Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Stock Options, Stock Purchase Plan and Warrants

v3.3.1.900
Stock Options, Stock Purchase Plan and Warrants
12 Months Ended
Dec. 31, 2015
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Stock Options, Stock Purchase Plan and Warrants

Note J – Stock Options, Stock Purchase Plan and Warrants

Stock Option Plan

On December 21, 2015, the board of directors of Parent (the “Board of Directors”) further amended the Amended and Restated Equity Incentive Plan (“the Amended Plan”), which amended and restated the Equity Incentive Plan, originally effective as of October 14, 2003, and previously amended and restated effective as of October 31, 2006, April 16, 2013 and May 4, 2015. The Amended Plan allows for the award of equity incentives, including stock options, stock appreciation rights, restricted stock awards, stock bonus awards, deferred stock awards, and other stock-based awards to certain employees, directors, or officers of, or key non-employee advisers or consultants, including contracted physicians to the Company or its subsidiaries. The Amended Plan, which expires on October 15, 2025, provides that the maximum aggregate number of shares of the Company’s common stock reserved and available for issuance under the Amended Plan is 12,500,000.

As of December 31, 2015, option and stock awards for 5,326,505 shares were outstanding, including 800,000 options issued outside of the Amended Plan to Douglas VanOort, the Company’s Chairman and Chief Executive Officer. A total of approximately 4,081,940 shares were available for future option and stock awards under the Amended Plan. Options typically expire after 5 - 10 years and generally vest over 3 or 4 years, but each grant’s expiration, vesting and exercise price provisions are determined at the time the awards are granted by the Compensation Committee of the Board of Directors or by the Chairman and Chief Executive Officer by virtue of authority delegated to him by the Compensation Committee.

The fair value of each stock option award granted during the years ended December 31, 2015, 2014 and 2013 was estimated as of the grant date using a trinomial lattice model with the following weighted average assumptions:

 

 

 

2015

 

 

2014

 

 

2013

 

Expected term (in years)

 

2.5 – 4.6

 

 

3.0 – 4.6

 

 

2.5 – 4.5

 

Risk-free interest rate (%)

 

 

1.2

%

 

 

1.0

%

 

 

0.7

%

Expected volatility (%)

 

 

51

%

 

 

50

%

 

 

46

%

Dividend yield (%)

 

 

0.0

%

 

 

0

%

 

 

0

%

Weighted average fair value/share at grant date

 

$

1.84

 

 

$

1.50

 

 

$

1.19

 

 

The status of our stock options and stock awards are summarized as follows: 

 

 

 

Number

Of

Shares

 

 

Weighted

Average

Exercise

Price

 

Outstanding at December 31, 2012

 

 

5,777,212

 

 

$

1.02

 

 

 

 

 

 

 

 

 

 

Granted

 

 

416,000

 

 

 

3.66

 

Exercised

 

 

(438,998

)

 

 

0.85

 

Canceled

 

 

(28,916

)

 

 

1.47

 

Outstanding at December 31, 2013

 

 

5,725,298

 

 

 

1.22

 

 

 

 

 

 

 

 

 

 

Granted

 

 

760,500

 

 

 

4.21

 

Exercised

 

 

(2,387,327

)

 

 

0.76

 

Canceled

 

 

(86,375

)

 

 

2.39

 

Outstanding at December 31, 2014

 

 

4,012,096

 

 

 

2.04

 

 

 

 

 

 

 

 

 

 

Granted

 

 

1,819,000

 

 

 

4.90

 

Exercised

 

 

(492,091

)

 

 

1.45

 

Canceled

 

 

(12,500

)

 

 

3.19

 

Outstanding at December 31, 2015

 

 

5,326,505

 

 

 

3.07

 

Exercisable at December 31, 2015

 

 

2,608,284

 

 

 

1.69

 

 

The number and weighted average grant-date fair values of options non-vested at the beginning and end of 2015, as well as options granted, vested and forfeited during the year was as follows:

 

 

 

Number of

Options

 

 

Weighted

Average

Grant Date

Fair Value

 

Non-vested at December 31, 2014

 

 

1,627,718

 

 

$

1.35

 

Granted in 2015

 

 

1,765,500

 

 

 

2.55

 

Vested in 2015

 

 

(667,497

)

 

 

0.57

 

Forfeited in 2015

 

 

(7,500

)

 

 

1.39

 

Non-vested at December 31, 2015

 

 

2,718,221

 

 

 

2.22

 

 

The following table summarizes information about our options outstanding at December 31, 2015:

 

 

 

Options Outstanding

 

 

Options Exercisable

 

Range of

Exercise

Prices ($)

 

Number

Outstanding

 

 

Weighted

Average

Remaining

Contractual

Life (Years)

 

 

Weighted

Average

Exercise

Price

 

 

Number

Exercisable

 

 

