Stock Options

12 Months Ended

Dec. 31, 2013

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

STOCK OPTIONS

10. STOCK OPTIONS

During 2012, 27,700,000 options were granted, 211,600 options vested and 26,595,804 were forfeited, as follows:

On May 18, 2012, five directors each received 40,000 options, for a total of 200,000 options, as compensation. The options were immediately vested with a expiration date of May 18, 2017 and a strike price of $.10. On May 18, 2012, 27,500,000 options were granted to directors and management as incentive bonuses. The options vesting schedule is tied to market performance, with strike prices ranging from $.125 and $.40, and bear a expiration date of May 18, 2018. The options are unvested at December 31, 2013.

Of the 211,600 options which vested in 2012: 49,600 have an expiration date of September 11, 2014 and a strike price of $2.21, 160,000 have an expiration date of May 18, 2017 and a strike price of $.10, and 2,000 have an expiration date of April 26, 2017 and a strike price of $.21.

Of the 26,595,804 options which were forfeited in 2012: 3,200,000 issued to directors and management had an expiration date of September 27, 2017 and a strike price of $.50, 280,000 issued to a former director had expiration dates ranging from September 11, 2014 to May 18, 2017 and strike prices ranging from $.03 to $.60, 395,804 were issued to former employees who voluntarily terminated with expiration dates ranging from September 11, 2014 and April 25, 2017 and strike prices ranging from $.21 to $2.50, and 22,720,000 were issued to former officers and employees who were not retained following the sale of Illume Mobile with expiration dates ranging from May 18, 2018 to October 6, 2017 and strike prices ranging from $0.125 and $2.50.

During 2013, no options were granted, 39,200 options vested, and 63,120 options expired, as follows:

Of the 39,200 options that vested in 2013: all had an expiration date of September 11, 2014 and a strike price of $2.21.

Of the 63,120 options that expired in 2013, expirations occurred between January 1, 2013 and July 1, 2013 and the strike prices were $.60.

The calculated value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model, assuming maximum value, 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 $90,020 and $94,738 was recognized in 2013 and 2012 for employee options based on the Black-Scholes computation.

A summary of stock option activity as of December 31, 2013 and 2012 and changes during the periods then ended is presented below:

 

	Stock Options
	Options			Weighted Average Exercise Price
Outstanding – December 31, 2011		11,829,507		$	0.52
Granted		27,700,000		$	0.26
Forfeited or Expired		(26,595,804	)	$	0.32
Outstanding – December 31, 2012		12,933,703		$	0.36
Exercisable – December 31, 2012		5,394,503		$	0.51
Granted		-		$	0.00
Forfeited or Expired		(63,120	)	$	0.60
Outstanding – December 31, 2013		12,870,584		$	0.37
Exercisable –  December 31, 2013		5,370,584		$	0.52

Total Options outstanding and exercisable at December 31, 2013 and 2012 had an aggregate intrinsic value of $-0- and a weighted-average remaining contractual term of 2.9 and 3.7 years, respectively.

A summary of the status of the Company’s nonvested options and restricted stock as of December 31, 2013 and 2012 is presented below:

	Stock Options
Nonvested Shares	Options
Nonvested - Beginning of Year 2012		6,028,450
2012 Granted		27,700,000
2012 Vested		(211,600	)
2012 Forfeited		(25,977,650	)
Nonvested – End of Year 2012		7,539,200
2013 Granted		-
2013 Vested		(39,200	)
2013 Forfeited		( -	)
Nonvested- End of Year 2013		7,500,000

As of December 31, 2013 and 2012, there was $290,938 and $380,958 unrecognized compensation cost related to nonvested share-based compensation arrangements under the stock bonus plan. The weighted-average remaining vesting period is 3 years.