|12 Months Ended|
Dec. 31, 2015
|Disclosure of Compensation Related Costs, Share-based Payments [Abstract]|
2014 Omnibus Incentive Plan
In January 2014, our board of directors approved the 2014 Omnibus Incentive Plan and amended and restated the plan in March 2014. Our stockholders approved the Amended and Restated 2014 Omnibus Incentive Plan, or the 2014 Plan, in March 2014. Our 2014 Plan permits for the issuance of equity based instruments covering up to an initial total of 1,400,000 shares of common stock.
We have computed the fair value of options granted to employees and non-employees using the Black-Scholes option valuation model. The compensation costs of non-employee arrangements are subject to re-measurement at each reporting period over the vesting terms as earned. Option forfeitures are estimated at the time of valuation and reduce expense ratably over the vesting period. This estimate will be adjusted periodically based on the extent to which actual option forfeitures differ, or are expected to differ, from the previous estimate, when it is material. The expected term used for options issued to non-employees is the contractual life and the expected term used for options issued to employees is the estimated period of time that options granted are expected to be outstanding. We have estimated the expected life of our employee stock options using the “simplified” method, whereby, the expected life equals the arithmetic average of the vesting term and the original contractual term of the option due to our lack of sufficient historical data. Since our stock has not been publicly traded for a sufficiently long period of time, we are utilizing an expected volatility figure based on a review of the historical volatilities, over a period of time, equivalent to the expected life of the instrument being valued, of similarly positioned public companies within our industry. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued.
Stock Options to Employees and Non-Employees
During the years ended December 31, 2014 and 2015, we granted incentive stock options for the purchase of 491,200 and 77,500 shares, respectively, of our common stock to our employees and consultants. The options granted in 2014 have an exercise price range of $5.79 per share to $8.06 per share with a term ranging from three years to ten years. The options granted in 2015 have an exercise price range of $3.83 per share to $12.98 per share with a term of ten years. The options vest over various periods, generally quarterly over sixteen quarters. The options granted in 2014 had an aggregate grant date fair value of $2.0 million and the options granted in 2015 had an aggregate grant date fair value of $384,000 utilizing the Black-Scholes option valuation model.
We estimated the fair value of stock options awarded during the years ended December 31, 2014 and 2015 using the Black-Scholes option valuation model. The fair values of stock options granted for the years were estimated using the following assumptions:
Stock-based compensation expense related to stock options for employees was $413,000 and $451,000 for the years ended December 31, 2014 and 2015, respectively. We are also required to estimate forfeitures at the time of grant, and revise those estimates in subsequent periods if actual forfeitures differ from our estimates. We use historical data to estimate pre-vesting option forfeitures and record stock-based compensation expense only for those awards that are expected to vest. To the extent that actual forfeitures differ from our estimates, the difference is recorded as a cumulative adjustment in the period the estimates were revised. For the years ended December 31, 2014 and 2015, there was no forfeiture rate applied as there have been very minimal forfeitures since the grant of awards. We do not expect to incur forfeitures for those shares currently awarded.
For stock options paid in consideration of services rendered by non-employees, we recognize compensation expense in accordance with the requirements of ASC 505-50. Non-employee stock option grants that do not vest immediately upon grant are recorded as an expense over the vesting period. At the end of each financial reporting period prior to performance, the value of these stock options, as calculated using the Black-Scholes option valuation model, is determined, and compensation expense recognized or recovered during the period is adjusted accordingly. Since the fair market value of stock options granted to non-employees is subject to change in the future, the amount of the future compensation expense is subject to adjustment until the common stock options are fully vested. Stock-based compensation expense related to stock options for consultants was $284,000 and $60,000 for the years ended December 31, 2014 and 2015, respectively.
