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Stockholders' Equity | 12 Months Ended
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Dec. 31, 2013
Stockholders' Equity Note [Abstract] |
Stockholders' Equity Note Disclosure [Text Block] | Note 6 – 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 a warrant to purchase 345,000 shares of 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. As described in Note 10, the Company completed a $6.5 million registered direct offering of common stock in March 2014.
Equity Incentive Plan The Company has an Equity Incentive 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, certain consultants, and advisors. The Compensation Committee of the Board of Directors is authorized to administer the Equity Incentive Plan and establish the grant terms, including the grant price, vesting period and exercise date. As of December 31, 2013, the number of shares reserved for issuance under the Equity Incentive Plan totaled 991,300 shares. The Equity Incentive 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. Activity under the Equity Incentive Plan is as follows:
|  | 2013 |  | 2012 |
Reserved but unissued shares under the Equity Incentive Plan, beginning of year |  | 480,260 |  | 140,625 |
Increases in the number of authorized shares under the Equity Incentive Plan |  | 5,866 |  | 360,434 |
Grants of stock options |  | (206,390) |  | - |
Stock option forfeitures |  | - |  | - |
Stock grants |  | (30,000) |  | (83,299) |
Stock grant forfeitures |  | - |  | 62,500 |
Reserved but unissued shares under the Equity Incentive Plan, end of year |  | 249,736 |  | 480,260 |
Stock Options In 2013, the Company granted to certain employees 203,990 and 2,400 stock options at an exercise prices of $4.88 per share and $7.33 per share, respectively, under the Equity Incentive Plan. The stock options were issued at the grant date fair value for a contractual life of 10 years and vest over four years. As permitted by SAB 107, due to the Company’s insufficient history of option activity, management utilized the simplified approach to estimate the options’ expected term, which represents the period of time that options granted are expected to be outstanding. Expected volatility was determined through the average of a peer group of public companies. The Company estimated the forfeiture rate at the time of grant and will revise it, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company recognizes compensation costs only for those equity awards expected to vest. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield in effect at the time of grant. The Company has never declared or paid dividends and has no plans to do so in the foreseeable future. The Company did not grant stock options in 2012. The following weighted-average assumptions were utilized in the calculation of the fair value of the stock options:
Expected life |  | 6.25 years |
Weighted average volatility |  | 33 | %
Forfeiture rate |  | 13 | %
Weighted average risk-free interest rate |  | 1.31 | %
Expected dividend rate |  | - |
The fair value of stock options granted estimated on the date of grant using the Black-Scholes option valuation model was $307,000. The recognized compensation expense associated with these grants in 2013 was $76,000.
A summary of the Company’s stock option activity and related information is as follows:
|  | 2013 |  | 2012 |
|  | Common Stock |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Life (in years) |  | Common Stock |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Life (in years) |
Outstanding at January 1 |  | 359,375 |  | $ | 2.20 |  | 8.75 |  | 359,375 |  | $ | 2.20 |  | 9.75 |
Granted |  | 206,390 |  | $ | 4.91 |  | 9.01 |  | - |  |  | - |  | - |
Exercised |  | - |  |  | - |  | - |  | - |  |  | - |  | - |
Forfeited/Expired/Exchanged |  | - |  |  | - |  | - |  | - |  |  | - |  | - |
Outstanding at December 31 |  | 565,765 |  | $ | 3.19 |  | 8.21 |  | 359,375 |  | $ | 2.20 |  | 8.75 |
Exercisable at December 31 |  | 317,354 |  | $ | 2.44 |  | 7.87 |  | 242,188 |  | $ | 2.20 |  | 8.75 |
A summary of the status of the Company’s non-vested stock options at December 31 and changes during the year is as follows:
|  | 2013 |  |  | 2012 |
|  |  |  | Weighted Average |  |  |  |  | Weighted Average |
|  | Number of Options |  |  | Grant Date Fair Value |  |  | Number of Options |  |  | Grant Date Fair Value |
Non-vested stock options at January 1 |  | 117,188 |  | $ | 2.20 |  |  | 234,375 |  | $ | 2.20 |
Granted |  | 206,390 |  | $ | 4.91 |  |  | - |  |  | - |
Vested |  | (75,167) |  | $ | 3.21 |  |  | (117,188) |  | $ | 2.20 |
Exercised |  | - |  |  | - |  |  | - |  |  | - |
Forfeited/Expired/Exchanged |  | - |  |  | - |  |  | - |  |  | - |
Non-vested stock options at December 31 |  | 248,411 |  | $ | 4.15 |  |  | 117,188 |  | $ | 2.20 |
At December 31, 2013, there was $290,000 of total unrecognized compensation cost related to non-vested stock option-based compensation arrangements granted under the Equity Incentive Plan. That cost is expected to be recognized in future years as follows:
2014 |  | $ | 116,000 |
2015 |  |  | 97,000 |
2016 |  |  | 76,000 |
2017 |  |  | 1,000 |
|  | $ | 290,000 |
The recognized compensation cost is as follows:
|  | 2013 |  | 2012 |  | For the Period from Inception (January 23, 2008) to December 31, 2013 |
Research and development |  | $ | 42,000 |  | $ | 16,000 |  | $ | 66,000 |
General and administrative |  |  | 73,000 |  |  | 23,000 |  |  | 199,000 |
Effect on net loss |  | $ | 115,000 |  | $ | 39,000 |  | $ | 265,000 |
Effect on net loss per share |  | $ | 0.01 |  | $ | 0.01 |  | $ | 0.06 |
