Share-Based Compensation | 9 Months Ended |
Sep. 30, 2013 |
Share-Based Compensation [Abstract] | ' |
SHARE-BASED COMPENSATION | ' |
8. SHARE-BASED COMPENSATION |
Stock Option Plan |
The Company adopted the Vycor Medical, Inc Employee, Director, and Consultant Stock Plan (the “Plan”) as of February 13, 2008. The Plan provides for both incentive stock options and nonqualified stock options to be granted to employees, officers, consultants, independent contractors, directors and affiliates of the Company. The board of directors establishes the terms and conditions of all stock option grants, subject to the Plan and applicable provisions of the Internal Revenue Code. Incentive stock options must be granted at an exercise price not less than the fair market value of the common stock on the grant date. The options granted to participants owning more than 10% of the Company’s outstanding voting stock must be granted at an exercise price not less than 110% of the fair market value of the common stock on the grant date. The options expire on the date determined by the board of directors, but may not extend mare than 10 years from the grant date, while incentive stock options granted to participants owning more than 10% of the Company’s outstanding voting stock expire five years from the grant date. The vesting period for employees is generally over three years. The vesting Period for non-employees is determined based on the services being provided. The maximum number of shares of stock which may be delivered under the plan shall automatically increase by a number sufficient to cause the number of shares covered by the plan to equal 10% of the total number of shares of stock then outstanding on a fully diluted basis. |
Under ASC Topic 718, the Company estimates the fair value of option awards on the date of grant using an option pricing model. The grant date fair value is recognized over the option vesting period, the period during which an employee is required to provide service in exchange for the award. No compensation cost is recognized for equity instruments for which employees do not render the requisite service. Under these standards, compensation cost for employee cost for employee stock-based awards is based on the estimated grant-date fair value and recognized over the vesting period of the applicable |
award on a straight-line basis. No employee stock options were granted for the nine month periods ended September 30, 2013 and 2012. |
Initial grants of options to purchase 500,000 shares were issued under the Plan on February 13, 2008 to each of Kenneth T. Coviello, the Company’s then Chief Executive Officer and then Heather N. Vinas, the Company’s President at an exercise price of $0.135 per share. The options vested 33-1/3% on each of the first, second, and third anniversary of the grant and expire February 12, 2018. Following Heather Vinas’ resignation as President of the Company in May 2010, 166,667 unvested options were cancelled. These options have been fully expensed. |
Stock appreciation rights may be granted either on a stand alone basis or in conjunction with all or part of any other stock options granted under the plan. As of June 30, 2013 there were no awards of any stock appreciation rights. |
The Company from time to time issues common stock, stock options or common stock warrants to acquire services or goods from non-employees. Common stock, stock options and common stock warrants issued to other than employees or directors are recorded on the basis of their fair value, which is measured as of the “measurement date” using an option pricing model. The “measurement date” for options and warrants related to contracts that have substantial disincentives to non-performance is the date of the contract, and for all other contracts is the vesting date. Expense related to the options and warrants is recognized on a straight-line basis over the shorter of the period over which services are to be received or the life of the option or warrant. |
The details of the outstanding rights, options and warrants and value of such rights, options and warrants are as follows: |
| | | | |
STOCK WARRANTS: | | Number of shares | | Weighted average exercise price |
per share |
Outstanding at December 31, 2011 | | | 1,747,341 | | | $ | 3.07 | |
Granted | | | 4,667 | | | | 4.5 | |
Exercised | | | — | | | | — | |
Cancelled or expired | | | (2,140 | ) | | | 36 | |
Outstanding at December 31, 2012 | | | 1,749,874 | | | $ | 3.03 | |
Granted | | | — | | | | — | |
Exercised | | | (341,941 | ) | | $ | 1.49 | |
Cancelled or expired | | | — | | | | — | |
Outstanding at September 30, 2013 | | | 1,407,933 | | | $ | 3.4 | |
| | | | | | | | |
| | | | |
STOCK OPTIONS: | | Number of shares | | Weighted average exercise price |
per share |
Outstanding at December 31, 2011 | | | 5,557 | | | $ | 20.25 | |
Granted | | | — | | | | — | |
Exercised | | | — | | | | — | |
Cancelled or expired | | | — | | | | — | |
Outstanding at December 31, 2012 | | | 5,557 | | | $ | 20.25 | |
