Annual report pursuant to Section 13 and 15(d)

4. Stock-Based Compensation

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4. Stock-Based Compensation
12 Months Ended
Dec. 31, 2016
Stock-based Compensation  
4. Stock-Based Compensation

The Company's stock-based compensation plan provides for the issuance of stock options to the Company’s employees, officers, and directors. The Compensation Committee of Fusion’s Board of Directors approves all awards that are granted under the Company's stock-based compensation plan.

 

The Company's 2016Equity Incentive Plan, ratified by the Company’s stockholders on October 28, 2016, reserves a number of shares of common stock equal to 10% of the Company’s shares outstanding from time to time on a fully diluted basis. The plan provides for the grant of incentive stock options, stock appreciation rights, restricted stock, restricted stock units, stock grants, stock units, performance shares and performance share units to employees, officers, non-employee directors of, and consultants to the Company. Options under the plan typically vest in annual increments over a three or four year period, expire ten years from the date of grant and are issued at exercise prices no less than 100% of the fair market value at the time of grant.

 

The following table summarizes the stock option activity under our stock plans for the years ended December 31, 2016 and 2015:

 

    Number of Options   Weighted Average Exercise Price   Weighted Average Remaining Contract Term  
Outstanding at December 31, 2014   607,877    $        8.00   8.08 years  
Granted   614,730   2.44      
Exercised                   -   0.00      
Forfeited   (53,280)   3.81      
Expired   (11,076)   32.71      
Outstanding at December 31, 2015   1,158,251   4.96   8.43 years  
Granted   1,135,650   1.31      
Exercised                   -                   -      
Forfeited   (89,826)   2.51      
Expired   (20,352)   69.46      
Outstanding at December 31, 2016   2,183,723   2.56   8.56 years  
Exercisable at December 31, 2016   689,963    $        4.52   6.85 years  

 

 

The Company recognized compensation expense of $853,458 and $639,296 related to stock options for the years ended December 31, 2016 and 2015, respectively. These amounts are included in selling, general, and administrative expenses in the consolidated statements of operations.

 

The following weighted average assumptions were used to determine the fair value of the stock options granted under the Company’s stock-based compensation plan using the Black-Scholes option-pricing model:

 

        Year Ended December 31,
        2016   2015
Dividend yield       0.0%   0.0%
Expected volatility       92.40%   132.99%
Average Risk-free interest rate (%)       1.21-2.23    1.78-2.25
Expected life of stock option term (years)       6.86-8.00   8.43
             

 

 

The following table summarizes additional information regarding outstanding and exercisable options under the stock option plans at December 31, 2016

 

 

  Stock Options Outstanding   Stock Options Exercisable    
Range of Exercise Prices   Options Outstanding   Weighted Average Remaining Contractual Life (Years)   Weighted Average Exercise Price   Aggregate intrinsic Value   Options Exercisable   Weighted Average Remaining Contractual Life (Years)   Weighted Average Price   Aggregate intrinsic Value    
$1.26 to $1.91   1,130,250   9.64   1.31       0   0.00   0.00        
$1.93 to $2.94   421,950   8.73   2.14       186,995   8.71   2.12        
$3.00 to $4.50   496,813   7.22   3.83       375,818   7.00   3.91        
$4.70 to $7.50   106,440   4.69   5.89       98,880   4.50   5.84        
$9.00 to $15.50   15,530   1.25   15.43       15,530   1.25   15.43        
$19.50 to $34.50   12,730   0.25   34.38       12,730   0.25   34.38        
$37.50 to $37.50   10   0.31   37.50       10   0.31   37.50        
      2,183,723   8.56   2.56   242,945   689,963   6.85   4.52   196,587    

 

The weighted-average estimated fair value of stock options granted was $1.08 and $2.44 during the years ended December 31, 2016 and 2015, respectively.  No stock options were exercised during the years ended December 31, 2016 and 2015.  As of December 31, 2016, there was approximately $1.9 million of total unrecognized compensation cost related to stock options granted under the Company’s stock incentive plans, which is expected to be recognized over a weighted-average period of 2.26 years.