Note 10 - Stock Compensation

12 Months Ended

Jan. 31, 2014

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

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

10.

Stock Compensation

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

The Company’s former employee stock option plan (the “Prior Employee Plan”) expired during May 2005. As a result, no new options could be granted under the plan thereafter. This plan provided for the issuance of up to 825,000 shares of common stock. As of January 31, 2013, the Prior Employee Plan had 25,000 stock options outstanding. During December 2005, the Board of Directors approved and adopted the Company’s 2005 Equity Incentive Plan (the “2005 Plan”) covering 450,000 shares of common stock. The 2005 Plan was approved by the Company’s shareholders at its annual shareholders’ meeting in June 2006, and subsequently amended at its annual shareholders’ meeting in June 2008 to increase the number of shares issuable under the plan from 450,000 to 1,100,000 shares. In July 2011, the Company’s shareholders approved the 2011 Equity Incentive Plan (the “2011” Plan) covering 750,000 shares of common stock, as well as the shares that remained available for issuance under the 2005 Plan plus shares that were the subject of outstanding awards under the 2005 Plan, which again become available for grant under that plan. Thus, the 2011 Plan combines the 2011 Plan and the 2005 Plan. Under the 2011 Plan, we may grant stock options, stock appreciation rights, restricted stock, restricted stock units, and performance based awards to employees, consultants and directors. In addition, under the 2011 Plan, awards vest or become exercisable in installments determined by the compensation committee of our Board of Directors. The options granted under Prior Employee Plan expire as determined by the committee, but no later than ten years and one week after the date of grant (five years for 10 percent shareholders). The options granted under the 2011 and 2005 Plan expire as determined by the committee, but no later than ten years after the date of grant (five years for 10 percent shareholders).

During fiscal 2014, 420,000 restricted stock shares were granted and no stock options were granted. The fair value of the restricted stock shares granted during fiscal 2014 was estimated using the stock price on the date of the grant of $0.18 and a forfeiture rate of 8.2 percent. During fiscal 2013, 300,000 restricted stock units were granted and 465,000 stock options were granted. The fair value of the restricted stock units granted during fiscal 2012 was estimated using the stock price on the date of the grant of $0.16 and a forfeiture rate of 10.63 percent.

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 model require the input of subjective assumptions including estimating the length of time employees will retain their vested stock options before exercising them (the “expected term”), the estimated volatility of the common stock price over the expected term, and the number of options 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. We review our valuation assumptions at each grant date and, as a result, are likely to change our valuation assumptions used to value stock-based awards granted in future periods. The values derived from using either the Lattice Binomial or 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 materially differ from our current estimates.

The stock-based compensation expense recognized under ASC Topic 718 is summarized in the table below (in thousands except per share amounts):

	Years Ended
	January 31,
	2014			2013
Stock-based compensation expense	$	77		$	159
Impact on basic and diluted earnings per share	$	(0.01	)	$	(0.02	)

The total compensation cost related to nonvested awards not yet recognized is approximately $18,200, which will be expensed over a weighted average remaining life of 14 months.

The fair value of the 465,000 options granted under our stock option plans during fiscal 2013 was estimated on the date of grant using the following weighted average assumptions:

		Year Ended
		January 31, 2013
Weighted average risk-free interest rate		0.7%
Expected life (in years)		5.5
Expected stock volatility		121%
Dividend yield		None
Expected forfeitures		8.2%

Transactions and other information related to stock options granted under these plans for the years ended January 31, 2014 and 2013 are summarized below:

	Outstanding Options
				Weighted-Ave.
	Number of			Exercise
	Shares			Price
Balance, February 1, 2012		380,000		$	3.93
Options granted		465,000			0.40
Options canceled or expired		(80,500	)		7.90
Options exercise		-			-
Balance, January 31, 2013		764,500		$	1.48
Options granted		-
Options canceled or expired		(126,000	)		2.77
Options exercise		-
Balance, January 31, 2014		638,500		$	1.22
Stock Options Exercisable at January 31, 2014		591,100		$	1.23

Transactions and other information related to restricted stock units (“RSU’s”) granted under these plans for the years ended January 31, 2014 and 2013 are summarized below:

	Outstanding Restricted
	Stock Units
				Weighted-Ave.
	Number of			Exercise
	Shares			Price
Balance, February 1, 2012		293,651		$	3.93
RSUs granted		300,000			0.40
RSUs canceled or expired		(42,480	)		7.90
RSUs exercise		(246,845	)		0.28
Balance, January 31, 2013		304,326		$	1.48
RSUs canceled or expired		(112,700	)		0.16
RSUs exercise		(191,626	)		0.16
Balance, January 31, 2014		-		$	-

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.

Transactions and other information related to restricted stock granted under these plans for the year ended January 31, 2014 are summarized below:

	Outstanding Restricted Stock
	Number of Shares		Weighted-Average Stock Price on Grant Date
Balance, January 31, 2013		-	$	-
Restricted Stock Granted		420,000		0.18
Restricted Stock Forfeited		-		-
Balance, January 31, 2014		420,000	$	0.18

At January 31, 2014 and 2013, the stock awards outstanding had no intrinsic value based upon closing market price of $0.17 per share, respectively.

The following table summarizes information about stock awards outstanding at January 31, 2014:

			Awards Outstanding						Options Exercisable
Range of Exercise/Grant Prices			Number Outstanding		Weighted-Ave. Remaining Contractual Life		Weighted-Ave. Exercise/Grant Price		Number Exercisable		Weighted-Ave. Exercise Price
	$0.40			465,000		8.70	$	0.40		465,000	$	0.40
$1.09	-	$1.20		118,500		9.65		1.11		71,100		1.11
	$4.90			15,000		4.08		4.90		15,000		4.90
$8.38	-	$10.43		40,000		3.40		9.78		40,000		9.78
				638,500				1.22		591,100		1.23

There were 591,100 stock options exercisable at January 31, 2014 at a weighted-average exercise price of $1.23. Shares available under the plans for future grants at January 31, 2014 were 35,224.

- 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.

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