RMG Networks Holding Corp - 10-Q filing on 2014-11-14

Note 17 - Equity Incentive Plan	9 Months Ended
Sep. 30, 2014
Disclosure Text Block Supplement [Abstract]
Shareholders' Equity and Share-based Payments [Text Block]	17. Equity Incentive Plan On July 12, 2013, the Company’s stockholders approved the Company’s 2013 Equity Incentive Plan (the “2013 Plan”) and the reservation of 2,500,000 shares of the Company’s common stock for issuance under the 2013 Plan. The 2013 Plan is intended to promote the interests of the Company and its stockholders by providing the Company’s employees, directors and consultants with incentives and rewards to encourage them to continue in the Company’s service and with a proprietary interest in pursuing the Company’s long-term growth, profitability and financial success. Equity awards available under the 2013 Plan include stock options, stock appreciation rights, phantom stock, restricted stock, restricted stock units, performance shares, deferred share units, share-denominated performance units and cash awards. The 2013 Plan is administered by the compensation committee of the board of directors of the Company, which has the authority to designate the employees, consultants and members of the board of directors who will be granted awards under the 2013 Plan, to designate the amount, type and other terms and conditions of such awards and to interpret any and all provisions of the 2013 Plan and the terms of any awards under the 2013 Plan. The 2013 Plan will terminate on the tenth anniversary of its effective date. In August 2013 the Company awarded 1,660,000 options to its employees. 291,666 of these stock options have been subsequently cancelled. These options have an exercise price of $8.10 and vest over a three-year period. The cost associated with these options for the nine months and the three months ended September 30, 2014 was $1,199,152 and $39,473, respectively. These amounts are net of a credit of $291,076 related to the cancellation of certain stock options during the three months ended September 30, 2014. The unamortized cost of these options at September 30, 2014 was $3,103,916 to be recognized over a weighted-average life of 1.0 years. The unamortized cost of these options at December 31, 2013 was $4,467,863. At September 30, 2014, 565,000 of these options were exercisable. At December 31, 2013, none of these options were exercisable. There was no intrinsic value associated with these options as of September 30, 2014 and December 31, 2013. The weighted-average remaining contractual life of the options outstanding is 8.8 years. The Company estimated the fair value of the stock-based rights granted to employees in 2013 using the Black-Scholes option pricing model with the following weighted-average assumptions: expected life of 6.0 years, expected volatility of 48.9%, dividend yield of 0%, and risk-free interest rate of 1.97%. The average fair value of options granted during 2013 was $3.91. On August 13, 2013 the Company granted its Chief Executive Officer 350,000 shares of common stock under the 2013 Plan. The shares had a three-year vesting period beginning in April 2014. On July 22, 2014 the CEO resigned. In connection with his resignation, the CEO received 100,000 shares of common stock that had vested and the remaining unvested restricted stock grant was forfeited. The cost associated with the restricted stock grant for the nine months ended September 30, 2014 was $305,613. In connection with the cancellation of the restricted stock grant, the Company reversed $334,825 of previously recorded stock-based compensation charges. The reversal of these charges resulted in a net credit to stock-based compensation expense of $278,545 for the three months ended September 30, 2014. On July 22, 2014 the Company awarded 500,000 options to its new CEO under the 2013 Plan. These options have an exercise price of $2.45 and vest over a 3.5 year period. The cost associated with these options for the three months ended September 30, 2014 was $34,730. The unamortized cost of these options at September 30, 2014 was $590,270 to be recognized over a weighted-average life of 2.0 years. At September 30, 2014, none of these options were exercisable and there was no intrinsic value associated with these options. The weighted-average remaining contractual life of the options outstanding is 9.8 years. The Company estimated the fair value of the stock-based rights granted to its new CEO in 2014 using the Black-Scholes option pricing model with the following weighted-average assumptions: expected life of 6.75 years, expected volatility of 48.9%, dividend yield of 0%, and risk-free interest rate of 1.98%. The average fair value of options granted to the new CEO was $1.25.

