Annual report pursuant to Section 13 and 15(d)

Stock Plans

v2.4.0.8
Stock Plans
12 Months Ended
Dec. 31, 2013
Stock Plans [Abstract]  
Stock Plans [Text Block]
12. Stock Plans
 
In July 2002, we adopted the 2002 Stock Incentive Plan (“2002 Plan”). The 2002 Plan assumed the options which remained available for grant under our option plans previously approved by stockholders. Under the 2002 Plan and predecessor plans, a total of 7.4 million shares of our common stock were authorized for issuance to employees, officers, directors, consultants, and advisers. In August 2005, we adopted an amendment to the 2002 Stock Incentive Plan (“2002 Plan”) to (i) permit the issuance of shares of restricted stock and stock appreciation rights to participants under the 2002 Plan, and (ii) increase the number of shares issuable pursuant to grants under the 2002 Plan from 2,000,000 to 3,000,000. Options granted under the 2002 Plan and predecessor plans may either be incentive stock options within the meaning of Section 422 of the Internal Revenue Code and/or options that do not qualify as incentive stock options; however, only employees are eligible to receive incentive stock options. Options granted under the option plans generally expire no later than ten years from the date of grant. Option vesting schedule and exercise price are determined at time of grant by the board of directors or compensation committee. Historically, the exercise prices of options granted under the 2002 Plan were 100% of the fair market value of our common stock on the date of grant. The 2002 Plan expired by its terms in July 2012. On December 31, 2013, options to purchase an aggregate of 4,280,153 shares of our common stock were outstanding under the 2002 Plan.
   
In August 2001, we adopted the 2001 Employee Non-Qualified Stock Option Plan (“2001 NQ Plan”) pursuant to which 1,750,000 shares of common stock were authorized for issuance for option grants to employees and consultants who are not officers or directors of Titan. Options granted under the option plans generally expire no later than ten years from the date of grant. Option vesting schedule and exercise price were determined at time of grant by the board of directors or compensation committee. Historically, the exercise prices of options granted under the 2001 NQ Plan were 100% of the fair market value of our common stock on the date of grant. The 2001 Stock Option Plan expired by its terms in August 2011. On December 31, 2013, options to purchase an aggregate of 1,199,500 shares of our common stock were outstanding under the 2001 NQ Plan.
 
Activity under our stock plans, as well as non-plan activity, is summarized below (shares in thousands):
 
 
 
 
 
Number of
 
 
 
 
 
 
Shares or
 
Options and
 
 
 
 
 
 
Awards  Available
 
Awards
 
Weighted Average
 
 
 
For Grant
 
Outstanding
 
Exercise Price
 
Balance at December 31, 2010
 
3,393
 
5,115
 
$
2.29
 
Options granted
 
(734)
 
734
 
$
1.44
 
Options cancelled and expired
 
45
 
(241)
 
$
15.01
 
Options forfeited
 
55
 
(55)
 
$
1.77
 
Awards granted
 
(181)
 
181
 
$
0.00
 
Awards issued
 
 
(139)
 
$
0.00
 
Balance at December 31, 2011
 
2,578
 
5,595
 
$
1.56
 
Options granted
 
(1,718)
 
1,718
 
$
1.14
 
Options cancelled and expired
 
290
 
(290)
 
$
5.54
 
Awards issued
 
 
(181)
 
$
0.00
 
Expiration of option plan
 
(1,150)
 
 
$
0.00
 
Balance at December 31, 2012
 
 
6,842
 
$
1.33
 
Options exercised
 
 
(75)
 
$
1.50
 
Options cancelled and expired
 
 
(35)
 
$
3.29
 
Balance at December 31, 2013
 
 
6,732
 
$
1.31
 
 
The 2002 Plan and the 2001 NQ Plan allow for stock options issued as the result of a merger or consolidation of another entity, including the acquisition of the minority interest of our former subsidiaries, to be added to the maximum number of shares provided for in the plan (“Substitute Options”). Consequently, Substitute Options are not returned to the shares reserved under the plan when cancelled. During 2013, 2012 and 2011, the number of Substitute Options cancelled was immaterial.
 
