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Stock-Based Compensation
9 Months Ended
Sep. 30, 2013
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Stock-Based Compensation

8. STOCK-BASED COMPENSATION

On April 25, 2013, at the Company’s 2013 Annual Meeting of Stockholders, the Company’s stockholders approved the Company’s adoption of the new 2013 Stock Incentive Plan (“2013 Plan”) having terms substantially similar to the Company’s 2005 Stock Incentive Plan (the “2005 Plan”) and having 3.5 million shares available for issuance in respect of awards made there under. As of September 30, 2013, the aggregate number of shares of common stock remaining available for issuance for awards under the 2013 Plan and the 2005 Plan totaled approximately 4 million.

On February 11, 2013, the Company’s former Chairman, President and Chief Executive Officer (“Former CEO”) contractually agreed pursuant to a forebearance agreement (the “Forbearance Agreement”) to not exercise 900,000 fully vested options until such time as the stockholders of the Company approved an increase in the number of authorized shares of the Company’s common stock or, if earlier, the Company’s written consent. On April 25, 2013, the Company’s stockholders approved an increase in the authorized shares of common stock and therefore the restriction placed on the Former CEO’s ability to exercise the 900,000 fully vested options lapsed. For financial reporting purposes, the Forbearance Agreement was accounted for at the time it was executed as a cancellation with no concurrent grant and therefore upon the lapsing of the exercise restriction on April 25, 2013, the Company recognized additional stock compensation of approximately $423,000.

On April 25, 2013, the Company granted stock options to numerous employees to acquire a total of approximately 1.3 million shares of common stock at an exercise price of $1.24. Included therein, was a grant to the Company’s Former CEO to acquire 1 million shares of common stock of which a quarter vested immediately and the balance vest based upon the achievement of defined cash flow, revenue or stock price targets. The fair value of the Former CEO’s vested options resulted in stock based compensation recognized for the three months ended June 30, 2013 and the nine months ended September 30, 2013 of approximately $200,000.

During May 2013 the Company issued 75,000 shares of common stock to two consultants as compensation for service rendered. In connection therewith, the Company recognized stock compensation of approximately $80,000 for the three months ended June 30, 2013 and the nine months ended September 30, 2013.

 

On June 15, 2013 the Former CEO resigned from the Company. As of the date of termination the Former CEO held approximately 1.2 million vested and 750,000 unvested options with exercise prices of $1.24 or $3.75. In accordance with the terms of the stock option plan, the unvested options expired on the date of resignation and are available for future grants under the stock option plan. The Former CEO had 90 days from termination date to exercise vested options. The Former CEO’s vested options expired unexercised during September 2013 and are currently available for future grants under the stock option plans.

On June 21, 2013, the Company granted stock options to its Interim Chief Executive Officer to acquire 200,000 shares of common stock at an exercise price $0.73 per share. The options vest quarterly over one year and vesting may be accelerated under certain defined circumstances. The total fair value of the grant will be recognized as compensation expense over the vesting period, and is approximately $96,000. The amount of stock compensation expense recognized for the three months ended September 30, 2013 was not material and for the nine months ended September 30, 2013 was approximately $50,000.

During August 2013 the Company granted stock options and restricted stock awards to acquire a total of approximately 1.2 million and 233,000 shares of common stock respectively to various employees and consultants (collectively referred to as the “August 2013 Grant”.) Approximately 1 million stock options have an exercise price of $0.92 and the balance have an exercise price of $0.74. Approximately 800,000 of the stock options and all the restricted stock awards vest quarterly over a year from the date of grant and the remaining stock options vest annually over four years from the date of grant. The aggregate fair value of the August 2013 Grant is approximately $916,000 of which approximately $265,000 was recognized as stock compensation for the three and nine months ended September 30, 2013. During the nine months ended September 30, 2013, 2,795,367 stock options were granted, 2,647,748 were forfeited or expired and 18,059 were exercised.