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14. STOCK-BASED COMPENSATION
 12 Months Ended
Dec. 31, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
14. STOCK-BASED COMPENSATION

Pursuant to the Company’s Amended and Restated 2007 Equity Incentive Plan, the aggregate number shares of the Company’s common stock available for grant of stock options and issuance is 4,341,989 shares.

 

The fair value of each option award below is estimated on the date of grant using the Black-Scholes option-pricing model. The risk free rate is based on the yield-to-maturity in continuous compounding of the US Government Bonds with the time-to-maturity similar to the expected tenor of the option granted, volatility is based on the annualized historical stock price volatility of the Company, and the expected life is based on the estimated average of the life of options using the “simplified” method, as prescribed in FASB ASC 718, due to insufficient historical exercise activity during recent years as a basis from which to estimate future exercise patterns.

  

 

In early March 2012, the Company granted to an independent director an option to purchase 12,500 shares of the Company’s common stock at an exercise price of $2.77 per share and the options vested immediately. The options were valued at $15,300 fair value, with assumed 95.89% volatility, a three-year expiration term with expected tenor of 1.49 years, a risk free rate of 0.21% and no dividend yield.

 

On May 7, 2012, the Company entered into a service agreement with an independent director in which he would be entitled to receive stock option grants of 12,500 shares of common stock on the date of the agreement and on each anniversary date from that date through May 7, 2014. The exercise price of the options, which will equal or exceed the fair market value of a share of the Company’s common stock on the day before the grant date, shall be determined by the Board of Directors and the options shall vest immediately upon the grant date. This agreement remains effective as long as the director continues to serve as a non-employee director of the Company. Pursuant to this agreement, on May 7, 2012, the Company granted to this independent director an option to purchase 12,500 shares of the Company’s common stock at an exercise price of $2.06 per share and the options vested immediately. The options were valued at $11,000 fair value, with assumed 95.21% volatility, a three-year expiration term with expected tenor of 1.49 years, a risk free rate of 0.21% and no dividend yield.

 

On July 2, 2012, the Company granted to an independent director an option to purchase 12,500 shares of the Company’s common stock at an exercise price of $1.22 per share and the options vested immediately. The options were valued at $7,000 fair value, with assumed 94.92% volatility, a three-year expiration term with expected tenor of 1.49 years, a risk free rate of 0.24% and no dividend yield.

 

On July 17, 2012, the Company granted to 3 executive officers and 18 management staff options to purchase 600,000 shares and 218,000 shares of the Company’s common stock, respectively, at an exercise price of $0.952 per share and the options vested immediately. The options to executive officers and management staff were valued at $344,743 and $125,257 fair value, respectively, both with assumed 88.03% volatility, a four-year expiration term with expected tenor of 2 years, a risk free rate of 0.24% and no dividend yield.

 

On November 8, 2012, the Company granted to an independent director an option to purchase 12,500 shares of the Company’s common stock at an exercise price of $1.37 per share and the options vested immediately. The options were valued at $7,200 fair value, with assumed 94.88% volatility, a three-year expiration term with expected tenor of 1.50 years, a risk free rate of 0.21% and no dividend yield.

 

In early March 2013, the Company granted to an independent director an option to purchase 12,500 shares of the Company’s common stock at an exercise price of $1.12 per share and the options vested immediately. The options were valued at $4,900 fair value, with assumed 74.73% volatility, a three-year expiration term with expected tenor of 1.49 years, a risk free rate of 0.19% and no dividend yield. For the three-month period ended March 31, 2013, $4,900 was recognized as general and administrative expenses.

 

On May 30, 2013, the Company granted to 3 executive officers and 17 management staff options to purchase 600,000 shares and 203,000 shares of the Company’s common stock, respectively, at an exercise price of $0.952 per share and the options vested immediately. The options were valued at $394,100 and $133,300 fair value, respectively, both with assumed 80.76% volatility, a four-year expiration term with expected tenor of 2 years, a risk free rate of 0.29% and no dividend yield.

 

On July 2, 2013, the Company granted to an independent director an option to purchase 12,500 shares of the Company’s common stock at an exercise price of $1.17 per share and the options vested immediately. The options were valued at $4,100 fair value, with assumed 61.56% volatility, a three-year expiration term with expected tenor of 1.49 years, a risk free rate of 0.24% and no dividend yield.

 

On November 8, 2013, the Company granted to an independent director an option to purchase 12,500 shares of the Company’s common stock at an exercise price of $2.12 per share and the options vested immediately. The options were valued at $8,500 fair value, with assumed 66.49% volatility, a three-year expiration term with expected tenor of 1.50 years, a risk free rate of 0.21% and no dividend yield.

 

During the year ended December 31, 2013, 213,131 shares of common stock were issued upon cashless exercise of 344,000 options.

 

 

The following table summarizes all Company stock option transactions between January 1, 2012 and December 31, 2013.

 

   

Number of Option

and Warrants

Outstanding and exercisable

  

Weighted- Average Exercise price of Option

and Warrants

    

Range of

Exercise Price per Common Share

  
Balance, December 31, 2011     1,144,471     $6.30       $2.41 - $12.60  

Granted and vested during the year

ended December 31, 2012

     868,000     $1.00       $0.95 - $2.77  

Forfeited during the

year ended December 31, 2012

     (38,000 )   $4.97       $4.97  
Balance, December 31, 2012     1,974,471     $4.00       $0.95 - $12.60  
Balance, January 1, 2013     1,974,471     $4.00       $0.95 - $12.60  

Granted and vested during the year

ended December 31, 2013

     840,500     $0.98       $0.95 - $2.12  

Exercised during the year ended

December 31, 2013

     (344,000 )   $0.95       $0.95  

Expired during the

year ended December 31, 2013

     (12,500 )   $10.43       $10.43  
Balance, December 31, 2013     2,458,471     $3.36       $0.95 - $12.60  

 

 

    Stock and Warrants Options Exercisable and Outstanding
            Weighted Average   Weighted Average
    Outstanding       Remaining   Exercise Price of
   

at December 31,

 2013

  

Range of

Exercise Prices

  

Contractual Life

 (Years)

  

Options Currently

 Outstanding

Exercisable and outstanding   2,458,471   $0.95 - $12.60   2.22   $3.36

 

The aggregate intrinsic value of options outstanding and exercisable as of December 31, 2013 was $1,682,136.

 

The total intrinsic value of options exercised during the year ended December 31, 2013 and 2012 was $64,672 and $0.