Stockholders' Equity

12 Months Ended

Dec. 31, 2012

Stockholders' Equity [Abstract]

Stockholders' Equity

10. Stockholders' equity:

Common stock options:

At December 31, 2012, the Company has two stock-based employee compensation plans, the 2009 Stock Compensation Plan, and the 2011 Stock Compensation Plan. The Company may also grants options to employees, directors and consultants outside of the 2009 and 2011 Stock Compensation Plans under individual plans.

In April 1999, the Company adopted and, in June 1999, the stockholders approved, the 1999 Option Plan. Incentive and non-qualified options under the 1999 Option Plan were granted to employees, officers, and consultants of the Company. The 1999 Option Plan expired in April 2009 (options outstanding under that plan are not affected by its expiration). There were 4,000 shares of Common Stock authorized for issuance under the 1999 Option Plan. The options had a seven year term and generally vested quarterly over three years. As of December 31, 2012, 345 plan options were outstanding and 345 plan options were exercisable with a weighted average exercise price of $0.389 per share.

The 2009 Stock Compensation Plan was adopted by the Board of Directors on July 1, 2009. Non-qualified options under the 2009 Stock Compensation Plan can be granted to employees, officers, and consultants of the Company. There were 7,000 shares of Common Stock authorized for issuance under the 2009 Stock Compensation Plan. The options have a term of three to seven years and can vest immediately or quarterly over three years, as defined. As of December 31, 2012, 425 plan options were outstanding, and 379 plan options were exercisable with a weighted average exercise price of $0.105 per share.

The 2011 Stock Compensation Plan was adopted by the Board of Directors on January 28, 2011. Incentive and non-qualified options under the 2011 Stock Compensation Plan can be granted to employees, officers, and consultants of the Company. In November 2012, shareholder approved an increase in the number of shares from 50,000 shares to 100,000 shares of Common Stock authorized for issuance under the 2011 Stock Compensation Plan. The options have a term seven years and can vest immediately or quarterly over three years, as defined. As of December 31, 2012, 43,609 plan options were outstanding, and 22,445 plan options were exercisable with a weighted average exercise price of $0.0464 per share.

The Company has issued options under individual plans to its employees and directors. The individual plan options generally vest over four years or pro rata quarterly over three years. Non-plan options are generally exercisable over a period not to exceed seven years. As of December 31, 2012, 150 non-plan options were outstanding and 150 non-plan options were exercisable with a weighted average exercise price of $0.192 per share.

Valuation and Expense Information:

The weighted-average fair value of stock-based compensation is based on the single option valuation approach. Forfeitures are estimated and it is assumed no dividends will be declared. The estimated fair value of stock-based compensation awards to employees is amortized over the vesting period of the options. The fair value calculations are based on the following assumptions:

	Year Ended December 31, 2012	Year Ended December 31, 2011
Risk free interest rate	0.62% - 5.11%	0.62% - 5.11%
Expected life (years)	2.82 - 7.00	2.82 - 7.00
Expected volatility	91.99% - 180.36%	93.63% - 147.4%
Expected dividends	None	None
Estimated average forfeiture rate	10%	11%

The following table summarizes the allocation of stock-based compensation expense related to stock option grants for the years ended December 31, 2012 and 2011. The Company granted 2,500 options at a weighted average exercise price of $0.06 per share with a valuation of $43 on the date of grant. There were 203 stock option exercised for cash proceeds of $13 during the year ended December 31, 2012. There were no stock options exercised during the year ended December 31, 2011.

	Year Ended December 31, 2012	Year Ended December 31, 2011
Research and development	$ 206	$ 347
Sales and marketing	91	161
General and administrative	137	204
Director options	27	92
Stock-based compensation expense included in operating expenses	$ 461	$ 804

The cash flows from tax benefits for deductions in excess of the compensation costs recognized for share-based payment awards would be classified as financing cash flows. Due to the Company's loss position, there was no such tax benefits during the year ended December 31, 2012.

