Quarterly report pursuant to Section 13 or 15(d)

STOCK OPTIONS/STOCK-BASED COMPENSATION AND WARRANTS

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STOCK OPTIONS/STOCK-BASED COMPENSATION AND WARRANTS
9 Months Ended
Sep. 30, 2015
STOCK OPTIONS/STOCK-BASED COMPENSATION AND WARRANTS [Abstract]  
STOCK OPTIONS/STOCK-BASED COMPENSATION AND WARRANTS
NOTE 6     STOCK OPTIONS/STOCK-BASED COMPENSATION AND WARRANTS

The Company maintains its 2013 Incentive Plan (the “2013 Plan”) to provide a means whereby the Company may be able, by granting equity and other types of awards, to attract, retain and motivate capable and loyal employees, non-employee directors, consultants and advisors of the Company, for the benefit of the Company and its shareholders.  In May 2015, the Company’s shareholders approved an amendment to the 2013 Plan to increase the number of shares available for awards under the 2013 Plan by 2.5 million shares.  As a result, as of September 30, 2015, there were 3,729,177 shares available for future awards under the 2013 Plan.
 
Restricted Stock Awards

During the nine months ended September 30, 2015, the Company issued 565,039 restricted shares of common stock under the 2013 Plan as compensation to officers, employees and directors of the Company.  Unvested restricted shares vest over various terms with all restricted shares vesting no later than October 2018.  As of September 30, 2015, there was approximately $6.3 million of total unrecognized compensation expense related to unvested restricted stock that will be recognized over a weighted-average period of approximately 2.0 years.  The Company has assumed a zero percent forfeiture rate for restricted stock due to the small number of officers, employees and directors that have received restricted stock awards.

The following table reflects the outstanding restricted stock awards and activity related thereto for the nine months ended September 30, 2015:

   
Nine Months Ended
September 30, 2015
 
   
Number of
Shares
   
Weighted-Average
Price
 
Restricted Stock Awards:
           
Restricted Shares Outstanding at Beginning of Period
    538,499     $ 13.54  
Shares Granted
    565,039       8.65  
Lapse of Restrictions
    (201,216 )     12.99  
Shares Forfeited
    (1,397 )     14.79  
Restricted Shares Outstanding at End of Period
    900,925     $ 10.42  

Stock Option Awards

On November 1, 2007, the board of directors granted options to purchase 560,000 shares of the Company’s common stock under the Company’s 2006 Incentive Stock Option Plan.  The Company granted options to purchase 500,000 shares of the Company’s common stock to members of the board and options to purchase 60,000 shares of the Company’s common stock to one employee pursuant to an employment agreement.  These options were granted at a price of $5.18 per share and the optionees were fully vested on the grant date.  As of September 30, 2015, options to purchase a total of 141,872 shares of the Company’s common stock remain outstanding but unexercised.  The board of directors determined that no future grants will be made pursuant to the 2006 Incentive Stock Option Plan.

The Company used the Black-Scholes option valuation model to calculate stock-based compensation at the date of grant.  Option pricing models require the input of highly subjective assumptions, including the expected price volatility.  The Company used the simplified method to determine the expected term of the options due to the lack of sufficient historical data.  Changes in these assumptions can materially affect the fair value estimate.  The total fair value of the options is recognized as compensation over the vesting period.  There were no stock options granted by the Company in the nine months ended September 30, 2015.

Currently Outstanding Options

·
No options were forfeited during the nine months ended September 30, 2015.
·
No options expired during the nine months ended September 30, 2015.
·
Options covering 141,872 shares were exercisable and outstanding at September 30, 2015.
·
The Company recorded no compensation expense related to these options for the nine months ended September 30, 2015.  There is no further compensation expense that will be recognized in future periods relative to any options that had been granted as of September 30, 2015, because the Company recognized the entire fair value of such compensation upon vesting of the options.
·
There were no unvested options at September 30, 2015.