Options for 6.7 million and 6.0 million shares were exercisable at December 31, 2013 and 2012, respectively. The options outstanding at December 31, 2013 have been segregated into four ranges for additional disclosure as follows (options in thousands):
 
 
 
Options Outstanding
 
Options Exercisable
 
 
 
 
 
Weighted
 
 
 
 
 
 
 
 
 
 
 
 
 
Average
 
Weighted
 
 
 
Weighted
 
 
 
Number
 
Remaining
 
Average
 
Number
 
Average
 
Range of Exercise Prices
 
Outstanding
 
Life (Years)
 
Exercise Price
 
Exercisable
 
Exercise Price
 
$0.69 - $1.53
 
5,423
 
6.32
 
$
1.05
 
5,422
 
$
1.05
 
$1.54 - $2.38
 
604
 
3.85
 
$
2.19
 
601
 
$
2.19
 
$2.39 - $3.22
 
643
 
3.27
 
$
2.52
 
643
 
$
2.52
 
$3.23 - $4.06
 
62
 
0.11
 
$
3.70
 
62
 
$
3.70
 
$0.69 - $4.06
 
6,732
 
5.75
 
$
1.31
 
6,728
 
$
1.31
 
 
We use the Black-Scholes-Merton option-pricing model with the following assumptions to estimate the stock-based compensation expense for the years ended December 31, 2013, 2012 and 2011:
 
 
 
Years Ended December 31,
 
 
 
2013
 
 
2012
 
 
2011
 
Weighted-average risk-free interest rate
 
0.92
%
 
0.91
%
 
2.3
%
Expected dividend payments
 
 
 
 
 
 
Expected holding period (years)(1)
 
3.9
 
 
5.1
 
 
5.4
 
Weighted-average volatility factor(2)
 
1.38
 
 
1.75
 
 
1.71
 
Estimated forfeiture rates for options granted to management(3)
 
23
%
 
23
%
 
23
%
Estimated forfeiture rates for options granted to non-management(3)
 
41
%
 
41
%
 
41
%
 
___________________________________________________________________
   (1)
Expected holding period is based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and the expectations of future employee behavior.
   (2)
Weighted average volatility is based on the historical volatility of our common stock.
   (3)  
Estimated forfeiture rates are based on historical data.  
 
No options or awards were granted during the year ended December 31, 2013. Based upon the above methodology, the weighted-average fair value of options and awards granted during the years ended December 31, 2012 and 2011 was $1.09 and $1.38, respectively.
  
The following table summarizes the stock-based compensation expense and impact on our basic and diluted loss per share for the years ended December 31, 2013, 2012 and 2011:
 
 
 
Years Ended December 31,
 
(in thousands, except per share amounts)
 
2013
 
2012
 
2011
 
Research and development
 
$
378
 
$
1,560
 
$
371
 
General and administrative
 
 
300
 
 
1,021
 
 
806
 
Total stock-based compensation expenses
 
$
678
 
$
2,581
 
$
1,177
 
Increase in basic net income (loss) per share
 
$
(0.01)
 
$
(0.04)
 
$
(0.02)
 
Increase in diluted net income (loss) per share
 
$
(0.01)
 
$
(0.04)
 
$
(0.02)
 
 
No tax benefit was recognized related to stock-based compensation expense since we have incurred operating losses and we have established a full valuation allowance to offset all the potential tax benefits associated with our deferred tax assets.
 
No options to purchase common stock were granted to employees, directors and consultants during the year ended December 31, 2013. The following table summarizes option activity for the year ended December 31, 2013:
 
 
 
 
 
 
 
 
Weighted
 
 
 
 
 
 
 
 
Weighted
 
Average
 
 
 
 
 
 
 
 
Average
 
Remaining
 
Aggregate
 
 
 
 
 
Exercise
 
Contractual
 
Intrinsic
 
(in thousands, except per share amounts)
 
Shares
 
Price
 
Term
 
Value
 
Outstanding at January 1, 2012
 
6,842
 
$
133
 
 
 
 
 
 
Exercised
 
(75)
 
 
1.50
 
 
 
 
 
 
Cancelled
 
(35)
 
 
3.29
 
 
 
 
 
 
Outstanding at December 31, 2013
 
6,732
 
$
1.31
 
5.75
 
$
 
Exercisable at December 31, 2013
 
6,728
 
$
1.31
 
5.75
 
$
 
 
As of December 31, 2013, there was approximately $2,000 of total unrecognized compensation expense related to non-vested stock options. This expense is expected to be recognized over a weighted-average period of 0.24 years.
 
There were no awards of restricted stock during the year ended December 31, 2013.
 
There were no outstanding awards of restricted stock at December 31, 2013 that had not vested.