EMPLOYEE STOCK PLANS

12 Months Ended

Dec. 31, 2012

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

EMPLOYEE STOCK PLANS

7.  EMPLOYEE STOCK PLANS

Stock Options and Restricted Stock Awards

The Company adopted the MacroSolve, Inc. Compensation and Stock Option Plan 2008-2010 on December 16, 2008. The Plan includes use of stock options for compensation of officers and directors. At the adoption date, 2,674,420 options which have been approved by shareholders between 2002 and 2005 remained available for use by the Compensation Committee of the Board of Directors. During 2011, 1,761,569 options were issued, respectively, as follows:

	At Adoption		Issued			Issued			Issued
	Date		2011			2010			2009			Remaining
Incentive Stock Options for Key Managers		1,300,000		(1,076,000	)		-			(224,000	)		-
Director Stock Options		400,000		(80,000	)		(160,000	)		(160,000	)		-
Other Awards and Reserves		974,420		(605,569	)		(175,000	)		(193,851	)		-
Total		2,674,420		(1,761,569	)		(335,000	)		(577,851	)		-

The Plan also involves three separate incentive awards: (1) The Employee Bonus awards involve annual (or quarterly) payments of cash or restricted stock for attainment of goals. All employees will participate in the Employee Bonus program; (2) The Management Incentive Stock Option Plan awards involve annual issuance of stock options for attainment of goals. Only officers of the Company will participate in these awards; and, (3) The Senior Executive Incentive Stock Option Plan awards involve issuance of stock options for attainment of specific goals associated with public financing of the Corporation and public trading of its shares. Only the Chairman of the Board and the Chief Executive Officer will participate in these awards. As of December 31, 2012, all awards in the MacroSolve, Inc. Compensation and Stock Option Plan 2008-2010 had been granted. Furthermore, the balance of 536,924 shareholder approved options expired unissued in May 2012.

On September 23, 2011, shareholders approved 10,000,000 shares of restricted common stock for management incentive plans. On September 23, 2011, the Company adopted the 2011 MacroSolve, Inc. Key Employee Stock Incentive Plan. Subsequently on April 10, 2012, shareholders approved an additional 40,350,000 shares bringing the total to 50,350,000 shares of restricted common stock for management incentive plans. On that date, the Company amended the 2011 Plan to incorporate the increased number of shares. The purpose of this Plan is to provide competitive incentives that will enable the Company to attract, retain, motivate, and reward Key Employees of the Company. The approved shares may be granted as Stock Bonus Awards, Performance Unit Awards, or Restricted Stock Awards, and/or Options, which may be Incentive Stock Options or Non-Statutory Stock Options. During 2012, 27,700,000 options were issued and 17,540,000 were cancelled. During 2011, 4,368,431 options were issued and 4,278,431 were cancelled in 2012, as follows:

	At Adoption		Issued			Cancelled		Issued			Cancelled		Remaining
	Date		2011			2011		2012			2012
Beginning Balance		10,000,000
2012 increase		40,350,000
Director Stock Options				(1,720,000	)		1,640,000		(5,200,000	)		40,000
Incentive Stock Options for Key Managers				(2,126,564	)		2,618,431		(22,500,000	)		17,500,000
Non-Statutory Stock Options for Key Managers				(491,867	)		-		-			-
Incentive Stock Options for Key Employees				(30,000	)		20,000		-			-
Ending Balance December 31, 2012		50,350,000		(4,368,431	)		4,278,431		(27,700,000	)		17,540,000		40,100,000

At the end of the second quarter 2010, employees were granted 941,500 shares of registered compensation shares under the 2010 Employee Bonus award plan. These shares will be distributed on a three year vesting schedule to employees who remain with the Company as of the distribution dates. The Company valued these awards at $942 which was the amount of compensation employees elected to take within 30 days of the grant on 83(b) elections filed with the Internal Revenue Service. The restricted stock award agreements bear a substantial risk of forfeiture by the employee in the event of their voluntary termination. Since grant, 213,166 shares have been forfeited by terminated employees. On July 12, 2012, 228,585 shares vested to twelve employees. On July 12, 2011, 271,168 shares vested to fourteen employees. Remaining unvested shares are 228,581 which will vest on July 12, 2013.

