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NOTE 7 - STOCK-BASED COMPENSATION
 9 Months Ended
Sep. 30, 2012
Notes to Financial Statements  
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Options and Warrants

 

We have two long-term incentive plans which we refer to as the 2000 Plan and the 2006 Plan. The 2000 Plan was terminated as to future grants when the 2006 Plan was approved by the stockholders in 2006. As of September 30, 2012, we have reserved for issuance under the 2006 Plan 11,000,000 shares of common stock. Certain options granted under the 2006 Plan to employees are intended to qualify as incentive stock options under existing tax regulations. In addition, we may issue non-qualified stock options and warrants under the 2006 Plan from time to time to non-employees, in connection with acquisitions and for other purposes and we may also issue restricted stock under the 2006 Plan. Stock options and warrants generally vest over two to five years and expire five to ten years from date of grant.

 

As of September 30, 2012, 5,250,750, or approximately 84.3%, of the 6,231,250 outstanding stock options and warrants granted under our option plans are fully vested.  During the nine months ended September 30, 2012, we did not grant options or warrants under the 2006 Plan.

 

We have issued warrants outside the 2006 Plan under various types of arrangements to employees, and in exchange for outside services.  All warrants issued to employees or consultants after our February 2007 listing on the NASDAQ Global Market have been characterized as awards under the 2006 Plan.  All warrants outside the 2006 Plan have been issued with an exercise price equal to the fair value of the underlying common stock on the date of grant. The warrants expire from five to seven years from the date of grant.  Vesting terms are determined by the board of directors or the compensation committee of the board of directors at the date of grant.

 

As of September 30, 2012, 1,502,898, or 100%, of all the outstanding warrants outside the 2006 Plan are fully vested. During the nine months ended September 30, 2012, we did not grant warrants outside of our 2006 Plan.

 

The following summarizes all of our option and warrant transactions for the nine months ended September 30, 2012:

 

Outstanding Options and Warrants         Weighted Average Exercise price Per     Weighted Average Remaining
Contractual Life		     Aggregate
Intrinsic		  
Under the 2006 Plan and 2000 Plan   Shares     Common Share     (in years)     Value  
                         
Balance, December 31, 2011     6,656,250     $ 3.62                  
Granted     –       –                  
Exercised     –       –                  
Canceled or expired     (425,000 )     4.19                  
Balance, September 30, 2012     6,231,250       3.58       2.13     $ 1,329,575  
Exercisable at September 30, 2012     5,250,750       3.64       1.95       1,171,692  

 

Non-Plan         Weighted Average Exercise price Per     Weighted Average Remaining
Contractual Life		     Aggregate
Intrinsic		  
Outstanding Warrants   Shares     Common Share     (in years)     Value  
Balance, December 31, 2011     2,502,898     $ 2.58                  
Granted     –       –                  
Exercised     (250,000 )     2.52                  
Canceled or expired     (750,000 )     4.77                  
Balance, September 30, 2012     1,502,898       1.50       0.90     $ 1,979,011  
Exercisable at September 30, 2012     1,502,898       1.50       0.90       1,979,011  

 

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between our closing stock price on September 30, 2012 and the exercise price, multiplied by the number of in-the-money options or warrants, as applicable) that would have been received by the holder had all holders exercised their options or warrants, as applicable, on September 30, 2012. The total intrinsic value of options and warrants exercised during the nine months ended September 30, 2012 and 2011 was approximately $265,000 and $605,650, respectively.  As of September 30, 2012, total unrecognized stock-based compensation expense related to non-vested employee awards was approximately $1.2 million, which is expected to be recognized over a weighted average period of approximately 1.4 years.

 

Restricted Stock Awards

 

The 2006 Plan permits the award of restricted stock. On January 3, 2012, we granted restricted stock awards (“awards”) for 525,000 shares of our common stock to certain employees and 200,000 awards to non-employee directors of the Company. Of the awards granted, 241,667 were vested on the award date, 241,667 cliff vest after one year provided that the employees or non-employees remain continuously employed or engaged through the vesting date and 241,666 cliff vest after two years provided that the employees or non-employees remain continuously employed or engaged through the vesting date. We valued the awards based on the closing market price of our stock on January 3, 2012 which was $2.17 per share.

 

On May 15, 2012, we granted 115,000 restricted stock awards (“awards”) to certain employees. Of the awards granted, 38,333 were vested on the award date, 38,333 cliff vest after one year provided that the employees remain continuously employed through the vesting date and 38,334 cliff vest after two years provided that the employees remain continuously employed through the vesting date. We valued the awards based on the closing market price of our stock on May 15, 2012 which was $3.12 per share.

 

At September 30, 2012, the total unrecognized fair value of these restricted stock awards was approximately $855,000, which will be recognized over the remaining vesting period of 1.67 years.

 

In sum, of the 11,000,000 shares of common stock reserved for issuance under the 2006 Plan, 7,013,750 were outstanding at September 30, 2012 with respect to grants of options, warrants and restricted stock and 3,986,250 were available for grant.