Stockholders' Equity

6 Months Ended

Jun. 30, 2016

Stockholders' Equity Note [Abstract]

Stockholders' Equity

6. Stockholders’ Equity

On August 11, 2016, the Company announced that, in accordance with the approval of its shareholders on July 19, 2016, the Company intends that its issued and outstanding common stock will be automatically reclassified into a smaller number of shares such that each four shares of the Company’s issued and outstanding common stock immediately prior to the Effective Time will be reclassified into one validly issued, fully paid and nonassessable share of common stock (the “Reverse Stock Split“). No fractional shares of the Company’s common stock will be issued as a result of the Reverse Stock Split. Instead, stockholders of record who otherwise would be entitled to receive fractional shares will be entitled to a rounding up of their fractional share to the nearest whole share, except in the case of any stockholder that owns less than four shares of the Company’s common stock immediately preceding the Effective Time. In such case, such stockholder will receive cash for such fractional share.

Stock Options - In March 2016, three of the Company’s senior management voluntarily cancelled an aggregate of 1,200,000 options to purchase shares of the Company’s common stock with exercise prices of $3.00 per share, of which 166,667 of the options were unvested on the date of cancellation. During the six months ended June 30, 2016, the Company issued an aggregate of 150,000 options to purchase the Company’s common stock at $0.25 per share with a term of five years to two new employees. The options vest pro-ratably as follows: 1/3 on the grant date, 1/3 on the first anniversary of the grant date and 1/3 on the second anniversary of the grant date as long as the employee is employed on such dates. The options were valued at $15,000 using the Black-Scholes-Merton option pricing model with a volatility of 85.6%, a risk free rate of return of 1.28% and zero dividend and forfeiture estimates.

Restricted Stock - During the six months ended June 30, 2016, the Company issued 25,000 shares of restricted common stock to a consultant providing marketing services to the Company. The restricted shares vested on May 2, 2016 and had an aggregate grant date fair value of approximately $6,250.

Stock-Based Payments and Compensation - The Company records stock-based payment expense related to options and warrants based on the grant date fair value in accordance with FASB ASC 718. Stock-based compensation includes expense charges for all stock-based awards to employees, directors and consultants. Such awards include option grants, warrant grants, and restricted stock awards. During the six months ended June 30, 2016, the Company had stock compensation expense of approximately $86,000 or less than $0.01 basic and diluted earnings per share ($643,000; $0.01 basic and diluted earnings per share for the corresponding six months ended June 30, 2015).