The summary activity under the Company's 2011 and 2009 Stock Compensation Plans, the 1999 Option Plan and Individual Plans is as follows:

	December 31, 2012				December 31, 2011
	Shares	Weighted Average Exercise Price	Aggregate Intrinsic Value	Weighted Average Remaining Contractual Life	Shares	Weighted Average Exercise Price	Aggregate Intrinsic Value	Weighted Average Remaining Contractual Life
Outstanding at beginning of period	51,353	$0.09			10,028	$0.33
Granted	2,500	$0.06			44,971	$0.05
Exercised	(203)	$0.07	$ 2		-	-	$ -
Forfeited/ Cancelled	(9,121)	$0.26			(3,645)	$0.27
Outstanding at period end	44,529	$0.05		3.2	51,353	$0.09		3.2
Options vested and exercisable at period end	23,319	$0.05		2.6	14,539	$0.19		2.6
Weighted average grant-date fair value of options granted during the period	$0.06				$0.05

Valuation and Expense Information:

The following table summarizes significant ranges of outstanding and exercisable options as of December 31, 2012:

Range of Exercise Prices	Options Outstanding			Options Exercisables
	Options Outstanding	Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price	Number Outstanding	Weighted Average Exercise Price
$0.00 - $0.50	44,472	5.3	$0.05	23,262	$0.05
$0.51 - $1.00	44	0.7	$0.79	44	$0.79
$1.01 - $2.00	13	0.2	$1.75	13	$1.75
	44,529			23,319

A summary of the status of the Company's non-vested shares as of December 31, 2012 is as follows:

Non-vested Shares	Shares	Weighted Average Grant-Date Fair Value
Non-vested at January 1, 2012	36,814	$0.05
Granted	2,500	$0.06
Forfeited	(2,149)	$0.18
Vested	(15,955)	$0.20
Non-vested	21,210	$0.05

As of December 31, 2012, there was $187 of total unrecognized compensation cost related to non-vested share-based compensation arrangements. The unrecognized compensation cost is expected to be recognized over a weighted average period of 1.1 years.

The Company expects to make additional option grants in future years. The options issued to employees and directors will be subject to the same provisions outlined above, which may have a material impact on the Company's financial statements.

As of December 31, 2012, 44,529 shares of common stock were reserved for issuance upon exercise of outstanding options.

Treasury Stock:

The Company received 6,500 shares of its Common Stock having a fair value under the cost method of $325 in January 2012, in settlement of a 16b suit brought by a shareholder against Phoenix Venture Fund, LLC. At December 31, 2012, the total value of treasury stock was $325.

Preferred Shares:

The Company has five series of Preferred Stock; Series A-1 Preferred Stock, Series B Preferred Stock, Series C Preferred Stock Series D-1 Preferred Stock and Series D-2 Preferred Stock.

The Company has amended its Amended and Restated Certificate of Incorporation to increase the number of authorized shares of capital stock. The Company solicited its stockholders and its stockholders approved an amendment of the Company's Amended and Restated Certificate of Incorporation to increase the number of authorized shares of capital stock from 1,050,000,000 to 1,536,000,000 (the "Charter Amendment"). Of these authorized shares, 1,500,000,000 have been designated as Common Stock, 2,000,000 as Series A-1 Preferred Stock, 14,000,000 as Series B Preferred Stock, 9,000,000 as Series C Preferred Stock, 3,000,000 as Series D-1 Preferred Stock and 8,000,000 as Series D-2 Preferred Stock. The Charter Amendment allows the Company to and have additional shares of stock available for possible future capital raising activities as approved by the Board of Directors.

The Company has amended and restated the Certificates of Designation for the Series A-1 Preferred Stock, Series B Preferred Stock and Series C Preferred Stock to, among other things, subordinate the Series A-1 Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, in terms of dividend rights, liquidation preferences and other rights, to the Series D Preferred Stock. Holders of at least a majority of the shares of the Company's Series A-1 Preferred Stock, Series B Preferred Stock and Series C Preferred Stock have approved the amendment and restatement of the Certificate of Designation applicable to such holders.

