Stockholders' Equity

3 Months Ended

Mar. 31, 2013

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

6.           Stockholders’ Equity

2011 Equity Incentive Plan

The Company’s 2011 Equity Incentive Plan, as amended and restated (the “Plan”) is designed and utilized to enable the Company to offer its employees, officers, directors, consultants and others whose past, present and/or potential contributions to the Company have been, are or will be important to the success of the Company, an opportunity to acquire a proprietary interest in the Company. A total of 5,000,000 shares of common stock are eligible for issuance under the Plan. The Plan provides for the grant of any or all of the following types of awards: stock options, restricted stock, deferred stock, stock appreciation rights and other stock-based awards. The Plan is administered by the Board, or, at the Board's discretion, a committee of the Board.

On April 17, 2012, the Company issued to management an aggregate of 1,100,000 shares of restricted stock. The vesting date of 1,025,000 shares of restricted stock was November 15, 2012, provided, however, that each such grantee has the right to extend the vesting date by six-month increments in his or her sole discretion, prior to the date the restrictions would lapse. The vesting date of 37,500 shares of restricted stock is May 15, 2013, provided however, the executive has the right to extend the vesting date by six-month increments in his sole discretion, prior to the date the restrictions would lapse. The vesting date of 37,500 shares of restricted stock is May 15, 2014, provided however, the executive has the right to extend the vesting date by six-month increments in his sole discretion, prior to the date the restrictions would lapse. As of March 31, 2013, restrictions on 509,488 shares have lapsed. On November 15, 2012, the Company repurchased 209,623 shares upon vesting of restricted stock in satisfying the grantees tax withholding obligation.

Also, on April 17, 2012, the Company issued 50,000 shares of restricted stock to a non-executive employee. The vesting date of the 50,000 shares of restricted stock was November 15, 2012, provided however, the employee has the right to extend the vesting date by nine-month increments in her sole discretion, prior to the date the restrictions would lapse. As of March 31, 2013, restrictions on 24,916 shares have lapsed. On November 15, 2012 the Company repurchased 8,540 shares upon vesting of restricted stock in satisfying the grantees tax withholding obligation.

On May 1, 2012, the Company granted options to purchase an aggregate of 105,500 shares of Common Stock to non-executive employees of the Company. The exercise price per share of the options is $3.00 per share, and 50% of the options will vest on each of the first and second anniversaries of the grant date. Of these awards, 26,750 options were forfeited, and reverted to, and are eligible for re-grant under the Plan.

On June 1, 2012, the Company issued to non-management directors 138,335 shares of restricted stock. The vesting date of 138,335 shares of restricted stock was December 1, 2012, provided, however, that each such grantee has the right to extend the vesting date by six-month increments in his sole discretion, prior to the date the restrictions would lapse. As of March 31, 2013, restrictions on 53,995 shares have lapsed. On November 15, 2012 the Company repurchased 18,870 shares on vesting of restricted stock in satisfying the grantees tax withholding obligation.

On June 1, 2012, the Company issued to management 242,775 shares of restricted stock. The vesting date of 242,775 shares of restricted stock was December 1, 2012, provided, however, that each such grantee has the right to extend the vesting date by six-month increments in his sole discretion, prior to the date the restrictions would lapse. As of March 31, 2013, none of these shares have vested.

Stock Options

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility.

The fair value for all options and warrants was estimated at the date of grant using a Black-Scholes option-pricing model with the following weighted-average assumptions:

Expected Volatility (i)	35-42	%
Expected Dividend Yield	0	%
Expected Life (Term) (ii)	3 – 5.75 years
Risk-Free Interest Rate	0.42% - 0.98	%

The options that the Company granted under its plans expire at various times, either five, seven or ten years from the date of grant, depending on the particular grant.

(i) Due to the Company’s limited trading activity, the Company used the average volatility of similar companies in its industry.

(ii) Due to the Company’s limited history, the expected life of options was calculated using the ‘simplified method’ in accordance with Staff accounting bulletin (“SAB”) Topic 14.02 in accordance with SAB no. 110.

