I am going to vote yes to the options. Before you blast me, let me explain why.
I looked through their 10K filing and found out some interesting things. First,
SYCR in the last 2 years has never granted any options for under the current
stock price. Second, the average life before they can be exercised is 4 years.
The lowest amount of time currently listed is 2.9 years. Third, the amount of
receivable being rolled into Q2 is around $3 million according to their latest
10Q filing. That right there is about $.06 per share not including what they
happen to sell during Q2.
While I think SYCR really screwed up with their 10K fiasco, I also know that
things happen in business that are beyond control. RP's job is to make the
product and get it on the shelf and sold. He has a CFO to handle the books,
that is not his job. It is very possible that the CFO is the one that screwed
up and we are punishing everybody else for her mistake. We would also be
punishing the new people coming into the company even though they weren't
around when all these things happened.
Here is an excerpt of their 10K filing about options.
Activity under the option plan for fiscal years 1996 and 1997 was as
follows:
WEIGHTED AVERAGE
EXERCISE PRICE
SHARES PER SHARE
--------- ----------------
Shares under option, June 30, 1995............... 653,000 6.50
Granted.......................................... 980,000 3.20
Exercised........................................ -- --
Forfeited........................................ 6,918 6.50
---------
Shares under option, June 30, 1996............... 1,626,082 4.51
Granted.......................................... 1,635,000 2.42
Exercised........................................ (5,275) 1.50
Forfeited........................................ (324,393) 2.92
---------
Shares under option, June 30, 1997............... 2,931,414 $ 3.52
=========
The number of options exercisable at June 30, 1996 and 1997 were 818,000
and 1,616,894, respectively.
(13) ACCOUNTING FOR STOCK-BASED COMPENSATION
The Company has adopted the disclosure-only provisions of SFAS 123,
"Accounting for Stock-Based Compensation," but applies Accounting Principles
Board Opinion No. 25 and related interpretations in accounting for its plan and
warrants. If the Company had elected to recognize compensation cost based on the
fair value at the date of grants for award under the plans and warrants,
consistent with the method as prescribed by SFAS No. 123, net loss per share for
the years ended June 30, 1996 and 1997 would have changed to the pro-forma
amounts indicated below:
1996 1997
---------- ---------
Net loss:
As reported........................................ 12,021,950 6,821,429
Pro-forma.......................................... 12,091,662 7,013,713
Net loss per share:
As reported........................................ (.87) (.39)
Pro-forma.......................................... (.87) (.41)
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted average
assumptions used for grants in 1996 and 1997: dividend yield of zero percent for
each year; expected volatility of 29.3%; risk-free interest rate of 6.4%; and
expected life of 3.9 years.
Pro-forma net loss reflects only options granted in 1996 and 1997.
Therefore the full amount of calculating compensation cost for stock options and
warrants under SFAS No. 123 is not reflected in the pro-forma net loss amounts
presented above because compensation cost is reflected over the options' vesting
period and compensation cost for options granted prior to July 1, 1995 is not
considered. The disclosure of compensation cost under this pronouncement may not
be representative of the effects on net income (loss) for future years.
The weighted average grant date fair value of options granted during fiscal
1996 and 1997 where the exercise price was equal to the stock price on the date
of grant was $1.06 and $0.75 per option, respectively. The weighted average
grant date fair value of options granted during fiscal 1997 where the exercise
price was greater than the stock price on the date of grant was $0.01 per
option. No options were granted during 1996 or 1997 where the exercise price was
less than the stock price on the date of grant.
The following table summarizes information about shares under option at
June 30, 1997:
WEIGHTED AVERAGE WEIGHTED
RANGE OF REMAINING AVERAGE OPTIONS WEIGHTED AVERAGE
EXERCISE PRICES OPTIONS OUTSTANDING CONTRACTUAL LIFE EXERCISE PRICE EXERCISABLE EXERCISE PRICE
----------------- ------------------- ---------------- -------------- ----------- ----------------
$0.875 - 1.375 430,000 4.4 years $ 1.09 76,683 $ 1.03
1.50 - 2.75 430,000 4.2 2.25 75,000 2.67
3.00 - 4.00 1,382,500 4.0 3.19 805,000 3.11
6.50 688,914 2.9 6.50 660,211 6.50
--------- ---------
$.0875 - 6.50 2,931,414 3.8 3.52 1,616,894 4.37
========= =========
During 1996 and 1997, total compensation cost recognized related to options
granted to non-employees aggregated $717,633 and $107,192, respectively. |