Weighted

Average

Remaining

Contractual

Life (Years)

 

 

Weighted

Average

Exercise

Price

 

0.31 – 1.00

 

 

1,010,503

 

 

 

0.22

 

 

$

0.80

 

 

 

1,010,503

 

 

 

0.22

 

 

$

0.80

 

1.01 – 1.50

 

 

572,170

 

 

 

0.73

 

 

 

1.43

 

 

 

509,670

 

 

 

0.70

 

 

 

1.43

 

1.51 – 3.00

 

 

881,500

 

 

 

1.17

 

 

 

1.74

 

 

 

664,832

 

 

 

1.16

 

 

 

1.73

 

3.01 – 4.00

 

 

640,835

 

 

 

2.79

 

 

 

3.66

 

 

 

264,863

 

 

 

2.65

 

 

 

3.71

 

4.01 – 5.00

 

 

2,060,997

 

 

 

4.24

 

 

 

4.76

 

 

 

148,416

 

 

 

3.88

 

 

 

4.56

 

5.01 – 7.85

 

 

160,500

 

 

 

4.48

 

 

 

6.54

 

 

 

10,000

 

 

 

3.69

 

 

 

5.44

 

 

 

 

5,326,505

 

 

 

2.42

 

 

 

3.07

 

 

 

2,608,284

 

 

 

1.02

 

 

 

1.69

 

 

As of December 31, 2015, the aggregate intrinsic value of all stock options outstanding and expected to vest was approximately $25.5 million and the aggregate intrinsic value of currently exercisable stock options was approximately $16.0 million. The intrinsic value of each option share is the difference between the fair market value of NeoGenomics common stock and the exercise price of such option share to the extent it is “in-the-money”. Aggregate intrinsic value represents the value that would have been received by the holders of in-the-money options had they exercised their options on the last trading day of the year and sold the underlying shares at the closing stock price on such day. The intrinsic value calculation is based on the $7.87 closing stock price of NeoGenomics Common Stock on December 31, 2015, the last trading day of 2015. The total number of in-the-money options outstanding and exercisable as of December 31, 2015 was approximately 2.6 million.

The total intrinsic value of options exercised during the years ended December 31, 2015, 2014 and 2013 was approximately $2,470,000, $8,882,000 and $1,200,000, respectively. Intrinsic value of exercised shares is the total value of such shares on the date of exercise less the cash received from the option holder to exercise the options. The total cash proceeds received from the exercise of stock options was approximately $714,000, $1,807,000 and $372,000 for the years ended December 31, 2015, 2014 and 2013, respectively.

The total fair value of options granted during the years ended December 31, 2015, 2014 and 2013 was approximately $3,347,000, $1,139,000 and $493,000, respectively. The total fair value of option shares vested during the years ended December 31, 2015, 2014 and 2013 was approximately $871,000, $540,000 and $349,000.

We recognize stock-based compensation expense over the vesting period using the straight-line basis over the awards’ requisite service periods for employees and variably for non-employees due to the market-to-market adjustments at the end of each reporting period. Stock compensation cost recognized for the years ended December 31, 2015, 2014 and 2013 related to stock options was approximately $2,889,000, $511,000 and $666,000, respectively. As of December 31, 2015, there was approximately $4,861,000 of total unrecognized stock-based compensation cost, related to unvested stock options granted under the Amended Plan. This cost is expected to be recognized over a weighted-average period of 1.4 years.

 

 

Employee Stock Purchase Plan

Effective January 1, 2007, the Company began sponsoring an Employee Stock Purchase Plan (“ESPP”), under which eligible employees may purchase Common Stock, by means of limited payroll deductions, at a 5% discount from the fair market value of the Common Stock as of specific dates. In accordance with ASC Topic 718-50 Compensation – Stock Compensation – Employee Share Purchase Plans, the ESPP is considered non-compensatory and does not require the recognition of compensation cost because the discount offered to employees does not exceed 5%. Shares issued pursuant to this plan were 73,958, 90,285 and 76,595 for the years ended December 31, 2015, 2014 and 2013, respectively.

Common Stock Warrants

From time to time, the Company issues warrants to purchase its common stock. These warrants have been issued for consulting services, in connection with the Company’s credit facilities and sales of its common stock, and in connection with employment agreements and for compensation to directors. These warrants are valued using trinomial lattice pricing model and using the volatility, market price, strike price, risk-free interest rate and dividend yield appropriate at the date the warrants were issued. Stock compensation costs recognized for the years ended December 31, 2015, 2014 and 2013 was approximately $0, $51,000 and $263,000, respectively for warrants excluding the Albitar Warrants referenced below.

