Quarterly report pursuant to Section 13 or 15(d)

Note 4 - Stock-based Compensation

v3.19.3
Note 4 - Stock-based Compensation
9 Months Ended
Sep. 30, 2019
Notes to Financial Statements  
Share-based Payment Arrangement [Text Block]
4
.
Stock-Based Compensation
 
The Company has
two
shareholder–approved stock-based compensation plans. The
2006
Stock Incentive Plan was adopted in
2006
(
“2006
Plan”) and had options granted under it through
April 12, 2016.
On
June 1, 2016,
the shareholders ratified the IAI
2016
Stock Incentive Plan (
“2016
Plan”), which had been approved by the Board of Directors on
April 4, 2016.
 
The Company recognizes compensation costs only for those shares expected to vest on a straight-line basis over the requisite service period of the awards. Such options generally vest over periods of
nine
months to
two
years. Fair values of option awards granted in the
three
months and
nine
months ended
September 30, 2019
and
2018,
were estimated using the Black-Scholes option pricing model under the following assumptions:
 
   
Three Months Ended
   
Three Months Ended
   
Nine Months
Ended
   
Nine Months
Ended
 
   
September 30,
2019
   
September 30,
2018
   
September 30,
2019
   
September 30,
2018
 
Risk-free interest rate
   
n/a
     
2.75%
     
2.31%
     
2.65%
-
2.92%
 
Dividend yield
   
n/a
     
0%
     
0%
     
 
0%
 
 
Expected term (in years)    
n/a
     
5
     
5
     
 
5
 
 
Expected volatility
   
n/a
     
53.4%
     
57.9%
     
49.0%
-
53.4%
 
 
2016
Stock Incentive Plan
 
The
2016
Plan became effective
June 1, 2016,
and expires
April 4, 2026.
The
2016
Plan provides for the granting of equity awards to key employees, including officers and directors. The maximum number of shares for which equity awards
may
be granted under the
2016
Plan is
1,000,000.
Options under the
2016
Plan expire
no
later than
ten
years from the date of grant or when employment ceases, whichever comes first, and vest over periods determined by the Board of Directors. The minimum exercise price of each option is the quoted market price of the Company’s stock on the date of grant. At
September 30, 2019,
there were unexpired options for
371,000
shares issued under the
2016
Plan, of which
343,500
were exercisable.
 
2006
Stock Incentive Plan
 
The
2006
Plan became effective
May 18, 2006,
and expired
April 12, 2016.
The
2006
Plan provides for the granting of equity awards to key employees, including officers and directors. Options under the
2006
Plan were generally granted at-the-money or above, expire
no
later than
ten
years from the date of grant or within
three
months of when employment ceases, whichever comes first, and vest over periods determined by the Board of Directors. The number of shares subject to options available for issuance under the
2006
Plan could
not
exceed
1,950,000.
There were
978,000
unexpired options remaining from the
2006
Plan at
September 30, 2019,
all of which were exercisable.
 
The status of the options issued under the foregoing option plans as of
September 30, 2019,
and changes during the
three
months and
nine
months ended
September 30, 2019,
were as follows:
 
   
Options outstanding
             
           
Weighted average
   
Weighted average
 
Aggregate
 
           
exercise price
   
remaining
 
intrinsic
 
Incentive Options
 
Shares
   
per share
   
contractual term
 
value
 
Outstanding at January 1, 2019
   
1,376,500
    $
0.23
   
 
   
 
 
Options granted
   
-
     
-
   
 
   
 
 
Options exercised
   
-
     
-
   
 
   
 
 
Options expired
   
(4,500
)    
0.13
   
 
   
 
 
Options forfeited
   
-
     
-
   
 
   
 
 
Outstanding at March 31, 2019
   
1,372,000
    $
0.23
   
 
   
 
 
Options granted
   
3,000
     
0.21
   
 
   
 
 
Options exercised
   
(10,000
)    
0.10
   
 
   
 
 
Options expired
   
(11,000
)    
0.08
   
 
   
 
 
Options forfeited
   
(2,500
)    
0.46
   
 
   
 
 
Outstanding at June 30, 2019
   
1,351,500
    $
0.23
   
 
   
 
 
Options granted
   
-
     
-
   
 
   
 
 
Options exercised
   
-
     
-
   
 
   
 
 
Options expired
   
-
     
-
   
 
   
 
 
Options forfeited
   
(2,500
)    
0.46
   
 
   
 
 
Outstanding at September 30, 2019
   
1,349,000
    $
0.23
   
4 years, 2 months
  $
11,443
 
Exercisable at September 30, 2019
   
1,321,500
    $
0.23
   
4 years
  $
11,443
 
 
There were
no
options granted during the
three
months ended
September 30, 2019,
and
3,000
options granted during the
nine
months ended
September 30, 2019,
of which
none
were granted to non-employees. There were
3,000
options granted during the
three
months ended
September 30, 2018,
of which
none
were granted to non-employees, and
163,000
options granted during the
nine
months ended
September 30, 2018,
of which
5,000
were granted to non-employees. The weighted-average grant date fair values of options granted during the
nine
months ended
September 30, 2019,
was
$0.11.
There were
no
options and
10,000
options exercised during the
three
months and
nine
months ended
September 30, 2019,
respectively, and
no
options exercised during the
three
months and
nine
months ended
September 30, 2018.
As of
September 30, 2019,
there was
$1,292
of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the stock incentive plans; that cost is expected to be recognized over a weighted-average period of
five
months.
 
Total compensation expense related to these plans was
$585
and
$8,226
for the
three
months ended
September 30, 2019
and
2018,
respectively, of which
$0
an
$426,
respectively, related to options awarded to non-employees. Total compensation expense was
$5,521
and
$23,882
for the
nine
months ended
September 30, 2019
and
2018,
respectively, of which
$0
and
$644,
respectively, related to options awarded to non-employees. Compensation expense of
$604
was reversed in the
nine
months ending
September 30, 2019,
from options that were forfeited prior to vesting.
 
Nonvested option awards as of
September 30, 2019
and changes during the
three
months and
nine
months ended
September 30, 2019
were as follows:
 
   
Nonvested
 
           
Weighted average
 
           
grant date
 
   
Shares
   
fair value
 
Nonvested at January 1, 2019
   
148,500
    $
0.20
 
Granted
   
-
     
-
 
Vested
   
(107,500
)    
0.21
 
Forfeited
   
-
     
-
 
Nonvested at March 31, 2019
   
41,000
    $
0.17
 
Granted
   
3,000
     
0.11
 
Vested
   
(12,500
)    
0.17
 
Forfeited
   
(2,500
)    
0.21
 
Nonvested at June 30, 2019
   
29,000
    $
0.16
 
Granted
   
-
     
-
 
Vested
   
(1,500
)    
0.12
 
Forfeited
   
-
     
-
 
Nonvested at September 30, 2019
   
27,500
    $
0.16