In March, 2011, the Company amended its Amended and Restated Certificate of Designation for its Series B Preferred Stock and its Certificate of Designation for its Series C Preferred Stock to modify the anti-dilution provisions. Under the amendments, in the event additional stock is issued at a price lower than the conversion price then in effect, the new conversion price of the Series B Preferred Stock or Series C Preferred Stock cannot be (A) lower than the average closing market price for the Common Stock for the twenty (20) trading days prior to the closing date of a transaction requiring an adjustment in the conversion price (the "Market Price") or (B) greater than the conversion price then in effect. The amendments were approved by the Company's Board of Directors and the necessary majorities of the Company's Series A-1 Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, and were filed with the Delaware Secretary of State on March 31, 2011. As of December 31, 2012 and 2011, the Company issued $73 and $67 in Dividends on its Series A-1 Preferred Stock, respectively. If the outstanding Series A-1 Preferred Stock had been converted in it entirety on December 31, 2012, the Company would have issued 6,806 shares of Common Stock. As od December 31, 2012 and 2011, the Company had 953 and 880 shares of Series A-1 Preferred Stock outstanding, respectively.

The Company's Preferred Stock is more fully described below.

Series A-1 Preferred Stock

The Series A-1 Preferred Stock carry an eight percent (8%) annual dividend, payable quarterly in arrears in cash or in additional shares of Series A-1 Preferred Stock, have a liquidation preference over Common Stock of one dollar ($1.00) per share and are convertible into shares of Common Stock at the conversion price of fourteen cents ($0.14) per share. If all outstanding shares of Series A-1 Preferred Stock were to convert to Common Stock, the Company would issue 6,807 shares of Common Stock. The Series A-1 Preferred Stock are convertible any time after June 30, 2008.

In connection with the closing of the June 2008 financing transaction, the Company entered into a Securities Purchase Agreement and a Registration Rights Agreement each dated as of June 5, 2008. Under the Securities Purchase Agreement, in exchange for the cancellation of $995 in principal amount and $45 of interest accrued thereon of the Company's aggregate outstanding $2,071 in existing debt and interest accrued thereon through May 31, 2008, the Company issued to the holders of such debt an aggregate of 1,040 shares of the Company's Series A Cumulative Convertible Preferred Stock, which shares were subsequently exchanged in October 2008 for an equivalent number of shares of Series A-1 Preferred Stock.

Series B Preferred Stock

The shares of Series B Preferred Stock carry a ten percent (10%) annual dividend, payable quarterly in arrears in cash or in additional shares of Series B Preferred Stock, and have a liquidation preference over shares of Series A-1 Preferred Stock and Common Stock of $1.50 per share. The shares of Series B Preferred Stock were convertible into shares of Common Stock at an initial conversion price of six cents per share. When the Company issued Series C Preferred Stock at the lower price less of $0.0225 per share, the Series B Preferred Stock conversion price was adjusted downwards to $0.0433 per share. Consequently, the number of shares of Common Stock that would be issued upon conversion of the outstanding shares of Series B Preferred Stock is higher after the adjustment. The shares of Series B Preferred Stock are convertible at any time.

On August 5, 2010, the Company completed the conversion of all of the Company's outstanding indebtedness and issued 6,608 shares of Series B Preferred Stock in accordance with the executed Exchange Agreement entered into with Phoenix and certain other holders of the Company's indebtedness (the "Recapitalization"). In accordance with the executed Stock Purchase Agreement the Company issued an additional 1,440 shares of Series B Preferred Stock for proceeds of $1,440, net of expenses of $437 (the "Series B Financing"). The Company paid approximately $143 in expenses to a third party in connection with the financing. The expenses were recorded as a charge to additional paid in capital. The proceeds were used for working capital and general corporate purposes, in each case in the ordinary course of business, and to pay fees and expenses associated with the Recapitalization and Series B Financing.

In January and March 2012, a total of 140 shares of Series B Preferred Stock were converted and the Company issued 3,232 shares of Common Stock. The Company issued 948 and 870 shares of Series B Preferred Stock in payment of dividends for year ended December 31, 2012, and 2011, respectively. The Company recorded a beneficial conversion feature associated with the issuance of the Series B Preferred dividends of $268 and $22, for the year ended December 31, 2012 and 2011, respectively. As of December 31, 2012 and 2011, there are 10,058 and 9,250 shares of Series B Preferred Stock outstanding, respectively. If the outstanding Series B Preferred Stock had been converted in its entirety on December 31, 2012, the Company would have issued 232,142 shares of Common Stock.

