NOTE 12 —EQUITY

Stock Incentive Plans

On June 3, 2004, Differential adopted the 2004 Stock Incentive Plan (the “2004 Incentive Plan”) and in October 2011, Differential adopted an Amended and Restated 2004 Stock Incentive Plan (the “Restated Plan”) to update the 2004 Incentive Plan with respect to certain provisions and changes in the tax code since its original adoption. Under the Restated Plan, the number of shares authorized for issuance is 227,500 shares of common stock after giving effect to the Reverse Stock Split. After the adoption of the Restated Plan in October 2011, we no longer grant awards pursuant to the 2004 Incentive Plan. Under the Restated Plan, grants may be made to employees, officers, directors and consultants under a variety of awards based upon underlying equity, including, but not limited to, stock options, restricted common stock, restricted stock units or performance shares. The Restated Plan limits the number of shares that can be awarded to any employee in one year to 41,667. The exercise price for incentive options may not be less than the fair market value of our common stock on the date of grant and the exercise period may not exceed ten years. Vesting periods, terms and types of awards are determined by the board of directors and/or our compensation committee. The Restated Plan includes a provision for the acceleration of vesting of all awards upon a change of control as well as a provision that allows forfeited or unexercised awards that have expired to be available again for future issuance. Since fiscal 2008, we have issued both restricted common stock and RSUs to our officers, directors and employees pursuant to our various plans. The RSUs represent the right to receive one share of common stock for each unit on the vesting date provided that the employee continues to be employed by us. On the vesting date of the RSUs, we expect to issue the shares of common stock to each participant upon vesting and expect to withhold an equivalent number of shares at fair market value on the vesting date to fulfill tax withholding obligations. Any RSUs withheld or forfeited will be shares available for issuance in accordance with the terms of the Restated Plan.

The shares of common stock issued upon exercise of a previously granted stock option or a grant of RSUs are considered new issuances from shares reserved for issuance under our various incentive plans. We require that the option holders provide a written notice of exercise in accordance with the applicable incentive plan and option agreement thereunder to the plan administrator and that full payment for the shares be made prior to issuance. All issuances are made under the terms and conditions set forth in the applicable plan.

As of June 30, 2016, shares reserved for future issuance under our 2004 Incentive Plan and our Restated Plan include: (i) 444 shares of common stock issuable upon the exercise of stock options granted under our incentive plans; and (ii) 700,431 shares of common stock issuable upon the vesting of RSUs. As of June 30, 2016, no shares remained available for grant under the Restated Plan. We expect to adopt a new or restated stock incentive plan at our next annual meeting of stockholders.

Exercise prices for all options outstanding as of June 30, 2016 were as follows (in actual amounts):

The following table summarizes stock option activity by incentive plan for the six months ended June 30, 2016 (in actual amounts):


	Total Number of Shares	2004 Incentive Plan	Restated Plan

Outstanding at January 1, 2016	—	—	—
Legacy Joe's stock options assumed	2,944	2,500	444
Granted	—	—	—
Exercised	—	—	—
Forfeited / Expired	(2,500)	(2,500)	—
Outstanding and exercisable at June 30, 2016	444	—	444

The following table summarizes stock option activity for all incentive plans for the six months ended June 30, 2016 (in actual amounts):


	Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value

Outstanding at January 1, 2016	—	$	—	—
Legacy Joe's stock options assumed	2,944		27.70	1.4		—
Granted	—		—	—		—
Exercised	—		—	—		—
Expired	—		—	—		—
Forfeited	(2,500)		30.60	—		—
Outstanding and exercisable at June 30, 2016	444	$	11.40	8.5	$	—

The following table summarizes RSU activity for the six months ended June 30, 2016 (in actual amounts):


	Restricted Stock Units
	Number Of Units	Weighted Average Grant Date Fair Value

Outstanding at December 31, 2015	—	$	—
Granted	745,938		5.84
Vested	—		—
Issued	(45,507)		11.16
Cancelled	—		—
Forfeited	—		—
Outstanding at June 30, 2016	700,431	$	5.49

During the three months ended June 30, 2016, we granted 100,000 shares of RSUs and did not issue any shares of common stock to holders of RSUs. During the six months ended June 30, 2016, we granted 745,938 shares of RSUs and issued 45,507 shares of common stock to holders of RSUs that vested during the period.

Stock-Based Compensation Cost

For all stock compensation awards that contain graded vesting with time-based service conditions, we have elected to apply a straight-line recognition method to account for all of these awards. There was a total of $312,000 of stock-based compensation expense recognized during the three months ended June 30, 2016 and $1,019,000 during the six months ended June 30, 2016. There were no stock options, RSUs or stock-based compensation awards granted or outstanding during fiscal year 2015, although in connection with the RG Merger, we assumed certain stock options granted by Joe’s which were outstanding during fiscal year 2015.

As of June 30, 2016, there was $3,336,000 of total unrecognized compensation cost related to nonvested stock-based compensation arrangements. That unrecognized compensation cost is expected to be recognized over a weighted-average period of 2.5 years.

Options Outstanding and Exercisable

Exercise Price

Number of Shares

Weighted-Average
Remaining Contractual
Life (Years)