrative 635 159
Total $ 946 $ 497 |