Series C Preferred Stock

The shares of Series C Preferred Stock carry a ten percent (10%) annual dividend, payable quarterly in arrears in cash or in additional Series C Preferred Stock, and have liquidation preference that is senior to shares of the Company's Series A-1 Preferred Stock, Series B Preferred Stock and Common Stock, pursuant to which holders of shares of Series C Preferred Stock will receive liquidating distributions in the amount of $1.50 per share plus any accrued dividends. After receipt of the liquidation preference on the Company's series of Preferred Stock, the shares of Series C Preferred Stock and Series B Preferred Stock also are entitled to participate pro rata on an as-converted basis with the shares of Common Stock in any remaining liquidation proceeds. The shares of Series C Preferred Stock are convertible into Common Stock at any time at an initial conversion price of $0.0225 per share, subject to adjustment for stock dividends, splits, combinations and similar events and, with certain exceptions, the issuance of additional securities at a purchase price less than the then current conversion price of the Series C Preferred Stock.

During 2011, the Company issued 195 shares of its Series C Preferred Stock and warrants to purchase 8,622 shares of Common Stock, as part of a professional service agreement with FirstGlobal Partners LLC ("FGP"). William Keiper, CIC's President and Chief Operating Officer, is Managing Director of FGP. These shares of Series C Preferred Stock and warrants are convertible into Common Stock under the same terms discussed above.

In March 2011, the Company amended its Amended and Restated Certificate of Designation for its Series B Preferred Stock and its Certificate of Designation for its Series C Preferred Stock to modify the anti-dilution provisions. Under the amendments, in the event additional stock is issued at a price lower than the conversion price then in effect, the new conversion price of the Series B Preferred Stock or Series C Preferred Stock cannot be (A) lower than the average closing market price for the Common Stock for the twenty (20) trading days prior to the closing date of a transaction requiring an adjustment in the conversion price (the "Market Price") or (B) greater than the conversion price then in effect. The amendments were approved by the Company's Board of Directors and the necessary majorities of the Company's Series A-1 Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, and were filed with the Delaware Secretary of State on March 31, 2011. As a result of the amendments, the Company reclassified $363 from derivative liabilities for 160 and 203 of Preferred Series B and C Preferred Stock.

In March 2011, the Company sold an additional 800 shares of Series C Preferred Stock for proceeds of $800, net of $121 in expenses, of which $50 went to SG Phoenix, LLC in payment of an administrative fee and $71 in expenses to third parties in connection with the financing. The Company recorded a beneficial conversion feature of $800 related to the intrinsic value of the conversion feature of the shares of Series C Preferred Stock.

In March 2012, the Company issue 278 shares of Series C Preferred Stock valued at $417 in settlement of the indemnification claim brought by Phoenix, resulting from the settlement of a 16b claim in January 2012 brought by a Company shareholder against Phoenix, certain affiliates of Phoenix and the Company as a nominal defendant. The Company booked a $418 accretion amount for the beneficial conversion feature on the 278 shares of Series C Preferred Stock at March 31, 2012.

On August 10, 2011, the Company issued 36 shares of its Series C Preferred Stock and warrants to purchase 1,624 shares of Common Stock to its former President as part of a separation agreement.

In September 2012, an investor converted 39 shares of Series C Preferred Stock into 1,729 shares of the Company's Common Stock.

The Company issued 389 and 305 shares of Series C Preferred Stock in payment of dividends for the years ended December 31, 2012 and 2011, respectively. The Company recorded a beneficial conversion feature associated with the issuance of the Series C Preferred Stock dividends of $385 and $198for the years ended December 31, 2012 and 2011, respectively. As of December 31, 2012, there are 4,175 shares of Series C Preferred Stock outstanding. If the outstanding shares of Series C Preferred Stock were converted in their entirety, the Company would issue 185,572 shares of Common Stock.

