Quarterly report pursuant to Section 13 or 15(d)

EMPLOYEE STOCK OPTIONS

v3.5.0.2
EMPLOYEE STOCK OPTIONS
 9 Months Ended
Sep. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]
NOTE 6 – EMPLOYEE STOCK OPTIONS
 
Compensation expense charged against income for share-based awards during the three and nine months ended September 30, 2016, was $555,587 and $1,647,554, respectively, as compared to $650,968 and $1,962,142, respectively, for the three and nine months ended September 30, 2015. These amounts are included in general and administrative expense in the accompanying financial statements.
 
In 2011, the Board of Directors and stockholders approved and adopted a long-term incentive plan which allowed for the issuance of up to 2,500,000 shares of common stock through the grant of qualified stock options, non-qualified stock options and restricted stock. In 2013, the Company’s stockholders approved an amendment to the long-term incentive plan, increasing the number of shares eligible under the plan to 5,000,000 shares. As of September 30, 2016, there were 1,949,650 shares remaining eligible for issuance under the plan.
 
On January 13, 2016, upon the recommendation of the Compensation Committee, Ring rescinded the option awards granted to its employees and directors on December 9, 2015 (other than Messrs. McCabe and Rochford, who are the members of the Compensation Committee) as the result of a significant decline in the stock price and re-issued the option awards as of that date to meet the goals and objectives of the Company’s equity based compensation program.
 
The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model and using certain assumptions. The expected volatility is based on the historical price volatility of the Company’s common stock. The Company uses the simplified method for estimating the expected term for options granted. Under the simplified method, the expected term is equal to the midpoint between the vesting period and the contractual term of the stock option. The risk-free interest rate represents the U.S. Treasury bill rate for the expected life of the related stock options. The dividend yield represents the Company’s anticipated cash dividend over the expected life of the stock options. The following are the assumptions used to determine the fair value of options granted during the nine months ended September 30, 2016 and 2015:
 
 
 
2016
 
2015
 
Weighted-average volatility
 
 
100 - 99
%
 
103
%
Expected dividends
 
 
0
 
 
0
 
Expected term (in years)
 
 
6.5
 
 
6.5
 
Risk-free interest rate
 
 
1.51 - 1.25
%
 
1.32
%
 
A summary of the stock option activity as of September 30, 2016, and changes during the nine months then ended is as follows:
 
 
 
 
 
 
 
 
 
Weighted-
 
 
 
 
 
 
 
 
 
Weighted-
 
Average
 
 
 
 
 
 
 
 
 
Average
 
Remaining
 
Aggregate
 
 
 
 
 
 
Exercise
 
Contractual
 
Intrinsic
 
 
 
Shares
 
Price
 
Term
 
Value
 
Outstanding, December 31, 2015
 
 
2,881,150
 
$
5.07
 
 
 
 
 
 
Granted
 
 
15,000
 
 
6.42
 
 
 
 
 
 
Exercised
 
 
(25,150)
 
 
4.49
 
 
 
 
 
 
Forfeited
 
 
(90,400)
 
 
9.71
 
 
 
 
 
 
Outstanding, September 30, 2016
 
 
2,780,600
 
$
4.67
 
6.5 Years
 
$
17,532,933
 
Exercisable, September 30, 2016
 
 
1,487,850
 
$
3.95
 
6.0 Years
 
 
 
 
 
The intrinsic value was calculated using the closing price on September 30, 2016 of $10.95. As of September 30, 2016, there was $2,473,232 of unrecognized compensation cost related to stock options that is expected be recognized over a weighted-average period of 2.2 years. The total intrinsic value of options exercised during the nine months ended September 30, 2016, was $58,058.