Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation Plan

Stock-Based Compensation Plan
9 Months Ended
Sep. 30, 2016
Stock-Based Compensation Plan [Abstract]  
Stock-Based Compensation Plan


Under the Company’s current 2015 Stock Incentive Plan (the “2015 Plan”) and the previous 2005 Stock Incentive Plan (the “2005 Plan”), the Company’s Board of Directors (the “Board of Directors”) had flexibility to determine the type and amount of awards to be granted to eligible participants, who must be employees, directors, officers or consultants of the Company or its subsidiaries.  The 2015 Plan allows for grants of incentive stock options, nonqualified stock options, restricted stock awards, stock appreciation rights, and restricted units.  The aggregate number of shares of common stock that may be granted through awards under the 2015 Plan to any employee in any calendar year may not exceed 500 shares.  The 2005 Plan continued in effect until June 2015 when it expired in accordance with its terms.  The 2015 Plan will continue in effect until December 2025 unless terminated sooner. 

During the nine months ended September 30, 2016, the Company issued stock options for an aggregate of 163 shares under the 2015 Plan to directors and employees of the Company.  Of the 163 options issued, 38 options vest in four equal consecutive quarterly tranches from the date of grant.  The remaining 125 options will vest in three installments as follows: 42 options shall vest on June 30, 2017, and the remaining options shall vest equally on June 30, 2018 and June 30, 2019.

For computing the fair value of the stock-based awards, the fair value of each option grant has been estimated as of the date of grant using the Black-Scholes option-pricing model with the following assumptions:



Options Granted During the Nine Months Ended September 30, 2016





Number of options



Option vesting period


1-3 Years

Grant price


$4.38 - $4.39

Dividend yield



Expected volatility (a)


43.0% - 44.6%

Risk-free interest rate


1.14% - 1.23%

Expected life (years) (b)


5.31 - 6.00

Weighted average fair value


$1.81 - $1.85




Expected volatility is based upon the Company’s historical volatility.


Because the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term for these grants, the Company utilized the simplified method in developing an estimate of the expected term of these options.

On July 1, 2016, the Company issued and granted to an employee a restricted stock award of 100 restricted shares under the 2015 Plan, which will vest if, on or before July 1, 2020, the Fair Market Value (as defined in the Plan) of the Company’s common stock shall have equaled or exceeded $15.00 per share for twenty consecutive trading days.  For computing the fair value of the 100 restricted shares with a market condition, the fair value of each restricted stock award grant has been estimated as of the date of grant using the Monte-Carlo pricing model with the assumptions below.

Market Condition Restricted Shares Granted on July 1, 2016



Number issued



Vesting period


$15.00 stock price target

Grant price



Dividend yield



Expected volatility



Risk-free interest rate



Expected term (years)



Weighted average fair value



The total non-cash stock compensation expense for continuing operations related to restricted stock, stock options and stock awards recorded by the Company for the three months ended September 30, 2016 and 2015 was $42 and $126, respectively, and for the nine months ended September 30, 2016 and 2015 was $193 and $1,028, respectively.  For the three and nine months ended September 30, 2016 and 2015, the majority of stock-based compensation costs were classified as selling, general and administrative expense.  The fair value of unvested restricted stock awards is determined based on the market price of our shares of common stock on the grant date or using the Monte-Carlo pricing model.  As of September 30, 2016, there were 350 unvested stock options and unrecognized compensation cost of $755 related to unvested stock options, as well as 390 unvested restricted stock awards and unrecognized compensation cost of $126 related to unvested restricted stock awards.  As of September 30, 2016, the Company has unvested restricted stock awards which vest based upon satisfaction of a performance condition.  Achievement of the performance condition is currently not considered probable.  Consequently, the Company has not recorded compensation costs associated with the performance condition awards.