Stock Grants In 2013 and 2012, the Company granted 30,000 and 20,799 shares, respectively, of common stock under the Equity Incentive Plan to its three independent directors in accordance with agreements for service on the board. The fair value of the stock at the time of grant was $5.00 and $4.94 per share for a total value of $150,000 and $103,000 which the Company recognized in general and administrative expense in 2013 and 2012, respectively. In 2011, the Company granted 125,000 shares of stock under the Equity Incentive Plan to a key employee which are subject to declining repurchase rights by the Company at $0.0001 per share should the employee terminate employment or upon other related circumstances prior to June 30, 2015. The fair value of the stock at the time of grant was $2.20 per share for a total value of $275,000. After the repurchase rights had expired on 62,500 shares, the Company terminated the remaining stock grant agreement in December 2012 and issued a new stock grant for 62,500 shares of which 2,500 shares were vested immediately. The new stock grant is subject to declining repurchase rights by the Company on 60,000 shares at $0.0001 per share should the employee terminate employment or upon other related circumstances prior to September 30, 2016. The Company recognized general and administrative compensation expense of $31,000 and $96,000 in 2013 and 2012, respectively, and $202,000 for the period from inception (January 23, 2008) to December 31, 2013. The remaining cost is reflected as a contra-equity balance against additional paid in capital and is expected to be recognized in future years as follows:
2014 |  | $ | 27,000 |
2015 |  |  | 26,000 |
2016 |  |  | 20,000 |
|  | $ | 73,000 |
Consultant Stock Plan On May 2, 2013, the shareholders approved the 2013 Consultant Stock Plan (the Consultant Plan) which provides for the granting of shares of common stock to consultants who provide services related to capital raising, investor relations, and making a market in or promoting the Company’s securities. The Company’s officers, employees, and board members are not entitled to receive grants from the Consultant Plan. The Compensation Committee of the Board of Directors is authorized to administer the Consultant Plan and establish the grant terms. The number of shares reserved for issuance under the Consultant Plan on the date of adoption of May 2, 2013 totaled 75,000 shares. The Consultant Plan provides for quarterly increases in the available number of authorized shares equal to the lesser of 1% 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. The Company granted 11,250 shares from the Consultant Plan to a consultant for 2013 services. The fair value of the stock at the time of grant was $9.12 per share for a total value of $102,000 which the Company recognized in general and administrative expense in 2013. Activity under the Consultant Plan in 2013 is as follows:
Reserved but unissued shares under the Consultant Plan at May 2, 2013 |  | 75,000 |
Increases in the number of authorized shares under the Plan |  | 287 |
Stock grants |  | (11,250) |
Stock grant forfeitures |  | - |
Reserved but unissued shares under the Consultant Plan at December 31, 2013 |  | 64,037 |
Warrants In conjunction with the IPO in 2012, the Company granted warrants to MDB to purchase 345,000 common stock shares at $5.00 per share exercisable from April 2013 to April 2017. The fair value of the warrants was estimated to be $128,000 on the date of the grant using the Black-Scholes option-pricing model. Expected volatility was determined through the average of a peer group of public companies. The risk-free rate for periods within the contractual life of the warrants is based on the U.S. Treasury yield in effect at the time of grant. The Company has never declared or paid dividends and has no plans to do so in the foreseeable future. The following weighted-average assumptions were utilized for the calculations:
Expected life (in years) |  | 2.5 |
Weighted average volatility |  | 27 | %
Weighted average risk-free interest rate |  | 0.33 | %
Expected dividend rate |  | - |
In 2013, a warrant to purchase 17,409 shares of common stock at $2.20 per share was exercised whereby the Company received $39,000 in proceeds. A summary of the Company’s warrant activity and related information is as follows:
|  | 2013 |  | 2012 |
|  | Warrants |  | Weighted Average Exercise Price |  | Warrants |  | Weighted Average Exercise Price |
Outstanding at beginning of year |  | 561,368 |  | $ | 3.86 |  | 216,368 |  | $ | 3.25 |
Granted |  | - |  |  | - |  | 345,000 |  | $ | 5.00 |
Exercised |  | (17,409) |  | $ | 2.20 |  | - |  |  | - |
Forfeited/Expired |  | - |  |  | - |  | - |  |  | - |
Outstanding at end of year |  | 543,959 |  | $ | 3.92 |  | 561,368 |  | $ | 3.86 |
The following table summarizes the number of warrants, the weighted average exercise price, and weighted average life (in years) by price for both total outstanding warrants and total exercisable warrants at December 31, 2013:
|  |  | Total Outstanding Warrants |
Exercise Price |  | Warrants |  | Weighted Average Exercise Price |  | Life (in years) |
$ | 1.80 |  | 80,000 |  | $ | 1.80 |  | 7.13 |
$ | 2.20 |  | 118,959 |  | $ | 2.20 |  | 2.36 |
$ | 5.00 |  | 345,000 |  | $ | 5.00 |  | 3.32 |
|  |  | 543,959 |  | $ | 3.92 |  |  |

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- Definition The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.29-31) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21506-112644 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 29, 30, 31 -Article 5 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB TOPIC 4.E) -URI http://asc.fasb.org/extlink&oid=27010918&loc=d3e74512-122707 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section S99 -Paragraph 4 -Subparagraph (SAB TOPIC 4.C) -URI http://asc.fasb.org/extlink&oid=27012166&loc=d3e187143-122770 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Article 4 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 4 -Section C Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 4 -Section E Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(d),(e)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Glossary Preferred Stock -URI http://asc.fasb.org/extlink&oid=6521494 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Article 3 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21463-112644 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.3-04) -URI http://asc.fasb.org/extlink&oid=27012166&loc=d3e187085-122770 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 11 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21564-112644 Reference 16: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21488-112644 Reference 17: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21484-112644 Reference 18: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph d -Article 4 Reference 19: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6405834&loc=d3e23285-112656 + Details
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