Granted | | | — | | | | — | |
Exercised | | | — | | | | — | |
Cancelled or expired | | | — | | | | — | |
Outstanding at September 30, 2013 | | | 5,557 | | | $ | 20.25 | |
As of September 30, 2013, the weighted-average remaining contractual life of outstanding warrants and options is 1.16 and 4.38 years, respectively. |
Non-Employee Stock Compensation |
During the nine months ended September 30, 2013, the Company issued an aggregate of 6,269, 7,206 and 2,892 shares of common stock, respectively, valued at $15,000, $15,000 and $6,250 to each of Steven Girgenti, Oscar Bronsther and Lowell Rush for services rendered to the board of directors. For the nine months ended September 30, 2013, a total of $36,500 was recognized as share-based compensation for the issuance of these shares. |
During nine months ended September 30, 2013 the Company issued an aggregate of 2,253, 3,580 and 3,075 shares of common stock, respectively, valued at $6,250, to each of Alvaro Pascual-Leone, Jason Barton and Jose Romano and 2,261 shares of common stock valued at $9,375 to Josef Zihl for services rendered to the Scientific Advisory Board of NovaVision. For the nine months ended September 30, 2013, an aggregate of $28,125 was recognized as share-based compensation for the issuance of these shares. |
On November 30, 2012 the Company entered into 12 month consulting agreements with Del Mar Consulting, Inc and Alex Partners, LLC to provide investor relations and investor awareness consultancy services. Under these agreements, Del Mar and Alex Partners received shares Common Shares valued at $157,500 and $105,000 respectively. The value of these shares is being amortized over the period of the agreement, and for the nine months ended September 30, 2013 stock compensation of $196,875 was recognized as share-based compensation in connection with these agreements. During July to September 2013, Del Mar and Alex Partners were issued 10.800 and 7,200 shares of Common Stock, respectively, valued at $21,600 and $14,400, respectively, in lieu of cash consulting fees for the months of July to September 2013. |
On July 2, 2013, the Company entered into an advisory agreement with a registered broker-dealer to provide certain financial advisory services to the Company. Under the terms of the advisory agreement, the Company issued 15,000 restricted shares of Company Common Stock to the broker-dealer on execution, which were valued on the date of issuance at $37,500, which is being amortized over the first six months of the agreement. The value of these shares is being amortized over the six months of the agreement, and for the nine months ended September 30, 2013 stock compensation of $18,750 was recognized as share-based compensation in connection with this agreement. |
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Aggregate stock-based compensation expense charged to operations for stock and warrants granted to the above non-employees for the nine months ended September 30, 2013 was $316,000. As of September 30, 2013, there was $175,000 of total unrecognized compensation costs related to warrant and stock awards and non-vested options. |
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Stock-based compensation expenses related to employee options and warrants granted to non-employees are recognized as the stock options and warrants are earned. The fair value of the stock options or warrants granted is estimated at the grant date, using the Black-Scholes option pricing model, and the expense is recognized on a straight-line basis over the shorter of the period over which services are to be received or the life of the option or warrant. The grant date fair value of employee share options and similar instruments is estimated using the Black-Scholes option pricing model on the basis of the fair value of the underlying common stock on the measurement date, adjusted for the unique characteristics of those equity instruments, using the assumptions noted in the table below. The fair value of the common stock is determined by the then-prevailing private placement purchase price. Expected volatility was based on the historical volatility of a peer group of publicly traded companies. The expected term of options and warrants was based upon the life of the option, and the risk-free rate used was based on the U.S. Treasury Constant Maturity rate. |
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The following assumptions were used in calculations of the Black-Scholes option pricing model for options and warrants expensed in the nine months ended September 30, 2013 and 2012: |
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| | | | |
| | Nine months ended September 30, |
| | 2013 | | 2012 |
Risk-free interest rates | | | — | | | | 2.39% | |
Expected life | | | — | | | | 3 years | |
Expected dividends | | | — | | | | 0% | |
Expected volatility | | | — | | | | 96% | |
Vycor Common Stock fair value | | | — | | | | $1.88-$3.38 | |
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