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Note N - Stock Options

12 Months Ended

Dec. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

NOTE N—STOCK OPTIONS

1999 Stock Option Plan

During 1999, the Board of Directors of the Company adopted the 1999 Stock Option Plan (the 1999 Plan). The 1999 Plan was not presented to stockholders for approval and thus incentive stock options are not available under the plan. Under the 1999 Plan, 2,000,000 shares of common stock are reserved for issuance to employees, officers, directors, and consultants of the Company at exercise prices which may not be below 85% of fair market value. The term of nonstatutory stock options granted may not exceed ten years. Options issued under the Plan vest pursuant to the terms of stock option agreements with the recipients. In the event of a change in control, as defined, all options outstanding vest immediately. The 1999 Plan expired in August 2009.

2004 Stock Option Plan

On October 12, 2004, the Board of Directors of the Company approved the 2004 Stock Option Plan (the 2004 Plan). The 2004 Plan has not yet been presented to stockholders for approval and thus incentive stock options are not available under this plan. Under the terms of this plan, 4,000,000 shares of common stock are reserved for issuance to employees, officers, directors, and consultants of the Company at exercise prices which may not be below 85% of fair market value. The term of stock options granted may not exceed ten years. Options issued under the Plan vest pursuant to the terms of stock option agreements with the recipients. In the event of a change in control, as defined, all options outstanding vest immediately. The Plan expires in October 2014.

Non-Plan Stock Options

Periodically, the Company has granted options outside of the 1999 and 2004 Plans to various employees and consultants. In the event of change in control, as defined, certain of the non-plan options outstanding vest immediately.

Stock Option Activity

Information summarizing option activity is as follows:

	Number of Options											Weighted average exercise		Weighted average remaining life		Aggregate intrinsic
	1999 Plan		2004 Plan			Non Plan			Total			price		(in years)		value

Outstanding, as of December 31, 2011		500,000		2,831,836			1,072,576			4,404,412		$	0.22

Granted		—		600,000			—			600,000			0.09
Exercised		—		—			—			—			—
Forfeited		—		(164,623	)		(365,378	)		(530,001	)		0.09
Expired		—		(504,941	)		(707,198	)		(1,212,139	)		0.30
Outstanding, as of December 31, 2012		500,000		2,762,272			—			3,262,272		$	0.16

Granted		—		1,150,000			1,200,000			2,350,000			0.17
Exercised		—		(179,998	)		—			(179,998	)		0.13
Forfeited		—		(41,667	)		—			(41,667	)		0.16
Expired		—		—			—			—			—
Outstanding, as of December 31, 2013		500,000		3,690,607			1,200,000			5,390,607		$	0.17		4.48	$	136,787
Vested or expected to vest at December 31, 2013										4,526,934		$	0.17		4.17	$	130,993
Exercisable at December 31, 2013										2,495,595		$	0.17		2.74	$	105,496

The options outstanding and exercisable at December 31, 2013 were in the following exercise price ranges:

				Options Outstanding				Options Exercisable
Range of exercise prices				Number of shares	Weighted average exercise price		Weighted average remaining life (in years)	Number exercisable	Weighted average exercise price
	$ 0.08	-	0.21	4,980,607	$	0.14	4.60	2,085,595	$	0.12
	0.22	-	0.40	70,000	0.40		3.02	70,000	0.40
	0.41	-	0.68	340,000	0.46		3.02	340,000	0.46
	$ 0.07	-	0.68	5,390,607				2,495,595

The aggregate intrinsic value in the table above represents the total intrinsic value, based on the Company’s closing stock price of $0.16 as of December 31, 2013, which would have been received by the option holders had all option holders exercised their options as of that date. The total number of in-the-money options exercisable as of December 31, 2013 was 1,820,595.

The weighted average fair value of options granted during the years ended December 31, 2013 and 2012 was $0.15 and $0.05 per share, respectively. The total intrinsic value of options exercised during the years ended December 31, 2013 and 2012 was $31,643, and $0, respectively. The total fair value of shares vested during the years ended December 31, 2013 and 2012 was $42,058 and $70,026 respectively.

As of December 31, 2013 future compensation cost related to nonvested stock options is $335,020 and will be recognized over an estimated weighted average period of 2.10 years.

On March 13, 2014, the Board of Directors granted options to purchase 3,420,000 shares of the Company’s common stock to certain employees and members of the Board of Directors. The terms of the options include the following:

Exercise price - $0.205 per share

Vesting period – Three years

Expiration date – March 21, 2021

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

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