Prior to going public, the company used the calculated value method to account for the options. Under this method, a nonpublic entity that is unable to estimate the expected volatility of the price of its underlying share may measure awards based on a “calculated value,” which substitutes the volatility of an appropriate index for the volatility of the entity’s own share price.  Although the Company became publicly traded in August 2008, the stock has been subject to significant swings in trading volume and periods of thin trading; therefore, management determined it was unable to estimate the expected volatility of the stock price. In addition, management has not been able to identify a similar publicly held entity that can be used as a benchmark. Therefore, as a substitute for volatility, the Company used the historical volatility of the Technology Select Sector (XLK) index which is representative of the Company’s industry. The Company has used the historical closing values of that index to estimate volatility for the valuation of options in 2012 and 2011.

The calculated value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model, which values options based on the estimated fair value of the Company’s common stock at the grant date, the option strike price, the expected life of the option, the estimated volatility of the stock, the expected dividend payments, and the risk-free interest rate over the expected life of the option.  The Company uses historical data to estimate option exercise and employee termination within the valuation model. The expected term of options granted is based on the vesting period and represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Stock based compensation expense of  $-0- and $-0- was recognized in 2012 and 2011 respectively for director options. Stock based compensation expense of $-0- was recognized in 2012 and 2011 for employee options based on the Black Scholes computation.

Stock Based Compensation

Certain executive and management employees receive salary compensation in the form of restricted stock awards which vest over six months and which bear a substantial risk of forfeiture in the event of voluntary termination. Compensation expense for stock awards is recognized ratably over the implicit vesting period from date of grant to the termination of the trust.  Compensation expense for stock awards is based upon the estimated market value of the Company’s common stock at the date of grant. When the employee receiving the grant makes an 83(b) election, the compensation expense is recognized in the month of the election for the fair market value at the time of the election. In 2012 and 2011, all employees receiving stock awards elected 83(b) tax treatment. Because of low trading volumes and the history of operating losses, employees elected between $.01 - $.001 per share for restricted awards issued in 2012 and 2011. The Company granted 8,965,068 shares of restricted common stock in 2012 to employees and directors for compensation earned in the fourth quarter of 2011 and the first three quarters of 2012 and valued the employee awards at $25,711 based on the fair market value which employees claimed in tax elections to recognize compensation at the date of the grant.   The Company recognized stock based compensation expense related to all equity awards, including salary differential stock awards, stock bonus plans, and Board of Director compensation, totaling  $97,085, and $95,123, for the years ended December 31, 2012, and 2011, respectively.

Incentive Stock Options

In 2012, the Company granted 27,700,000 and cancelled 17,540,000 options to directors, manager and employees under the 2011 MacroSolve, Inc. Key Employee Stock Incentive Plan. A net of 10,000,000 director and management bonus options vest ratably in three increments based on the Company stock trading at $.25, $.40 and $.60 per share over five trading days at the price of $.125, $.25 and $.40, respectively. The 160,000 options issued to directors for annual board service vest at issuance with an exercise price of $.10. The incentive options expire five years from the date of issuance and are forfeited if employment ceases.

A summary of activity under the Employee Stock Plans as of December 31, 2012 and changes during the period then ended is presented below:

	Stock Options					Restricted Stock
	Options			Weighted Average Exercise Price		Shares
Outstanding – December 31, 2011		11,829,507		$	0.52		2,990,356
Exercisable – December 31, 2011		5,801,057		$	0.52		-
Granted		27,700,000		$	0.26		8,684,293
Exercised or Vested		(211,600	)	$	0.64		(7,409,485	)
Forfeited or Expired		(24,087,804	)	$	0.33		(30,000	)
Outstanding – December 31, 2012		15,441,703		$	0.35		4,235,164
Exercisable –  December 31, 2012		5,394,503		$	0.51		-

The weighted-average grant-date calculated value of options granted during the period ended December 31, 2012 and 2011 $-0-.  Options outstanding at December 31, 2012 had an aggregate intrinsic value of $-0- and a weighted-average remaining contractual term of 2.2 years. Options that were exercisable at December 31, 2012 had an aggregate intrinsic value of $-0- and a weighted-average remaining contractual term of 2.0 years.

A summary of the status of the Company’s nonvested options and restricted stock as of December 31, 2012 is presented below:

	Stock Options
Nonvested Shares	Options			Weighted- Average Grant Date.Calculated Value		Restricted Stock
Nonvested - Beginning of Year 2012		6,028,450		$	-		2,990,356
Granted		27,700,000		$	-		8,684,293
Vested		(211,600	)	$	-		(7,409,485	)
Forfeited		(23,469,650	)	$	-		( 30,000	)
Nonvested- End of Year 2012		10,047,200		$	-		4,235,164

As of December 31, 2012, there was $-0- unrecognized compensation cost related to nonvested share-based compensation arrangements under the stock bonus plan. The weighted-average remaining vesting period is 2.9 months.