Series D Preferred Stock

The material terms of the Series D-1 Preferred Stock and Series D-2 Preferred Stock, other than the initial conversion price, are essentially the same. The Series D-1 Preferred Stock is convertible into shares of the Company's Common Stock at a conversion price of $0.225 per share (subject to adjustment) and the Series D-2 Preferred Stock is convertible into shares of the Company's Common Stock at a conversion price of $0.05 per share (subject to adjustment). The Series D Preferred Stock accrues dividends at the rate of 10% per annum and will receive liquidating distributions in the amount of $1.00 per share plus any accrued dividends. Generally, the Series D Preferred Stock votes together on an as converted basis with the holders of Common Stock and the holders of Series A-1 Preferred Stock, Series B Preferred Stock and Series C Preferred Stock. In addition, the Series D Preferred Stock enjoys protective provisions similar to those provided to the holders of Series C Preferred Stock. The Series D Preferred Stock ranks senior to the Company's outstanding shares of Series A-1 Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Common Stock with respect to dividend rights and liquidation preferences. The Company issued 14 and 41 shares of Series D-1 and D-2 Preferred Stock in payment of dividends for year ended December 31, 2012. The Company recorded a beneficial conversion feature associated with the issuance of the Series D-1 Preferred dividends of $13 for the year ended December 31, 2012. As of December 31, 2012, there are 1,124 and 3,302 shares of Series D-1 and D-2 Preferred Stock outstanding, respectively. If the outstanding Series D-1 and D-2 Preferred Stock had been converted in its entirety on December 31, 2012, the Company would have issued 49,961 and 66,053 shares of Common Stock.

Warrants:

During 2012, 28,511 warrants were exercised on a cashless basis and the Company issued 20,186 shares of Common Stock in exchange for such exercise. During 2012, the Company issued 7,439 shares of common stock for the exercise 6,651 warrants for $212 in cash. During 2011, 12,222 warrants were exercised on a cashless basis and the Company issued 5,239 shares of common stock in exchange for such exercise.

In 2102, the Company issued 5,349 warrants in connection with the April 2012 Notes. The Company issued 3,000 warrants to related parties and 294 warrants to unrelated parties as finder's fees associated with the November Financing. In 2011, the Company issued 8,667 warrants to a related party for services, 18,833 and 32,235warrants to related parties and others, respectively, in connections with the issuance of additional 800 shares of Series C Preferred Stock in March and the December 2011 Note Financings. At December 31, 2012, 151,722 shares of common stock were reserved for issuance upon exercise of outstanding warrants.

A summary of the warrants is as follows:

	December 31, 2012		December 31, 2011
	Warrants	Weighted Average Exercise Price	Warrants	Weighted Average Exercise Price
Outstanding at beginning of period	182,644	$ 0.0261	135,131	$ 0.0274
Issued	8,643	$ 0.0500	59,735	$ 0.0064
Exercised	(35,162)	$ 0.0264	(12,222)	$ 0.0011
Forfeited	-	-	-	-
Expired	(4,403)	-	-	-
Outstanding at end of period	151,722	$ (0.0269)	182,644	$ 0.0261
Exercisable at end of period	151,722	$ 0.0269	182,644	$ 0.0261

A summary of the status of the warrants outstanding as of December 31, 2012 is as follows:

Number of Warrants	December 31, 2012
	Weighted Average Remaining Life	Weighted Average Exercise Price per share	Shares Exercisable
12,670	0.51	$ 0.0433	12,670
130,409	1.05	$ 0.0225	130,409
8,643	2.56	$ 0.0500	8,643
151,722	1.12	$ 0.0269	151,722

Restricted Share Grants

The Company issued 46 restricted shares during the twelve months ended December 31, 2012. As part of the Recapitalization in 2010, the Company issued restricted shares to four employees in exchange for reductions in their respective salaries payable in cash. The number of shares issued was calculated based on the amount of the annual salary reduction divided by $0.06 per share. As of December 31, 2012, the company had issued 452 shares of restricted stock in connection with the recapitalization. No other restricted shares will be issued in connection with the 2010 recapitalization.