NOTE 10 – STOCK COMPENSATION

Equity Incentive Plan

The Company’s board of directors authorized an increase in the number of shares available for issuance under its 2012 Equity Incentive Plan (as amended, the “Plan”) from 550,000 to 850,000 in November 2016, which was approved by the Company’s shareholders in December 2016. The Plan provides for grants of stock options, stock appreciation rights, restricted stock, other stock-based awards and other cash-based awards. As of September 30, 2017, 288,260 shares of common stock were available for future issuances.

The Company granted an aggregate of 30,000 options to purchase restricted common stock to certain directors prior to the adoption of the Plan. Stock options generally vest and become exercisable with respect to 100% of the common stock subject to such stock option on the third (3rd) anniversary of the date of grant. Any unvested portion of a stock option shall expire upon termination of employment or service of the participant granted the stock option, and the vested portion shall remain exercisable in accordance with the provisions of the Plan.

On August 24, 2017 the Company granted an incentive stock option to its Chief Executive Officer to purchase 300,000 shares under the Plan at an exercise price of $4.00 per share to be vested in eight quarterly installments commencing September 30, 2017. We evaluated the options issued using the Black-Scholes calculation with a stock price of $1.32, time to maturity of 6 years, risk free rate of 2.19%, and annualized volatility of 100% to determine that there is no significant adjustment in valuation.

Stock Options

The following table summarizes stock option activity for the nine months ended September 30, 2017:

	Shares Under Exercisable Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)
Balance at December 31, 2016		300,340		$	15.09		6.71
Options granted		300,000		$	4.00		9.90
Options forfeited/expired		(38,600	)	$	15.70
Balance at September 30, 2017		561,740		$	9.46		6.20

At September 30, 2017 and December 31, 2016, the exercisable options had no intrinsic value.

The following table summarizes information about options outstanding and exercisable at September 30, 2017 that were granted under the Plan:

Exercise Price		Options Outstanding		Weighted Average Remaining Contractual Life		Options Exercisable		Weighted Average Remaining Contractual Life

$	4.00		300,000		9.90		-		9.90
$	8.60		16,000		6.70		16,000		6.70
$	10.00		40		5.39		40		5.39
$	12.10		30,000		6.86		30,000		6.86
$	12.50		81,700		6.96		60,221		4.98
$	13.45		2,000		6.98		1,000		6.98
$	13.50		12,000		6.99		9,049		6.99
$	17.50		100,000		5.61		100,000		5.61
$	32.00		15,000		4.04		15,000		4.04
$	34.50		5,000		4.07		5,000		4.07
			561,740				236,310

As of September 30, 2017, 236,310 options have vested and 325,430 options remain unvested. The vesting terms range from 4.0 to 9.9 years; vested options have a weighted average remaining term of 6.86 years; and a weighted average exercise price of $9.46 per share.

Restricted Stock

The following table summarizes restricted stock awards activity for the nine months ended September 30, 2017:

	Shares		Weighted Average Grant Date Share Price
Restricted stock awards unvested at December 31, 2016		53,857	$	2.74
Granted		-
Forfeited / expired		-
Vested		50,957		2.14
Restricted stock awards unvested at September 30, 2017		2,900	$	1.00

At September 30, 2017, the weighted-average remaining vesting period of unvested restricted stock awards was 0.5 years.

Stock-Based Compensation:

Stock-based compensation was $39 and $38 for the three months ended September 30, 2017 and 2016, respectively, and $121 and $264 for the nine months ended September 2017 and 2016, respectively. Stock-based compensation consists of expenses related to the issuance of stock options and restricted stock.

The aggregate unrecognized compensation expense of stock options and restricted stock at September 30, 2017 was $415, which will be recognized through August 2021.