Note 9-Stock Based Compensation

Stock Options issued to Employees, Officers and Directors

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 December 27, 2015, Optex Systems Holdings has granted stock options to officers and employees as follows:

Optex Systems Holdings recorded compensation costs for options and shares granted under the plan amounting to for $24 thousand and $67 thousand for the three months ended December 27, 2015 and December 28, 2014, respectively. The $67 thousand of compensation expense recorded during the three months ending December 28, 2014 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 of December 27, 2015, the intrinsic value of the outstanding options was zero. There were zero options granted in the three months ended December 27, 2015 and December 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 December 27, 2015, the unrecognized compensation cost for non-vested share based compensation arrangements granted under the stock option plan was approximately $111 thousand.  These costs are expected to be recognized on a straight line basis through December 2017.

There were no other equity instruments issued to consultants and vendors during the three months ended December 27, 2015 and December 28, 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 December 27, 2015, Optex Systems Holdings had the following warrants outstanding: