Stockholders' Equity

9 Months Ended

Sep. 30, 2018

Equity [Abstract]

Stockholders' Equity

Note 9. Stockholders’ Equity

Stock Options

The Company previously issued non-qualified incentive stock options to key employees, officers and directors under a Stock Option Compensation plan approved by the Board of Directors in 2009. The plan remains in effect for ten (10) years from the Effective Date or unless terminated earlier by the Company. Terms of the option grants are at the discretion of the Board of Directors but historically have been seven years.

See Note 7. Related Party Transactions for discussion of the issuance of stock options for shares of the Company’s common stock during the three and nine months ended September 30, 2018 and 2017.

2017 Equity Incentive Plan

On August 23, 2017 and October 6, 2017, respectively, the board of directors and shareholders approved the 2017 Equity Incentive Plan (the “Equity Plan”). The Equity Plan is intended to make available incentives that will assist us to attract, retain and motivate employees, including officers, consultants and directors. We may provide these incentives through the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and units and other cash-based or stock-based awards.

A total of 1,187,500 shares of our common stock was initially authorized and reserved for issuance under the Equity Plan. This reserve will automatically increase on January 1, 2018 and each subsequent anniversary through 2027, by an amount equal to the smaller of (a) 3% of the number of shares of common stock issued and outstanding on the immediately preceding December 31, or (b) an amount determined by the board. On January 1, 2018, the amount authorized and reserved increased to 1,424,630 shares.

Awards may be granted under the Equity Plan to our employees, including officers, directors or consultants or those of any present or future parent or subsidiary corporation or other affiliated entity. All awards will be evidenced by a written agreement between us and the holder of the award and may include any of the following: stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and performance units and cash-based awards and other stock-based awards. To date, there have been no awards granted under this plan.

The assumptions used in the Black-Scholes-Merton model for the periods ended September 30, 2018 and 2017, and the resulting estimates of weighted-average fair value per share of options granted during those periods, are as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Volatility		-		96% to 98%		-		96% to 101%
Risk-free interest rate		-		1-2%		-		1-2%
Expected term		-		7 years		-		7 years

The following table summarizes all compensation plan stock options for the three and nine months ended September 30:

	Three Months Ended September 30,
	2018				2017
	Number of		Weighted		Number of			Weighted
	Stock Options		Exercise Price		Stock Options			Exercise Price
Options outstanding, beginning of period		496,667	$	1.82		560,417		$	1.68
Granted		-		-		13,750			3.76
Redeemed		-		-		(30,000	)		1.20
Exercised		-		-		-			-
Expired / terminated		-		-		-			-
Options outstanding, end of period		496,667	$	1.82		544,167		$	1.76
Options exercisable, end of period		496,009	$	1.81		534,167		$	1.78

	Nine Months Ended September 30,
	2018					2017
	Number of			Weighted		Number of			Weighted
	Stock Options			Exercise Price		Stock Options			Exercise Price
Options outstanding, beginning of period		531,667		$	1.80		557,917		$	1.60
Granted		-			-		41,250			4.42
Redeemed		(22,500	)		1.70		(55,000	)		1.22
Exercised		(7,500	)		1.40		-			-
Expired / terminated		(5,000	)		1.40		-			-
Options outstanding, end of period		496,667		$	1.81		544,167		$	1.85
Options exercisable, end of period		496,009		$	1.81		534,167		$	1.87

Stock compensation expense related to vesting and granting of stock options was $1,796 and $42,376 for the three months ended September 30, 2018 and 2017, respectively. Stock compensation expense was $6,656 and $160,351 for the nine months ended September 30, 2018 and 2017, respectively. There are 658 non-vested stock options and unrecognized stock-based compensation expense of $5,264 as of September 30, 2018 that will be fully vested and expensed by October 2018.