Note 3 - Stock Compensation

3 Months Ended

Apr. 30, 2013

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

3. Stock-Based Compensation

We grant stock awards for a fixed number of shares to employees, consultants, and directors with an exercise price equal to the fair value of the shares at the date of grant.

We account for stock-based compensation using the modified prospective method, which requires measurement of compensation cost for all stock awards at fair value on date of grant and recognition of compensation over the service period for awards expected to vest. The fair value of stock options is determined using a Lattice Binomial model for options with performance-based vesting tied to our stock price and the Black-Scholes valuation model for options with ratable term vesting. Both the Lattice Binomial and Black-Scholes valuation models require the input of subjective assumptions. These assumptions include estimating the length of time employees will retain their vested stock options before exercising them (the “expected term”), the estimated volatility of our common stock price over the expected term, and the number of awards that will ultimately not complete their vesting requirements (“forfeitures”). Changes in these subjective assumptions can materially affect the estimate of fair value of stock-based compensation and, consequently, the related amount recognized as an expense on the consolidated statements of operations. As required under the accounting rules, we review our valuation assumptions at each grant date, and as a result, we are likely to change our valuation assumptions used to value employee stock-based awards granted in future periods. The values derived from using either the Lattice Binomial or the Black-Scholes model are recognized as expense over the vesting period, net of estimated forfeitures. The estimation of stock awards that will ultimately vest requires significant judgment. Actual results, and future changes in estimates, may differ from our current estimates.

The compensation expense recognized is summarized in the table below (in thousands, except per share amounts):

	Three Months Ended April 30,
	2013		2012
Total stock-based compensation expense	$	27	$	40

Impact on basic and diluted earnings per share		0.00		0.01

The total compensation cost related to nonvested awards not yet recognized is approximately $68,000, which will be expensed over a weighted average remaining life of 6 months.

During the first quarter of fiscal 2014 no stock awards were granted. During the first quarter of fiscal 2013, 300,000 restricted stock units were granted and no stock options were granted.

We have stock-based compensation plans under which directors, employees and consultants receive stock options and other equity-based awards. The employee stock option plans and a director stock option plan provide that officers, key employees, consultants and directors may be granted awards to purchase up to 2,675,000 shares of common stock at not less than 100 percent of the fair market value at the date of grant, unless the optionee is a 10 percent shareholder, in which case the price must not be less than 110 percent of the fair market value.

Transactions and other information related to stock options granted under these plans for the three months ended April 30, 2013 are summarized below:

	Outstanding Options
	Number of Shares		Weighted-Average Exercise Price
Balance, January 31, 2013		764,500	$	1.48
Awards granted		—		—
Awards canceled or expired		—		—
Awards exercised		—		—
Balance, April 30, 2013		764,500	$	1.48
Stock Options Exercisable at April 30, 2013		212,100	$	4.00

Transactions and other information related to restricted stock units (“RSU’s”) granted under these plans for the three months ended April 30, 2013 are summarized below:

	Outstanding Restricted Stock Units
	Number of Shares			Weighted-Average Stock Price on Grant Date
Balance, January 31, 2013		304,326		$	0.20
RSU’s granted		—			—
RSU’s canceled or expired		(112,700	)		0.16
RSU’s vested/Common stock issued		(187,300	)		0.16
Balance, April 30, 2013		4,326		$	2.89

The RSU’s canceled or expired in the table above represent the difference between the number of shares awarded and the number issued because the recipient elected a net award to cover personal income taxes.

The following table summarizes information about the Company’s stock awards (consisting of stock options and RSU’s) outstanding at April 30, 2013:

				Awards Outstanding						Awards Exercisable
Range of Exercise/Grant Prices				Number Outstanding		Weighted-Avg. Remaining Contractual Life (years)		Weighted-Avg. Exercise		Number Exercisable		Weighted-Avg. Exercise
$	0.40	to	1.20		683,500		8.1	$	0.62		131,100	$	1.10
	2.89	to	4.90		19,326		3.8		4.45		15,000		4.90
	8.08	to	10.43		66,000		2.3		9.56		66,000		9.56
					768,826		7.5		1.49		212,100		4.00

At April 30, 2013, shares available for future grants under the Plans were 455,224.

- 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.

+ References+ Details