Quarterly report pursuant to Section 13 or 15(d)

STOCK BASED COMPENSATION

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STOCK BASED COMPENSATION
9 Months Ended
Sep. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
STOCK BASED COMPENSATION

NOTE 14: STOCK BASED COMPENSATION

 

Stock Options and Incentive Plan

 

On September 28, 2010, the Board of Directors approved the adoption of the 2010 Stock Option and Incentive Plan (“2010 Plan”) to provide for the grant of equity-based awards to employees, officers, non-employee directors and other key persons providing services to the Company. Awards of incentive options may be granted under the 2010 Plan until September 2020. No other awards may be granted under the 2010 Plan after the date that is 10 years from the date of stockholder approval. An aggregate of 66,667 shares were initially reserved for issuance in connection with awards granted under the 2010 Plan and on May 18, 2016, an additional 133,333 shares were reserved for issuance under the 2010 Plan. On May 9, 2017, the stockholders approved an additional 1,500,000 shares for issuance under the 2010 Plan.

 

The following table presents the automatic additions to the 2010 Plan since inception pursuant to the “evergreen” terms of the 2010 Plan:

 

January 1,     Number of
shares
 
2012       30,018  
2013       34,452  
2014       49,532  
2015       65,557  
2016       220,419  
2017       151,477  
Total additional shares       551,455  

 

The Company granted 0 and 1,716,323 options to purchase shares of common stock during the three and nine months ended September 30, 2017. No options were exercised during the three or nine months ended September 30, 2017. There are 100,456 shares available for grant under the 2010 Plan as of September 30, 2017.

  

Compensation costs associated with the Company’s stock options are recognized, based on the grant-date fair values of these options, over the requisite service period, or vesting period. Accordingly, the Company recognized stock based compensation expense of $224,254 and $257,389 for the three months ended September 30, 2017 and 2016, respectively, and $560,369 and $650,053 for the nine months ended September 30, 2017 and 2016, respectively. The fair value of stock options granted for the nine months ended September 30, 2017 and 2016 was calculated using the Black-Scholes option-pricing model applying the following assumptions:

 

    Period ended September 30,  
    2017     2016   
             
Risk free interest rate     1.86% - 2.04%       1.48% - 1.55%  
Expected term     5.32- 6.36 years       5.58 - 6.06 years  
                 
Dividend yield     - %        - %   
Expected volatility     112.86% - 114.19%       115.52% - 115.58%  

  

Options issued and outstanding as of September 30, 2017 and their activities during the nine months then ended are as follows:

 

    Number of
Underlying
Shares
    Weighted-
Average
Exercise Price
Per Share
    Weighted-
Average
Contractual
Life Remaining
in Years
    Aggregate
Intrinsic Value
 
Outstanding as of January 1, 2017     378,924     $ 26.25             $    
Granted     1,716,323       0.47                  
Forfeited     (3,167 )     15.00                  
Expired     (19,081 )     25.05                  
Outstanding as of September 30, 2017     2,072,999       4.10       9.29     $ 102,679  
Exercisable as of September 30, 2017     418,636       16.39       8.44     $ 9,645  
Vested and expected to vest     2,072,999     $ 4.10       9.29     $ 102,679  

 

At September 30, 2017, there were 1,651,052 unvested options outstanding and the related unrecognized total compensation cost associated with these options was approximately $1,203,000. This expense is expected to be recognized over a weighted-average period of 2.0 years.