Employee Stock Benefit Plans

9 Months Ended

Sep. 30, 2016

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

Employee Stock Benefit Plans

Note 13

Employee Stock Benefit Plans:

Post-Reverse Merger

The Company has a Non-Employee Director Stock Option Plan. This plan has authorized 74,000 shares; of which 1,733 shares had been issued or were reserved for issuance as awards of shares of common stock, and 1,999 shares were reserved for outstanding stock options. The number of shares available for future issuance pursuant to this plan is 69,756 as of September 30, 2016.

In addition, the Company has a 2005 Equity Compensation Plan (“2005 Equity Plan”). The 2005 Equity Plan has authorized 1,200,000 shares, of which 477,695 shares had been issued or were reserved for issuance as awards of shares of common stock, and 140,615 shares were reserved for outstanding options as of September 30, 2016. The number of shares available for future issuance pursuant to this plan is 578,772 as of September 30, 2016.

Stock option activity under all of the Company’s share-based compensation plans for the nine months ended September 30, 2016 was as follows:

	Number of Options			Weighted Average Exercise Price
Outstanding, January 1, 2016		150,117		$	3.40
Granted		-			-
Exercised		-			-
Cancelled		(7,503	)		2.83
Outstanding, September 30, 2016		142,614		$	3.38
Options exercisable at September 30, 2016		111,404		$	3.37

At September 30, 2016, there was $2,211 of total unrecognized compensation cost related to non-vested option grants and stock awards that is expected to be recognized over a weighted-average period of 2.11 years. The intrinsic value of options outstanding and exercisable at September 30, 2016 was not significant. The Company calculates expected volatility for share-based grants based on historic daily stock price observations of its common stock. For estimating the expected term of share-based grants, the Company has adopted the simplified method. The Company has used historical data to estimate expected employee behaviors related to option exercises and forfeitures and included these expected forfeitures as a part of the estimate of expense as of the grant date.

The Company uses the Black-Scholes option-pricing model to estimate fair value of grants of stock options. With respect to grants of options, the risk-free rate of interest is based on the U.S. Treasury rates appropriate for the expected term of the grant or award.

On February 26, 2015, the Company issued 299,000 restricted stock units to a number of employees. The restricted shares have a purchase price of $0.01 per share and vest, and cease to be subject to the Company’s right of repurchase, over a four-year period. The Company determined the fair value of the awards to be the quoted market price of the Company’s common stock units on the date of issuance less the value paid for the award. The aggregate fair value of these restricted stock units issued was $2,766.

Restricted stock vests ratably over a three-to-five year period, depending upon the terms of the grant. Employees must remain employed by the Company on each vesting date in order to have unrestricted ownership in these shares; employees who leave before a vesting date forfeit the shares in which they have not yet vested and the issuance of those shares is cancelled. For the three and nine months ended September 30, 2016, 22,000 and 37,250 shares had been cancelled due to forfeiture by employees.

On October 29, 2015, the Company issued 1,000 shares of common stock to a non-employee director for an aggregate fair value of $3.

Total stock based compensation expense was $1,478, and $5,901, including $4,652 that is included in discontinued operations for the nine months ended September 30, 2016 and 2015, respectively, including amounts relating to consultants.