Stock Options and Restricted Stock Units

12 Months Ended

Dec. 31, 2018

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

Stock Options and Restricted Stock Units

Note 11 – Stock Options and Restricted Stock Units

In January 2014, we granted 112,000 Restricted Stock Units (“RSUs”) to management and key employees, subject to the 2006 Plan. Under the terms of the RSU Award Agreements from January 2014, 25% of these RSUs vested immediately, with the remaining 75% to vest ratably over the next three years, pending the each recipient’s continued employment by DGSE. On September 24, 2014, the Board awarded the three independent directors a total of 42,600 RSUs as compensation for their Board service. 100% of these RSUs vested on the day prior to DGSE’s 2015 Annual Meeting of Stockholders. On December 10, 2014, the Board awarded DGSE’s former Chief Executive Officer, James D. Clem, 75,000 RSUs as part of his compensation package. 100% of these RSUs vested immediately, and pursuant to this vesting, 75,000 shares of Common Stock were issued to Mr. Clem on December 18, 2014. On February 18, 2015, the Company issued 15,000 shares of Common Stock to management and key employees pursuant to the RSU Award Agreements.

On April 27, 2016, the Board awarded Matthew Peakes, the Company’s former Chief Executive Officer and Nabil J. Lopez, the Company’s former Chief Financial Officer a total of 75,000 and 50,000 RSUs, respectively, as compensation for their service as executives of the Company. For Mr. Peakes, one-fourth (or 18,750), and for Mr. Lopez, one-fourth (or 12,500) of the RSUs were to vest ratably in equal annual installments over a four year period beginning on April 27, 2017, subject to a continued status as an employee on each such date and other terms and conditions set forth in the RSU Award Agreement, dated April 27, 2016. Each vested RSU is convertible into one share of our Common Stock, par value $0.01, without additional consideration. Upon termination of service of the employee, other than by death or disability, any RSUs that have not vested will be forfeited and the award of such units shall terminate. As a result of his resignation effective August 15, 2016, 50,000 RSUs awarded to Mr. Lopez was forfeited. In addition to the RSU grant above for Matthew Peakes and Nabil Lopez, the compensation committee granted an additional 75,000 and 50,000, respectively, performance based RSUs to the executives that were to vest ratably over a four year period beginning April 27, 2017 if certain financial performance criteria are achieved. As a result of his resignation effective August 15, 2016, 50,000 RSUs awarded to Mr. Lopez were forfeited.

On April 27, 2017, 18,750 RSUs, one-fourth of the original 75,000 RSU grant for service dated April 27, 2016, were exercised by Matthew Peakes due to his continued employment. However, 18,750 RSUs, one-fourth of the original 75,000 RSU performance grant dated April 27, 2016, were forfeited by Matthew Peakes for not reaching certain financial performance criteria. As a result of his resignation effective June 30, 2017, 112,500 RSUs awarded to Matthew Peakes, 56,250 for his continued employment and 56,250 for the performance grant were forfeited.

Subsequent to such grants, the 2006 Plan expired, as a result, no further issuances can be made pursuant to the 2006 Plan. On December 7, 2016, our shareholders approved the adoption of the 2016 Equity Incentive Plan (the “2016 Plan”), which reserved 1,100,000 shares for issuance pursuant to awards issued thereunder. As of December 31, 2018, no awards had been made under the 2016 Plan.

The following table summarizes the activity in common shares subject to options and warrants:

	Year Ended December 31,
	2018					2017
				Weighted				Weighted
				average exercise				average exercise
	Shares			price		Shares		price
Outstanding at beginning of year		1,015,000		$	0.67		1,015,000	$	0.67
Granted		-			-		-		-
Exercised		-			-		-		-
Forfeited		(1,000,000	)		0.65		-		-
Outstanding at end of year		15,000		$	2.17		1,015,000	$	0.67
Optons exercisable at end of year		15,000		$	2.17		1,015,000	$	0.67

Information about stock options outstanding at December 31, 2018 is summarized as follows:

		Options Outstanding and Exercisable
				Weighted average
				remaining		Weighted
				contractual life		average		Aggregate Intrinsic
Exercise price		Number outstanding		(Years)		exercise price		Value
$	2.13		10,000	NA	(1)	$	2.13	$	-
$	2.25		5,000	NA	(1)		2.25		-
			15,000					$	-

(1) Options currently issued pursuant to the Company’s 2004 Employee Stock Option Plans have no expiration date.

The aggregate intrinsic values in the above table were based on the closing price of our Common Stock of $0.46 as of December 31, 2018.

A summary of the status of our non-vested RSU grants issued under our 2006 Plan is presented below:

	Year Ended December 31,
	2018					2017
				Weighted					Weighted
				average exercise					average exercise
	Shares			price		Shares			price
Nonvested at beginning of year		500		$	0.56		152,000		$	0.56
Granted		-			-		-			-
Vested		-			-		(18,750	)		0.56
Forfeited		(250	)		0.56		(132,750	)		0.56
Outstanding at end of year		250		$	0.56		500		$	0.56

As a result of the expiration of the 2006 Plan, as of December 31, 2018, no further shares could be issued under the 2006 Plan. A total of 1,100,000 shares remain available for future grants pursuant to the 2016 Plan.

During 2018 and 2017, the Company recognized $0 and $10,688, respectively, of stock-based compensation expense attributable to employees and directors which was recorded in selling, general, and administrative expenses.