SHAREHOLDERS’ EQUITY

12 Months Ended

Dec. 31, 2016

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

NOTE 6 - SHAREHOLDERS’ EQUITY:

Incentive Compensation Plan:

In 2012, the Company’s Board of Directors and shareholders approved the Company’s 2012 Incentive Compensation Plan (the “2012 Plan”), which provides for the grant of restricted stock awards, non-qualified stock options and incentive stock options in compliance with the Internal Revenue Code of 1986, as amended, to employees, officers, directors, consultants and advisors of the Company who are expected to contribute to the Company’s future growth and success. When originally approved, the 2012 Plan provided for the grant of awards relating to 2,000,000 shares of common stock, plus those shares still available under the Company’s prior incentive compensation plan. In June 2014, the Company’s shareholders approved the Amended and Restated 2012 Incentive Compensation Plan allowing for an additional 1,658,045 shares of the Company’s common stock to be available for future grants under the Amended and Restated 2012 Plan. As of December 31, 2016, there were 1,096,000 shares available for issuance under the Amended and Restated 2012 Plan, including those shares available under the Company’s prior incentive compensation plan as of such date.

Service-based options granted have ten year terms and, from the date of grant, typically vest annually and become fully exercisable after a maximum of five years. However, vesting conditions are determined on a grant by grant basis. Performance-based options granted have ten year terms and vest and become fully exercisable when determinable performance targets are achieved. Performance targets are agreed to, and approved by, the Company’s compensation committee of the board of directors.

Under the Amended and Restated 2012 Plan, options may be granted to purchase shares of the Company’s common stock exercisable at prices equal to or above the fair market value on the date of the grant.

The following summarizes the components of share-based compensation expense by equity instrument for the years ended December 31:

	2016		2015
Service-based stock options	$	354,896	$	—
Service-based restricted common stock		208,345		210,600
Performance-based stock options		114,600		85,205
Performance-based restricted common stock		21,413		16,971
Total share-based compensation expense	$	699,254	$	312,776

Stock-based compensation for the years ended 2016 and 2015 is included in general and administrative expenses in the accompanying consolidated statement of operations.

The performance-based and service-based stock options outstanding and exercisable as of December 31, 2016 are summarized as follows:

	Weighted average		Options		Options		Weighted average
	exercise price		Outstanding		Exercisable		remaining life
Performance-based		$1.32		2,165,000		1,090,000		5.0 years
Service-based		$1.51		1,198,000		181,333		7.5 years
				3,363,000		1,271,333

Restricted common stock awards:

On June 8, 2016, the Company granted 150,000 shares of restricted common stock to certain non-employee directors of the Company under the Amended and Restated 2012 Plan. The shares were granted at a price of $1.33 per share. On June 30, 2016, the Company appointed Timothy Whelan as Chief Executive Officer. Mr. Whelan forfeited the 30,000 shares of restricted common stock that were granted to him on June 8, 2016 as a non-employee director in connection with his appointment as Chief Executive Officer. The remaining 120,000 shares of restricted common stock granted on June 8, 2016 will fully vest on the date of the Company’s next annual shareholders meeting to be held in May 2017, or a vesting period of approximately one year, provided that the director’s service continues through the vesting date. The total compensation expense to be recognized over the one-year vesting period with respect to the remaining 120,000 shares of restricted common stock is $159,600.

On June 30, 2016, the Company granted 8,333 shares of restricted common stock to its newly appointed Chief Executive Officer under the Amended and Restated 2012 Plan. The shares were granted at a price of $1.34 per share and will vest in sixteen equal quarterly installments over a period of four years, provided that the executive officer’s service with the Company continues through each quarterly vesting date, so that the shares will fully vest on June 30, 2020. The total compensation expense to be recognized over the four-year vesting period is $11,166.

On November 9 and 13, 2016, the Company granted 15,000 shares of restricted common stock to each of its newly appointed non-employee directors of the Company under the Amended and Restated 2012 Plan. The shares were granted at prices of $1.64 and $1.59 per share, respectively. The aggregate 30,000 shares of restricted common stock granted in November 2016 will fully vest on the date of the Company’s next annual shareholders meeting to be held in May 2017, or a vesting period of approximately six months, provided that the director’s service continues through the vesting date. The total compensation expense to be recognized over the six-month vesting period is $48,450.