On January 9, 2012 Dr. Maher Albitar was granted performance incentive warrants to purchase 200,000 shares of the Company’s common stock (the “Albitar Warrants”) at an exercise price per share of $1.43, which was the closing price per share on the last trading day prior to his start date. These warrants are being treated as non-employee consultant warrants and as such are being revalued, with assumptions for meeting performance, at the end of every reporting period using a trinomial lattice model. The Albitar Warrants have a five year term and vest in accordance with the performance criteria as follows:

 

(i)

80,000 will vest upon the commercial launch of the Company’s gene-based plasma prostate cancer test licensed from Health Discovery Corp (“HDC”) or similar test based on our mutual agreement.

 

(ii)

40,000 will vest upon the commercial launch of the Company’s gene-based colon cancer test licensed from HDC or similar test based on our mutual agreement.

 

(iii)

40,000 will vest upon the commercial launch of the Company’s gene-based pancreatic cancer test licensed from HDC or similar test based on our mutual agreement.

 

(iv)

20,000 will vest upon successful consummation of a sublicensing agreement with an instrument manufacturer to commercialize the cytogenetics automated image analysis technology licenses from HDC.

 

(v)

20,000 will vest upon successful consummation of a sublicensing agreement with an instrument manufacturer to commercialize the flow cytometry automated image analysis technology licenses from HDC.

In the event of a change of control of the Company in which the consideration payable to common stockholders of the Company has a deemed value of at least $4.00 per share, any unvested portion of the Albitar Warrants will immediately vest in full.  The options expire on January 9, 2017.

On December 31, 2015 the Albitar Warrants were valued at approximately $920,000 based on a trinomial lattice model with the following terms:

 

Expected term in years

 

 

2.3

 

Risk-free interest rate (%)

 

 

0.5

%

Weighted average expected volatility (%)

 

 

51.8

%

Dividend yield (%)

 

 

0

%

 

We recorded stock compensation expense of approximately $422,000, $49,000 and $231,000 for these warrants during the years ended December 31, 2015, 2014 and 2013, respectively.  The vesting requirements under (i) above have been met, and the remaining 120,000 warrants remain un-vested as of December 31, 2015.  The warrants expire on January 9, 2017.

On February 7, 2014, Gulfpointe Capital exercised 83,333 warrants to purchase shares of NeoGenomics common stock at an exercise price of $0.75 per share. The Company received proceeds of $62,500 from the exercise.

On March 12, 2014, Douglas M. VanOort exercised 375,000 warrants to purchase shares of NeoGenomics common stock at an exercise price of $1.05 per share. The Company received proceeds of $393,750 from the exercise. On March 16, 2014, 250,000 warrants issued to Douglas M. VanOort expired unvested because performance requirements were not met.

On May 3, 2010, warrants to purchase 450,000 shares of common stock at an exercise price of $1.50 per share were granted to Mr. Steven C. Jones (see Note L). These warrants, which were subject to time and performance requirements, are fully vested as of December 31, 2014.

Warrant activity is summarized as follows:

 

 

 

Shares

 

 

Weighted Average

Exercise Price

 

Warrants outstanding, December 31, 2012

 

 

1,358,333

 

 

$

1.24

 

Granted

 

 

 

 

 

 

Exercised

 

 

 

 

 

 

Expired

 

 

 

 

 

 

Cancelled

 

 

 

 

 

 

Warrants outstanding, December 31, 2013

 

 

1,358,333

 

 

 

1.24

 

Granted

 

 

 

 

 

 

Exercised

 

 

(458,333

)

 

 

 

Expired

 

 

(250,000

)

 

 

 

Cancelled

 

 

 

 

 

 

Warrants outstanding, December 31, 2014

 

 

650,000

 

 

 

1.48

 

Granted

 

 

 

 

 

 

Exercised

 

 

 

 

 

 

Expired

 

 

 

 

 

 

Cancelled

 

 

 

 

 

 

Warrants outstanding, December 31, 2015

 

 

650,000

 

 

$

1.48

 

Warrants exercisable at December 31, 2015

 

 

530,000

 

 

$

1.49

 

 

The number and weighted average grant-date fair values of warrants non-vested at the beginning and end of 2015, as well as options granted, vested and forfeited during the year was as follows:

 

 

 

Number of

Warrants

 

 

Weighted

Average

Grant Date

Fair Value

 

Non-vested at December 31, 2014

 

 

120,000

 

 

$

1.43

 

Granted in 2015

 

 

 

 

 

 

Vested in 2015

 

 

 

 

 

 

Forfeited in 2015

 

 

 

 

 

 

Non-vested at December 31, 2015

 

 

120,000

 

 

$

1.43

 

 

The following table summarizes information on warrants outstanding at December 31, 2015:

 

Number outstanding

 

 

Exercise

price

 

 

Issued

 

Expired

 

450,000

 

 

$

1.50

 

 

5/3/2010

 

5/2/2017

 

200,000

 

 

$

1.43

 

 

1/12/2012

 

1/12/2017

 

650,000

 

 

$

1.48