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Note 4 - Stock-Based Compensation
 3 Months Ended
Apr. 30, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

4.

Stock-Based Compensation


We grant stock awards for a fixed number of shares to employees, consultants, and directors pursuant to the Company’s shareholder-approved equity incentive plans.


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 the Company’s 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 optionees 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 applicable 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 stock-based awards granted in future periods. The values derived from using either the Lattice Binomial or the Black-Scholes model are recognized as an 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,

 
   

2014

   

2013

 

Stock-based compensation expense

  $ 12     $ 27  

Impact on basic and diluted earnings per share

  $ (0.00 )   $ (0.00 )

The total compensation cost related to nonvested awards not yet recognized is approximately $35,000, which will be expensed over a weighted average remaining life of 11 months.


During the three months ended April 30, 2014 and 2013, no stock awards were granted.


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. In 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). 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).


In the aggregate, Comarco has 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 provide that officers, key employees, directors and consultants may be granted options to purchase up to 2,675,000 shares of common stock of the Company at not less than 100 percent of the fair market value at the date of grant, unless the grantee is a 10 percent shareholder of the Company, 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, 2014 are summarized below:


   

Outstanding Options

 
   

Number of

Shares

   

Weighted-Ave.

Exercise

Price

 

Balance, January 31, 2014

    638,500     $ 1.22  

Options granted

    -          

Options canceled or expired

    (38,500 )     5.32  

Options exercise

    -          

Balance, April 30, 2014

    600,000     $ 1.13  

Stock Options Exercisable at April 30, 2014

    560,000     $ 0.95  

Transactions and other information related to restricted stock granted under these plans for the three months ended April 30, 2014 are summarized below: 


Outstanding Restricted Stock

 

Outstanding Restricted Stock

 
   

Number of Shares

   

Weighted-Average

Stock Price

on Grant Date

 
                 

Balance, January 31, 2014

  $ 420,000     $ 0.18  

Restricted Stock Granted

    -       -  

Restricted Stock Forfeited

    (30,000 )     0.18  

Balance, April 30, 2014

  $ 390,000     $ 0.18  

 At April 30, 2014, the restriced stock awards outstanding have an aggregative intrinsic value of $15,600, based on a closing price of $0.22 per share on April 30, 2104.


As of April 30, 2014, the stock awards outstanding have an aggregate intrinsic value of $6,000, based on a closing market price of $0.22 per share on April 30, 2014. The following table summarizes information about the Company’s stock awards outstanding at April 30, 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       8.45     $ 0.40       465,000     $ 0.40  
$ 1.09       100,000       4.54       1.09       60,000       1.09  
$ 4.90       15,000       3.84       4.90       15,000       4.90  
$ 10.43       20,000       2.14       10.25       20,000       10.43  
          600,000               1.13       560,000       0.95  

At April 30, 2014, shares available for future grants under the 2011 Plan totaled 35,224.