Note 10 - Stock-Based Compensation

6 Months Ended

Jun. 30, 2016

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

Note 10 - Stock-Based Compensation

Note 10 – Stock-Based Compensation

The Company has two Employee, Director and Consultant Stock Option Plans that were not terminated as a result of the fiscal 2015 restructuring of the Company and spin-out and have continued as part of the operations as detailed below.

In fiscal 2015, the option pool pertaining to the 2009 Employee, Director and Consultant Stock Option Plan (the “2009 Plan”) was adjusted for a 1 for 101 stock split due to the spin-out and restructuring plan, resulting in an authorized option pool of 18,152. Stock options typically vest over a three-year period and have a life of ten years from the date granted. As of June 30, 2016 there were 3,610 shares available for future awards under this plan.

In fiscal 2015, the option pool pertaining to the 2012 Employee, Director and Consultant Stock Option Plan (the “2012 Plan”) was adjusted for a 1 for 101 stock split due to the spin-out and restructuring plan, resulting in an authorized options pool of 74,257. Stock options typically vest over a three year period and have a life of ten years from the date granted. As of June 30, 2016, there were 45,673 shares available for future awards under this plan.

In addition, there are approximately 24,753 in options outstanding that were issued to a former CEO of spin-out Companyin fiscal 2014. These options issued are outside of the 2009 and 2012 Plans. 

On June 1, 2016Jim Driscoll was granted for his position as Chief Executive Officer(CEO) of the Company options to purchase up to 1,000,000 shares of Common Stock outside ofthe Company’s 2009 and 2012 stock option plans (the “Option Agreement”). These options covered 250,000 shares at an exerciseprice of $1.00 per share to be granted immediately and three additional tranches of 250,000 shares each at an exercise price of $1.50, $2.00 and $2.50 per share,respectively. The remaining three tranches will vest equally over the next three years with the first fully vesting on May 31, 2017 through May 31, 2019. The term of the options will be for a period of five years and may be exercised at any time as to the vested shares.

During the three and six months ended June 30, 2016, the Company recorded stock compensation expense related to the options granted to Mr. Driscoll of $496,668 and has unrecognized stock expense of $1,040,793 to be recorded over the vesting period. The grant-date fair value of options was estimated using the Black-Scholes option pricing model. The per share weighted average fairvalue of stock options granted for Mr. Driscoll wasa range of $1.35-$1.76and was determined using the following assumptions: expected pricevolatility is 80.39%, risk-free interest rate of 1.39%, zero expected dividend yield, and 4.0 years expected life of options. Theexpected term of options granted is based on the simplified method in accordance with Securities and Exchange CommissionStaff Accounting Bulletin 107, and represents the period of time that options granted are expected to be outstanding. TheCompany makes assumptions with respect to expected stock price volatility based on the average historical volatility of peerswith similar attributes. In addition, the Company determines the risk free rate by selecting the U.S. Treasury with maturitiessimilar to the expected terms of grants, quoted on an investment basis in effect at the time of grant for that business day. 

As of June 30, 2016, unrecognized stock compensation expense related to unvested stock options under all Plans was $1,041, 377. This expense is expected to be recognized over the remaining weighted average vesting periods of the outstanding options of 1.92 years. Total stock compensation expense recorded to selling, general and administrative expenses on the consolidated statements of operations and comprehensive for the six month period ending June 30, 2016 related to the all Plans and options that vested during the period was $508,634.

A summary of options issued, exercised and cancelled are as follows:

	Shares		Weighted- Average Exercise Price ($)		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value ($)
Outstanding at December 31, 2015		67,879	$	21.40		7.17		—
Granted		1,000,000		1.75		5.00		—
Cancelled		—		—		—		—
Outstanding at June 30, 2016		1,067,879	$	3.00		5.22		—
Exercisable at June 30, 2016		354,911	$	4.99		4.95		—