Options

			Weighted-Average
	Options		Exercise Price
Outstanding at January 1, 2013		345,000	$	4.54
Granted		-		-
Canceled		-		-
Exercised		-		-
Expired/Forfeited		-		-
Outstanding at March 31, 2013		345,000	$	4.54
Exercisable at March 31, 2013		174,858	$	5.00

Compensation expense related to stock option grants for the Current Quarter and the Prior Year Quarter was $20,000 and $10,000, respectively and is reported as stock-based compensation under operating expenses in the Unaudited Condensed Consolidated Statements of Operations.   An additional amount of $64,000 is expected to be expensed over a period of 13 months from April 1, 2013 through April 30, 2014.

The preceding table does not include options to purchase 576 shares of Common Stock for $728 per share issued under the Company’s former equity plan. The Company does not expect to issue any equity awards under this plan.

Warrants

A summary of the Company’s warrants for the Current Quarter is as follows:

			Weighted-Average
	Warrants		Exercise Price
Outstanding at January 1, 2013		1,132,043	$	2.47
Granted		-		-
Canceled		-		-
Exercised		-		-
Expired/Forfeited		-		-
Outstanding at March 31, 2013 and expected to vest.		1,132,043	$	2.47
Exercisable at March 31, 2013		1,082,043	$	2.35

Compensation expense related to warrants for the Current Quarter and the Prior Year Quarter was $11,000 and $11,000, respectively, and is reported as stock-based compensation under operating expenses in the Unaudited Condensed Consolidated Statements of Operations.  An additional amount of $22,000 is expected to be expensed over a period of 6 months from April 1, 2013 through September 30, 2013. 

The Company values other warrants issued to non-employees at the commitment date at the fair market value of the instruments issued, a measure which is more readily available than the fair market value of services rendered, using the Black-Scholes model. The fair market value of the instruments issued is expensed over the vesting period.

The Company issued to a licensee warrants to purchase 75,000 shares of common stock with an exercise price of $5.50 per share and a term of 5-years. Compensation expense related to warrants in connection with the licensing agreement is amortized over the 5-year initial term of the license agreement and is recorded as a discount to licensing revenues. The stock-based licensing revenue-discount for the Current Quarter and the Prior Year Quarter was $1,000 and $1,000, respectively.  An additional amount of $16,000 is expected to be amortized over a period of 42 months from April 1, 2013 through September 30, 2016.

Restricted Stock

Compensation cost for restricted stock is measured using the fair value of the Company’s common stock at the date the common stock is granted. The compensation cost, net of projected forfeitures, is recognized over the period between the grant date and the date any restrictions lapse, with compensation cost for grants with a graded vesting schedule recognized using the treasury method. The restrictions do not affect voting and dividend rights.

A summary of the Company’s restricted stock for the Current Quarter is as follows:

	Restricted Shares		Weighted-Average Grant Date Fair value
Outstanding at January 1, 2013		964,607	$	3.00
Granted		-		-
Canceled		-		-
Vested		-		-
Expired/Forfeited		-		-
Outstanding at March 31, 2013		964,607	$	3.00

Compensation expense related to restricted stock grants for the Current Quarter and Prior Year Quarter was $35,000 and $7,000, respectively, and is reported as stock-based compensation under operating expenses in the Unaudited Condensed Consolidated Statements of Operations.  An additional amount of $135,000 is expected to be expensed over a period of 13 months from April 1, 2013 through April 30, 2014.

Shares Available Under the Company’s 2011 Equity Incentive Plan

At March 31, 2013, there were 3,330,840 common shares available for issuance under the Company’s 2011 Equity Incentive Plan. See Note 10 Subsequent Events.

Shares Reserved for Issuance

At March 31, 2013, there were 4,808,459 common shares reserved for issuance pursuant to warrants, stock options and availability for issuance under the Company’s 2011 Equity Incentive Plan. See Note 10 Subsequent Events.

Dividends

The Company has not paid any dividends to date.