Note 17 - Equity Incentive Plan

9 Months Ended

Sep. 30, 2014

Disclosure Text Block Supplement [Abstract]

Shareholders' Equity and Share-based Payments [Text Block]

17. Equity Incentive Plan

On July 12, 2013, the Company’s stockholders approved the Company’s 2013 Equity Incentive Plan (the “2013 Plan”) and the reservation of 2,500,000 shares of the Company’s common stock for issuance under the 2013 Plan. The 2013 Plan is intended to promote the interests of the Company and its stockholders by providing the Company’s employees, directors and consultants with incentives and rewards to encourage them to continue in the Company’s service and with a proprietary interest in pursuing the Company’s long-term growth, profitability and financial success. Equity awards available under the 2013 Plan include stock options, stock appreciation rights, phantom stock, restricted stock, restricted stock units, performance shares, deferred share units, share-denominated performance units and cash awards. The 2013 Plan is administered by the compensation committee of the board of directors of the Company, which has the authority to designate the employees, consultants and members of the board of directors who will be granted awards under the 2013 Plan, to designate the amount, type and other terms and conditions of such awards and to interpret any and all provisions of the 2013 Plan and the terms of any awards under the 2013 Plan. The 2013 Plan will terminate on the tenth anniversary of its effective date. In August 2013 the Company awarded 1,660,000 options to its employees. 291,666 of these stock options have been subsequently cancelled. These options have an exercise price of $8.10 and vest over a three-year period. The cost associated with these options for the nine months and the three months ended September 30, 2014 was $1,199,152 and $39,473, respectively. These amounts are net of a credit of $291,076 related to the cancellation of certain stock options during the three months ended September 30, 2014. The unamortized cost of these options at September 30, 2014 was $3,103,916 to be recognized over a weighted-average life of 1.0 years. The unamortized cost of these options at December 31, 2013 was $4,467,863. At September 30, 2014, 565,000 of these options were exercisable. At December 31, 2013, none of these options were exercisable. There was no intrinsic value associated with these options as of September 30, 2014 and December 31, 2013. The weighted-average remaining contractual life of the options outstanding is 8.8 years.

The Company estimated the fair value of the stock-based rights granted to employees in 2013 using the Black-Scholes option pricing model with the following weighted-average assumptions: expected life of 6.0 years, expected volatility of 48.9%, dividend yield of 0%, and risk-free interest rate of 1.97%. The average fair value of options granted during 2013 was $3.91.

On August 13, 2013 the Company granted its Chief Executive Officer 350,000 shares of common stock under the 2013 Plan. The shares had a three-year vesting period beginning in April 2014. On July 22, 2014 the CEO resigned. In connection with his resignation, the CEO received 100,000 shares of common stock that had vested and the remaining unvested restricted stock grant was forfeited. The cost associated with the restricted stock grant for the nine months ended September 30, 2014 was $305,613. In connection with the cancellation of the restricted stock grant, the Company reversed $334,825 of previously recorded stock-based compensation charges. The reversal of these charges resulted in a net credit to stock-based compensation expense of $278,545 for the three months ended September 30, 2014.

On July 22, 2014 the Company awarded 500,000 options to its new CEO under the 2013 Plan. These options have an exercise price of $2.45 and vest over a 3.5 year period. The cost associated with these options for the three months ended September 30, 2014 was $34,730. The unamortized cost of these options at September 30, 2014 was $590,270 to be recognized over a weighted-average life of 2.0 years. At September 30, 2014, none of these options were exercisable and there was no intrinsic value associated with these options. The weighted-average remaining contractual life of the options outstanding is 9.8 years.

The Company estimated the fair value of the stock-based rights granted to its new CEO in 2014 using the Black-Scholes option pricing model with the following weighted-average assumptions: expected life of 6.75 years, expected volatility of 48.9%, dividend yield of 0%, and risk-free interest rate of 1.98%. The average fair value of options granted to the new CEO was $1.25.