Shareholders' Equity

12 Months Ended

Dec. 31, 2016

Shareholders' Equity [Abstract]

Shareholders' Equity

Note 4.  Shareholders’ Equity

Securities Purchase Agreement

On November 3, 2016, we issued 16,129,033 shares of our common stock at $1.55 per share, for aggregate gross proceeds of $25.0 million, to Accelmed Growth Partners, L.P. (“Accelmed”).  This issuance of these shares was approved by our stockholders on November 3, 2016.  Net proceeds totaled approximately $23,429,000 after deduction of $1,571,000 of expenses related to the issuance.

Share-based Compensation.

At December 31, 2016, the Company had one active plan, the Cogentix Medical 2015 Omnibus Incentive Plan, for share-based compensation grants (“the 2015 Plan”). Under the 2015 Plan, if we have a change in control (as defined in the 2015 Plan) and the Company is not the surviving entity, all outstanding grants, including those subject to vesting or other performance targets, fully vest immediately if they are not assumed or replaced with equivalent grants.  If the Company is the surviving entity, there is no accelerated vesting of equity grants solely upon a change in control.  In 2016, the Company experienced a change in control for which it was the surviving entity.  Outstanding grants will vest if a participant’s employment or other service with the Company is terminated, without cause or by the participant for good reason, within two years of the November 3, 2016 change in control.

Under the 2015 Plan, we reserved 2,500,000 shares of our common stock for share-based grants and 1,377,130shares remain available

We grant options at the discretion of our directors.  We grant option awards with an exercise price equal to the closing market price of our stock at the date of the grant.  We have options outstanding to purchase 1,680,990 shares of common stock granted under the 2015 Plan or predecessor companies’ plans.Options generally expire over a period ranging from five to seven years from date of grant and vest at varying rates ranging up to three years.  The options granted under the 2015 Plan generally provide for the exercise of options during a limited period following termination of employment, death or disability.

We recognize share-based compensation expense in the statement of operations based on the fair value at the time of grant of the share-based payment over the requisite service period.  We incurred a total of approximately $748,000 and $979,000 in share-based compensation expense for the year ended December 31, 2016 and the nine-month transition period ended December 31, 2015, respectively.

We determine the fair value of the option awards using the Black-Scholes option pricing model.  We used the following weighted-average assumptions to value the options granted during the year ended December 31, 2016 and the nine-month transition period ended December 31, 2015:

	December 31, 2016			December 31, 2015
Expected life, in years		3.90			3.84
Risk-free interest rate		.98	%		1.11	%
Expected volatility		61.86	%		63.9	%
Expected dividend yield		0	%		0	%

The expected life for options granted represents the period of time we expect options to be outstanding based on historical data of option holder exercise and termination behavior for similar grants.  The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury rate over the expected life at the time of grant.  Expected volatility is based upon historical volatility of our common stock.  We estimate the forfeiture rate for stock awards to be approximately 15% for executive employees and directors and approximately 20% for non-executive employees for the year ended December 31, 2016 awards based on our historical experience.

The following table summarizes the activity related to our stock options for the year ended December 31, 2016 and the nine-month transition period ended December 31, 2015:

	Number of shares			Weighted average exercise price		Weighted average grant date fair value		Aggregate intrinsic value		Weighted average remaining life in years
Balance at March 31, 2015		2,250,865		$	5.32			$	-		5.06
Options granted		617,914			1.64	$	0.79
Options exercised		-
Options surrendered		(295,139	)		5.08
Balance at December 31, 2015		2,573,640			4.46				-		5.24
Options granted		692,400			1.05		0.49
Options exercised		-
Options surrendered		(1,585,050	)		3.90
Balance at December 31, 2016		1,680,990		$	3.54			$	752,290		6.55
Options exercisable at December 31, 2016		811,015		$	3.80			$	607,800		3.71

The total fair value of stock options vested during the year ended December 31, 2016 and the nine-month transition period ended December 31, 2015, was approximately $276,000 and $519,000, respectively.

There were no options exercised for the year ended December 31, 2016 or for the nine-month transition period ended December 31, 2015.

We grant restricted shares at the discretion of our directors with vesting terms ranging from six months to one year.  The following table summarizes the activity related to our restricted stock for the year ended December 31, 2016 and the nine-month transition period ended December 31, 2015:

	Number of Shares			Weighted average grant date fair value		Weighted average remaining life in years		Aggregate intrinsic value
Balance at March 31, 2015		317,741		$	4.47		1.93	$	387,644
Shares granted		513,299			1.62
Shares vested		(122,353	)		4.42				157,835
Shares surrendered		(21,777	)		2.73
Balance at December 31, 2015		686,910			2.41		1.59		886,114
Shares granted		937,858			1.18
Shares vested		(324,521	)		2.19				652,287
Shares surrendered		(307,699	)		2.45
Balance at December 31, 2016		992,548		$	1.30		1.35	$	1,995,021

The aggregate intrinsic value shown above for the restricted shares represents the total pre-tax value based on the closing price of our common stock on the dates noted above.

At December 31, 2016, we had approximately $743,000 of unrecognized share-based compensation cost, net of estimated forfeitures, related to stock options and restricted shares that we expect to recognize over a weighted-average requisite service period of approximately 1.5 years.

Stock Warrants-Related Party.

At December 31, 2015, the Company had warrants outstanding that were issued to Mr. Pell to purchase an aggregate of 376,123 shares of our common stock at a weighted average exercise price of $9.31 per share.  These warrants were cancelled in November 2016.

Long-Term Incentive Plan and Awards.

On October 1, 2014, the compensation committee of our board of directors and our board of directors approved and adopted a Performance Award Agreement under the Uroplasty, Inc. 2006 Amended Stock and Incentive Plan, as amended (the “2016 Plan”), and on October 2, 2014, grants of Performance Awards (the “Awards”) were made to certain members of our senior management team.

Performance goals for the Awards are based on the achievement of specified stock price targets during the period beginning on the date of grant and ending on the fourth anniversary of the date of grant or, if earlier, the closing date of a change of control (as defined in the 2006 Plan) of the Company.  The stock price targets under the Awards were: $7.57 price per share of common stock, $10.32 price per share of common stock and $13.76 price per share of common stock.  A change of control occurred in November 2016, and the Awards were terminated without any of the stock targets being attained.