Stock-Based Compensation

3 Months Ended

Mar. 31, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

Note 10.  Stock-Based Compensation

The shareholders approved a stock option plan on August 6, 2013, the 2013 Equity Incentive Plan. This stock option plan is for the issuance of stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalents, cash bonuses and other stock-based awards to employees, directors and consultants of the Company.

There are 3,000,000 shares of common stock available for granting awards under the plan. Each year, commencing 2014, until 2016, the number of shares of common stock available for granting awards shall be increased by the lesser of 1,000,000 shares of common stock and 5% of the total number of shares of common stock outstanding. On each of January 1, 2014, 2015 and 2016 the number of shares available for granting awards under the 2013 Equity Incentive Plan has been increased by 1,000,000 shares.

During the year ended December 31, 2014 the Company issued options to purchase 500,000 shares of common stock under the 2013 Equity Incentive Plan. The options become fully vested on January 15, 2017 and are exercisable, at an exercise price of $4.54 per common share, to January 15, 2024. During the year ended December 31, 2015 the Company issued options to purchase 564,000 shares of common stock under the 2013 Equity Incentive Plan. These options become fully vested on May 12, 2018 and are exercisable, at an exercise price of $1.09 per common share, to May 12, 2025.

A summary of the Company’s 2013 Equity Incentive Plan as of March 31, 2016, is as follows:

	Number of			Weighted Average
	Options			Exercise Price
Outstanding at December 31, 2014		500,000		$	4.54
Options issued		564,000			1.09
Options forfeited		(120,000	)		4.54
Outstanding at December 31, 2015 and March 31, 2016		944,000			2.48

The grant date fair value of these options, using the Black-Scholes option-pricing model, is estimated to be $2,576,000. This expense, less an estimated forfeiture rate of 30%, is being recognized over the 3 year vesting periods. The amount of $156,000 and $129,000 has been recognized during the three months ended March 31, 2016 and 2015, respectively. As at March 31, 2016 there was unrecognized compensation expense of approximately $567,000 to be recognized over the remaining vesting periods.

For the 2013 Equity Incentive Plan there were no options issued, exercised or forfeited during the three months ended March 31, 2016.

Prior to the 2013 Equity Incentive Plan the Company issued stock options to employees, advisors, and consultants.

A summary of the Company’s other stock options as of March 31, 2016, is as follows:

				Weighted Average
	Number of Options			Exercise Price
Outstanding at December 31, 2013 and December 31, 2014		584,650		$	0.53
Options issued		291,900			0.53
Options forfeited		(850	)		0.51
Outstanding at December 31, 2015 and March 31, 2016		875,700		$	0.53

The grant date fair value of the options issued, using the Black-Scholes option-pricing model, is estimated to be $255,000. This expense is being recognized over the 2 year vesting period. The amount of $32,000 and $nil has been recognized during the three months ended March 31, 2016 and 2015, respectively. As at March 31, 2016 there was unrecognized compensation expense of approximately $159,000 to be recognized over the remaining vesting period.

There were no options issued, exercised or forfeited during the three months ended March 31, 2016.

The following table summarizes stock options outstanding at March 31, 2016:

		Number Outstanding at March 31,		Average Remaining Contractual Life		Number Exercisable at March 31,		Intrinsic Value at March 31,
Exercise Price		2016		(Years)		2016		2016
$	0.53		291,900		4.25		291,900		85,570
	0.53		291,900		6.25		291,900		85,570
	0.53		291,900		9.50		-		-
	4.54		380,000		7.75		-		-
	1.09		564,000		9.25		-		-

At March 31, 2016, 6,875,700 shares of common stock were reserved for all outstanding options and future commitments under the 2013 Equity Incentive Plan.