Note 11 - Stock-based Compensation

6 Months Ended

Jun. 30, 2013

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

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

11. Stock-based Compensation

The Company measures stock-based compensation expense for all stock-based compensation awards based on the grant-date fair value and recognizes the cost in the financial statements over the employee requisite service period.

The following table summarizes the consolidated stock-based compensation expense, by type of awards for the periods as follows (in thousands):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2013		2012		2013		2012
Employee stock options	$	36	$	95	$	107	$	193
Stock grants		—		106		—		106
Total stock-based compensation expense	$	36	$	201	$	107	$	299

The following table summarizes the consolidated stock-based compensation by line item for the periods as follow (in thousands):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2013		2012		2013		2012
General and administrative	$	36	$	185	$	95	$	267
Sales, marketing and customer service		—		16		11		30
Engineering, design and product management		—		—		1		2
Total stock-based compensation expense	$	36	$	201	$	107	$	299

Stock-based compensation expense recognized in the Condensed Consolidated Statements of Operations is based on awards ultimately expected to vest. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Valuation Assumptions

Valuation and Amortization Method —The Company estimates the fair value of time-based and performance-based stock options, if any, granted using the Black-Scholes-Merton option-pricing formula. The fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. Time-based and performance-based options, if any, typically have a five-year life from date of grant and vesting periods of three to four years. There were no performance-based options outstanding at June 30, 2013 or December 31, 2012.

Expected Term —The expected term represents the period that the Company’s stock-based awards are expected to be outstanding. For awards granted subject only to service vesting requirements, the Company utilizes the simplified method for estimating the expected term of the stock-based award, instead of historical exercise data.

Expected Volatility —The Company uses the historical volatility of the price of its common shares.

Expected Dividend —The Company has never paid dividends on its common shares and currently does not intend to do so and, accordingly, the dividend yield percentage is zero for all periods.

Risk-Free Interest Rate —The Company bases the risk-free interest rate used in the Black-Scholes-Merton valuation method upon the implied yield curve currently available on U.S. Treasury zero-coupon issues with a remaining term equal to the expected term used as the assumption in the model.

There were no new grants or awards issued in the three and six months ended June 30, 2013. Assumptions used in the determination of the fair value of share-based payment awards using the Black-Scholes model for stock option grants during the three and six months ended June 30, 2013 and 2012 were as follows:

	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2013		2012			2013		2012
Expected term		—		3.75			—		3.75
Risk-free interest rate		—		0.72	%		—		0.72-0.89	%
Volatility		—		215	%		—		213-215	%
Dividend yield		—		0	%		—		0	%

Equity Incentive Plan

On November 15, 2006, subject to approval of the stockholders, the Company adopted the 2006 Equity Incentive Plan (the “Plan”) which permits the Company to grant stock options to directors, officers or employees of the Company or others to purchase shares of common stock of the Company through awards of incentive and nonqualified stock options (“Option”), stock (Restricted Stock or Unrestricted Stock) and stock appreciation rights (“SARs”). The Plan was approved by the stockholders on February 7, 2007.

The Company currently has time-based options outstanding. The time-based options generally vest 25% annually and expire three to five years from the date of grant. The restricted shares were fully vested as of December 31, 2012. Total number of shares reserved and available for grant and issuance pursuant to this Plan is equal to nine percent (9%) of the number of outstanding shares of the Company. Not more than 2,000,000 shares of stock shall be granted in the form of incentive stock options. Shares issued under the Plan will be drawn from authorized and unissued shares or shares now held or subsequently acquired by the Company. Outstanding shares of the Company shall, for purposes of such calculation, include the number of shares of stock into which other securities or instruments issued by the Company are currently convertible (e.g. convertible preferred stock, convertible debentures, or warrants for common stock), but not outstanding options to acquire stock. At June 30, 2013 there were 12,816,606 shares available for grant under the plan (9% of the outstanding shares of 198,214,456 plus outstanding warrants of 300,000 less options outstanding and exercises since inception).

The following table summarizes the Company’s stock option activities for the three and six month periods ended June 30, 2013 and 2012:

	2013
	Shares			Weighted- Average Exercise Price Per Share
Outstanding as of January 1,		5,836,500		$	0.45
Granted		—			—
Exercised		—			—
Forfeited		(1,251,000	)		0.43
Outstanding as of March 31,		4,585,500		$	0.46
Granted		—			—
Exercised		—			—
Forfeited		(1,255,250	)		0.57
Outstanding as of June 30,		3,330,250		$	0.41

	2012
	Shares			Weighted- Average Exercise Price Per Share
Outstanding as of January 1,		5,171,500		$	0.56
Granted		675,000			0.46
Exercised		—			—
Forfeited		(23,000	)		1.10
Outstanding as of March 31,		5,823,500		$	0.55
Granted		750,000			0.28
Exercised		—			—
Forfeited		(830,000	)		0.64
Outstanding as of June 30,		5,743,500		$	0.50

The following table summarizes the Company’s restricted stock activities for the three and six month periods ended June 30, 2013 and 2012:

	2013 Number of Shares
Restricted stock units outstanding and vested at January 1,		1,325,868
Granted		-
Forfeited		-
Restricted stock units outstanding and vested at March 31,		1,325,868
Granted		-
Forfeited		-
Restricted stock units outstanding and vested at June 30,		1,325,868

	2012 Number of Shares
Restricted stock units outstanding and vested at January 1,		925,868
Granted		-
Forfeited		-
Restricted stock units outstanding and vested at March 31,		925,868
Granted		400,000
Forfeited		-
Restricted stock units outstanding and vested at June 30,		1,325,868