Note 12 — Stock Based Compensation

The Optex Systems Holdings 2009 Stock Option Plan provides for the issuance of up to 75,000 shares to Optex Systems Holdings officers, directors, employees and to independent contractors who provide services to Optex Systems Holdings as either incentive or nonstatutory stock options determined at the time of grant. As of September 27, 2015, Optex Systems Holdings has granted stock options to officers and employees as follows (as adjusted for the 1000:1 reverse stock split on common shares effective October 7, 2015):

Optex Systems Holdings recorded compensation costs for options and shares granted under the plan amounting to for $140 thousand and $105 thousand for the twelve months ended September 27, 2015 and September 28, 2015, respectively. The $140 thousand of compensation expense recorded during the twelve months ending September 27, 2015 included $57 thousand of expenses directly attributable to the early vesting of 7,500 shares on the resignation of the Chairman of the Board on November 19, 2014.

The following table summarizes the status of Optex Systems Holdings’ aggregate stock options granted under the incentive stock option plan (as adjusted for the 1000:1 reverse stock split on common shares effective October 7, 2015):

There were zero and 25,000,000 options granted in the twelve months ended September 27, 2015 and September 28, 2014, respectively.

The following table summarizes the status of Optex Systems Holdings’ aggregate non-vested shares granted under the 2009 Stock Option Plan:

As of September 27, 2015, the unrecognized compensation cost for non-vested share based compensation arrangements granted under the plan was approximately $159 thousand.  These costs are expected to be recognized on a straight line basis through December 2017.

There were no equity instruments issued to consultants and vendors in fiscal years 2015 and 2014.

Warrant Agreements: Optex Systems Holdings calculates the fair value of warrants issued with debt or preferred stock using the Black-Scholes-Merton valuation method. The total proceeds received in the sale of debt or preferred stock and related warrants are allocated among these financial instruments based on their relative fair values. The discount arising from assigning a portion of the total proceeds to the warrants issued is recognized as interest expense for debt from the date of issuance to the earlier of the maturity date of the debt or the conversion dates using the effective yield method. 

As of September 27, 2015, Optex Systems Holdings had the following warrants outstanding:

During the periods ended September 27, 2015 and September 28, 2014, Optex Systems Holdings recorded a total of $0 and $0 thousand in interest expense related to the outstanding warrants and has an unamortized interest balance of zero as of September 27, 2015.  These warrants are not included in the computation of weighted average of shares for year ended September 27, 2015 and September 28, 2014 as it would be anti-dilutive due to the net loss attributable to common shareholders incurred during the respective years.