Stock Option Award Activity
The following is a summary of our stock option activity during the year ended December 31, 2014:
The following is a summary of our stock option activity during the year ended December 31, 2015:
The following table presents information related to stock options outstanding and exercisable at December 31, 2015:
As of December 31, 2015, there was $1.1 million of unrecognized compensation expense related to unvested stock options, which is expected to be recognized over a weighted average vesting period of approximately 2.5 years. The aggregate instrinsic value of outstanding options and options vested as of December 31, 2014 were $2.6 million and $800,000, respectively, which represent options whose exercise price was less than the closing fair market value of our common stock on December 31, 2014 of $11.62 per share. The aggregate instrinsic value of outstanding options and options vested as of December 31, 2015 were zero as there were no options whose exercise price was less than the closing fair market value of our common stock of $2.65 per share. There were no excess tax benefits realized for tax deductions from stock options exercised during the years ended December 31, 2015 and 2014 as no options were exercised.
Restricted Stock Units Activity
We account for restricted stock units issued to employees at fair value, based on the market price of our stock on the date of grant, net of estimated forfeitures. The fair value of non-employee restricted stock units awarded are remeasured as the awards vest, and the resulting increase in fair value, if any, is recognized as expense in the period the related services are rendered. During the years ended December 31, 2014 and 2015 we recorded $333,000 and $849,000, respectively, of stock-based compensation related to the restricted stock unit shares that have been issued to-date. During the years ended December 31, 2014 and 2015 we granted 174,500 and 343,930 restricted stock unit shares, respectively. Shares vested during the years ended December 31, 2014 and 2015 were 43,233 and 73,122, respectively, of which 3,915 and 4,341 shares, respectively, were surrendered by the employees for payment of payroll tax withholding liabilities. During the year ended December 31, 2015 there were 26,446 shares canceled as a result of an employee termination. There were no cancelations during the year ended December 31, 2014.
A summary of restricted stock unit activity for the years ended December 31, 2014 is as follows:
A summary of restricted stock unit activity for the years ended December 31, 2015 is as follows:
As of December 31, 2015, there was $1.7 million of unrecognized compensation expense related to unvested restricted stock unit agreements which is expected to be recognized over a weighted-average period of approximately 2.8 years. For restricted stock unit awards subject to graded vesting, we recognize compensation cost on a straight-line basis over the service period for the entire award.
In 2015, we adopted a performance based bonus program which identifies five specific performance objectives to be accomplished during 2015 for all employees. The awards contain a combination of service conditions and performance conditions based on the achievement of specified performance thresholds approved by the board.
The performance bonus amounts are based on each individual’s salary paid during the year multiplied by the bonus multiplier percentage ranging from 6.67% to 13.34% per objective plus an additional 10% bonus for non-executive employees and a multiplier percentage ranging from 16.67% to 25.00% per objective for executive employees. The performance bonus will be paid in the form of restricted stock units which will vest half on the issuance date and the remaining half on the first business day of 2017. The number of shares granted to each employee will be determined based on the performance bonus amount divided by $2.68, the 10-day average stock price prior December 31, 2015. We recognize stock-based compensation expense for restricted stock units with performance conditions based on the probability of the performance condition being met, net of estimated pre-vesting forfeitures. For the year ended December 31, 2015, we recorded $121,000 of stock-based compensation which represents one-half of the total $242,000 performance bonus amount. The performance bonus amount has been recorded, as the achievement of the performance conditions were considered attained. Subsequent to year end, on February 5, 2016, a total of 90,265 restricted stock units were granted related to the 2015 performance bonus program. One half of the units awarded, 45,140 shares, vested on February 19, 2016 and the remaining half will vest on January 3, 2017.
Total equity-based compensation cost recorded in the consolidated statements of operations, which includes the value of stock options and restricted stock units issued to employees, directors and non-employees for services and excludes the performance bonus accrual and warrant consultant cost, is allocated as follows:
Common Stock Issued to Non-Employees
In September 2015, we issued a total of 33,000 shares of our common stock to two consultants in exchange for business and corporate development services provided both in Asia and in the United States. We recorded $156,000 in stock compensation expense related to these stock issuances for the year ended December 31, 2015, which represents the fair value of the stock on the date of issuance. There were no similar items, or expense recorded, for the year ended December 31, 2014.
The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.
Reference 1: http://www.xbrl.org/2003/role/presentationRef