The following tables summarize the restricted common stock awards granted to certain directors, officers and employees of the Company during the years ended December 31, 2016 and 2015 under the 2012 Plan:

Year ended December 31, 2016	Number of Shares		Fair Market Value per
Individuals	Granted		Granted Share		Vesting Date
Board of Directors		120,000		$1.33	Next Annual Meeting	(May 2017)
		15,000		$1.64	Next Annual Meeting	(May 2017)
		15,000		$1.59	Next Annual Meeting	(May 2017)
Chief Executive Officer		8,333		$1.34	Incremental time vest	(June 2020)
Total shares granted		158,333

Year ended December 31, 2015	Number of Shares		Fair Market Value per
Individuals	Granted		Granted Share		Vesting Date
Board of Directors		100,000		$2.22	Annual Meeting	(June 2016)

A summary of the status of the Company’s non-vested restricted common stock, as granted under the Company’s approved stock compensation plan, as of December 31, 2016 and 2015, and changes during the years ended December 31, 2016 and 2015 are presented below:

				Weighted Average
				Grant Date
Non-vested Shares	Number of Shares			Fair Value
Non-vested at January 1, 2015		180,000		$	2.09
Granted		100,000		$	2.22
Vested		(80,000	)	$	2.49
Forfeited		(13,000	)	$	1.77
Non-vested at December 31, 2015		187,000		$	2.01
Granted		188,333		$	1.38
Vested		(101,042	)	$	2.22
Forfeited		(30,000	)	$	1.33
Non-vested at December 31, 2016		244,291		$	1.52

Under the terms of the performance-based restricted common stock award agreements pertaining to the 87,000 shares of restricted stock awards granted to employees in 2013, the awards will fully vest and become exercisable on the date on which the Company’s Board of Directors shall have determined that specific financial milestones have been met, provided the employee remains in the employ of the Company at such time; provided, however, upon a Change in Control (as defined in the award agreements and the Amended and Restated 2012 Plan), the restricted stock shall automatically vest as permitted by the Plan. For the performance-based restricted stock awarded in 2013, the Company’s Board of Directors adopted specific revenue and earnings performance targets as vesting conditions. During the first quarter of 2015, management determined the performance conditions related to these restricted stock awards are probable to be achieved by the year ending 2020. As a result, the Company adjusted the amortization of the fair market value of these awards over the revised implicit service period from December 2017 to December 2020. If management determines in future periods the achievement of performance conditions are probable to occur sooner than expected, the Company will accelerate the expensing of any unamortized balance as of that determination date.

As of December 31, 2016, the unearned compensation related to Company granted restricted common stock is $207,521 of which $112,100 (pertaining to 150,000 service-based restricted common stock awards) will be amortized on a straight-line basis through the date of the Company’s next annual meeting to be held in May 2017, the vesting date, and $9,770 (pertaining to 8,333 service-based restricted common stock awards) will be amortized on a straight-line basis through June 30, 2020, the date which they will have fully vested. The remaining balance of $85,651 (pertaining to 87,000 performance-based restricted common stock awards issued in 2013) will be amortized on a straight-line basis through December 31, 2020, the revised implicit service period.

Performance-based stock option awards:

A summary of performance-based stock option activity, and related information for the years ended December 31 2016 and 2015 follows:

				Weighted Average
	Options			Exercise Price
Outstanding, January 1, 2015		2,070,000		$	1.33
Granted		50,000		$	1.83
Exercised		(30,000	)	$	0.78
Forfeited		(125,000	)	$	1.77
Expired		—			—
Outstanding, December 31, 2015		1,965,000		$	1.32
Granted		200,000		$	1.36
Exercised		—			—
Forfeited		—			—
Expired		—			—
Outstanding, December 31, 2016		2,165,000		$	1.32
Options exercisable:
December 31, 2015		1,090,000		$	0.96
December 31, 2016		1,090,000		$	0.96

The aggregate intrinsic value of performance-based stock options outstanding (regardless of whether or not such options are exercisable) as of December 31, 2016 and 2015 was $1,282,950 and $846,350, respectively. The aggregate intrinsic value of performance-based stock options exercised in 2015 was $42,300.

On September 8, 2015, the Company granted performance-based stock options to a non-executive officer employee to acquire 50,000 shares of common stock at an exercise price of $1.83 per share, which represents the closing price of the Company’s common stock as reported on the NYSE MKT on September 8, 2015, the date of grant. The per share fair-value of these performance-based options was $1.03. The per share fair-value was estimated on the date of grant using the Black-Scholes option pricing method and included the following range of assumptions; dividend yield 0%, risk-free interest rate of 1.53% and expected option life of 4 years. Volatility assumption was 75.46% and the forfeiture rate was assumed to be 0%.

