Stock Plans and Share-Based Payments

6 Months Ended

Jun. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Plans and Share-Based Payments

Note 6 - Stock Plans and Share-Based Payments

Stock Options

The Company accounts for stock option grants to employees and non-employee directors under the provisions of ASC 718, Stock Compensation. ASC 718 requires the recognition of the fair value of stock-based compensation in the statement of operations. In addition, the Company accounts for stock option grants to consultants under the provisions of ASC 505-50, and as such, these stock options are revalued at each reporting period through the vesting period.

During the three and six months ended June 30, 2017, the Company granted stock options to purchase 418,709 shares and 998,280 shares, respectively of common stock to an employee. These stock options will be expensed over their respective applicable vesting periods, which are based on service and performance conditions. The fair value of all stock-based awards granted during the three months ended June 30, 2017 was approximately $98,000. The fair value of all stock-based awards granted during the six months ended June 30, 2017 was approximately $321,000.

The fair value of stock-based awards is amortized over the vesting period of the award. For stock-based awards that vest based on performance conditions (e.g., achievement of certain milestones), expense is recognized when it is probable that the condition will be met. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. The below weighted average assumptions for the risk-free interest rates, expected dividend yield, expected lives and expected stock price volatility were used for the awards granted during the six months ended June 30, 2017.

Assumptions for Option Grants	Six Months Ended June 30, 2017
Stock Price Volatility		108.0	%
Risk-Free Interest Rates		2.04	%
Expected Life (in years)		6.01
Expected Dividend Yield		-	%

The Company calculates expected volatility for a stock-based grant based on historic monthly common stock price observations during the period immediately preceding the grant that is equal in length to the expected term of the grant. With respect to grants of options, the risk free rate of interest is based on the U.S. Treasury rates appropriate for the expected term of the grant. As a result of adopting ASU 2016-09, the Company has elected to recognize forfeitures as they occur.

Stock-Based Compensation for the Three Months Ended June 30, 2017

Stock-based compensation expense was approximately $111,000 and $92,000 for the three months ended June 30, 2017 and 2016, respectively. For the three months ended June 30, 2017, approximately $103,000 and approximately $8,000 are included in Selling, General and Administrative expenses and Research and Development expenses, respectively, on the accompanying condensed consolidated statement of operations and comprehensive loss. For the three months ended June 30, 2016, approximately $84,000 and approximately $8,000 are included in Selling, General and Administrative expenses and Research and Development expenses, respectively, on the accompanying condensed consolidated statements of operations and comprehensive loss.

Stock-Based Compensation for the Six Months Ended June 30, 2017

Stock-based compensation expense was approximately $213,000 and $194,000 for the six months ended June 30, 2017 and 2016, respectively. For the six months ended June 30, 2017, approximately $194,000 and approximately $19,000 are included in Selling, General and Administrative expenses and Research and Development expenses, respectively, on the accompanying condensed consolidated statement of operations and comprehensive loss. For the six months ended June 30, 2016, approximately $179,000 and approximately $15,000 are included in Selling, General and Administrative expenses and Research and Development expenses, respectively, on the accompanying condensed consolidated statements of operations and comprehensive loss.

There was no tax benefit related to expense recognized in the six months ended June 30, 2017 and 2016, as the Company is in a net operating loss position. As of June 30, 2017, there was approximately $1,087,000 of total unrecognized compensation cost related to unvested share-based compensation awards granted under the equity compensation plans. Approximately $230,000 of the $1,087,000 total unrecognized compensation will be recognized at the time that certain performance conditions are met. The remaining unrecognized compensation expense of approximately $857,000 will be amortized over the weighted average remaining requisite service period of 1.9 years. Such amount does not include the effect of future grants of equity compensation, if any.

Restricted Stock

During the six months ended June 30, 2017, the Company issued 17,756 shares of restricted stock as compensation for services to its chief executive officer in consideration of deferred cash salary of $7,000. The grant date fair value of the outstanding restricted stock awards was approximately $7,000.

Total stock-based compensation expense for the restricted stock grants was approximately $85,000 and $35,000 for the three months ended June 30, 2017 and 2016, respectively, and is included in Selling, General and Administrative expenses on the accompanying condensed consolidated statements of operations and comprehensive loss.

Total stock-based compensation expense for the restricted stock grants was approximately $182,000 and $79,000 for the six months ended June 30, 2017 and 2016, respectively, and is included in Selling, General and Administrative expenses on the accompanying condensed consolidated statements of operations and comprehensive loss.

As of June 30, 2017, there was approximately $3,000 of unrecognized compensation expense related to the restricted stock awards, which is expected to be recognized over the next three months, dependent upon the respective restricted stock grant dates.