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Stockholders' Equity
 3 Months Ended
Mar. 31, 2013
Stockholders' Equity Note [Abstract]  
Stockholders' Equity Note Disclosure [Text Block]

Note 4 – Stockholders’ Equity

 

Common Stock and Preferred Stock

 

The Company is authorized to issue 62,500,000 shares of common stock and 2,000,000 shares of preferred stock. Preferences, limitations, voting powers and relative rights of any preferred stock to be issued may be determined by the Company’s Board of Directors. The Company has not issued any shares of preferred stock.

 

In April and May 2012, the Company completed an initial public offering (IPO) whereby 3,450,000 shares of common stock were issued at $4.00 per share, which included the exercise of the overallotment allowance by the underwriter, MDB Capital Group LLC (MDB). Gross proceeds from the IPO totaled $13.8 million and net cash proceeds approximated $11.2 million. Expenses of the offering approximated $2.7 million, including underwriter fees of $1.2 million paid to MDB along with 345,000 warrants to purchase ClearSign’s common stock at $5.00 per share exercisable from April 2013 to April 2017 valued at $128,000, qualified independent underwriter fees of $110,000, underwriter legal fees of $125,000, underwriter expenses of $35,000, and issuer legal fees of $822,000, which was paid in part through the issuance of 110,000 shares of the Company’s common stock to its legal counsel at a price of $4.00 per share.

Equity Incentive Plan

 

The Company has an Equity Incentive Plan (the Plan) which provides for the granting of options to purchase shares of common stock, stock awards to purchase shares at no less than 85% of the value of the shares, and stock bonuses to officers, employees, board members, consultants, and advisors. The Compensation Committee of the Board of Directors is authorized to administer the Plan and establish the grant terms, including the grant price, vesting period and exercise date. As of March 31, 2013, the number of shares reserved for issuance under the Plan totaled 985,434 shares. The Plan provides for periodic increases in the number of authorized shares available for issuance under the Plan on the first day of each of the Company’s fiscal quarters. The Plan provides for quarterly increases in the available number of authorized shares equal to the lesser of 10% of any new shares issued by the Company during the quarter immediately prior to the adjustment date or such lesser amount as the Board of Directors shall determine. 

 

In January 2013, the Company granted 203,990 stock options under the Plan to certain employees. The stock options have an exercise price of $4.88 per share, the grant date fair value, a contractual life of 10 years, and vest over four years. The fair value of stock options granted in January 2013 estimated on the date of grant using the Black-Scholes option valuation model was $302,000. The recognized compensation expense associated with these grants for the three months ended March 31, 2013 was $19,000.

 

In January 2013, the Company granted 30,000 shares of common stock under the Plan to its three independent directors in accordance with agreements for board service in 2013. The fair value of the stock at the time of grant was $5.00 per share for a total value of $150,000 which the Company will recognize in general and administrative expense on a quarterly basis in 2013, including $37,000 for the three months ended March 31, 2013.

 

Outstanding stock option grants at March 31, 2013 and December 31, 2012 totaled 563,365 and 359,375 with 263,337 and 242,188 being vested and exercisable at March 31, 2013 and December 31, 2012, respectively. Stock grants made to date through March 31, 2013 and December 31, 2012 totaled 175,799 shares and 145,799 shares, respectively. Of these amounts, 56,000 and 60,000 at March 31, 2013 and December 31, 2012, respectively, are subject to declining repurchase rights by the Company at $0.0001 per share through September 30, 2016. The recognized compensation expense associated with these grants for the three months ended March 31, 2013 and 2012 totaled $39,000 and $48,000, respectively. At March 31, 2013, the number of shares reserved under the Plan but unissued totaled 246,270. At March 31, 2013, there was $463,000 of total unrecognized compensation cost related to non-vested share based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted average period of 3.4 years.

 

Warrants

 

The Company has the following warrants outstanding at March 31, 2013:

 

    Total Outstanding Warrants  
Exercise Price   Warrants     Weighted Average
Exercise Price		     Life
(in years)		  
$ 0.00     80,000     $ 1.80       7.89  
$ 0.00     136,368     $ 2.20       3.11  
$ 0.00     345,000     $ 5.00       4.07  
      561,368