Under the terms of the performance-based stock option agreements, the awards will fully vest and become exercisable on the date on which the Company’s Board of Directors shall have determined that specific financial performance milestones have been met, provided the employee remains in the employ of the Company at such time; provided, however, upon a Change in Control (as defined in the stock option agreements and the 2012 Plan), the stock options shall automatically vest as permitted by the 2012 Plan. During the first quarter of 2015, management determined the performance conditions related to stock option awards (pertaining to stock awards granted in 2013 and subsequent grants made) are probable to be achieved by the year ending 2020. As a result, the Company adjusted the amortization of the fair market value of these awards over the revised implicit service period from December 2017 to December 2020. If management determines in future periods the achievement of performance conditions are probable to occur sooner than expected, the Company will accelerate the expensing of any unamortized balance as of that determination date.

On May 16, 2016, the Company granted a performance-based stock option to a non-executive officer employee to acquire 200,000 shares of common stock at an exercise price of $1.36 per share, which represented the closing price of the Company’s common stock as reported on the NYSE MKT on the date of grant. The per share fair-value of this performance-based option was $0.78. The per share fair-value was estimated on the date of grant using the Black-Scholes option pricing method and included the following range of assumptions: dividend yield 0%, risk-free interest rate of 1.26% and expected option life of four years. The volatility assumption was 77.54% and the forfeiture rate was assumed to be 0%.

Under the terms of the performance-based stock option agreement granted on May 16, 2016, the award will incrementally vest and become exercisable upon achievement of specific annualized revenue targets in the Company’s network solutions segment. As of December 31, 2016, the Company had not incurred expense relating to this performance-based stock option as management determined it was more likely than not that the revenue targets would not be achieved.

As of December 31, 2016, the unearned compensation related to the performance-based stock option to acquire 825,000 shares of common stock granted in August 2013 (with a weighted average per share exercise price of $1.77) and the performance-based stock option to acquire 50,000 shares of common stock granted in September 2015 (with a weighted average per share exercise price of $1.83) is $419,140 and $39,259, respectively, which have been, and are expected to be, amortized on a straight-line basis through December 31, 2020, the implicit service period. Unearned compensation in the amount of $155,810 related to the performance-based stock option granted in May 2016 (with a weighted average per share exercise price of $1.36) will begin to be amortized when achievement of specific annualized revenue targets in the Company’s network solutions segment are determined to be probable.

The Company’s performance-based stock options granted prior to 2013 (consisting of 1,090,000 options) are fully amortized. For the years ended December 31, 2016 and 2015, the Company recorded compensation expense related to performance-based options in the amount of $114,600 and $85,205, respectively.

Service-based stock option awards:

A summary of service-based stock option activity, and related information for the years ended December 31, follows:

				Weighted Average
	Options			Exercise Price
Outstanding, January 1, 2015		522,000		$	2.51
Granted		145,000		$	1.30
Exercised		—			—
Forfeited		(120,000	)	$	2.28
Expired		(24,000	)	$	2.55
Outstanding, December 31, 2015		523,000		$	2.23
Granted		1,040,000		$	1.41
Exercised		—			—
Forfeited		(70,000	)	$	1.33
Expired		(295,000	)	$	2.46
Outstanding, December 31, 2016		1,198,000		$	1.51
Options exercisable:
December 31, 2015		378,000		$	2.58
December 31, 2016		181,333		$	2.09

The aggregate intrinsic value of outstanding service-based stock options (regardless of whether or not such options are exercisable) as of December 31, 2016 and 2015 was $567,300 and $0, respectively.

On November 19, 2015, the Company granted service-based stock options to acquire 145,000 shares of common stock at an exercise price of $1.30 per share to the members of the Company’s Strategic and Planning Committee, which represents the closing price of the Company’s common stock as reported on the NYSE MKT on November 19, 2015, the date of grant. The per share fair-value of these service-based options was $0.75. The per share fair-value was estimated on the date of grant using the Black-Scholes option pricing method and included the following range of assumptions; dividend yield 0%, risk-free interest rate of 1.68% and expected option life of 4 years. Volatility assumption was 78.22% and the forfeiture rate was assumed to be 0%.

Under the terms of the service-based stock option agreements relating to the November 19, 2015 stock option grants, the awards shall vest in twelve equal quarterly installments over a period of three years and shall be fully vested on November 19, 2018.

On June 8, 2016, the Company granted to certain non-employee directors of the Company service-based stock options to acquire collectively 350,000 shares of common stock at an exercise price of $1.33 per share, which represented the closing price of the Company’s common stock as reported on the NYSE MKT on June 8, 2016, the date of grant. The per share fair-value of these service-based options was $0.76. The per share fair-value was estimated on the date of grant using the Black-Scholes option pricing method and included the following range of assumptions: dividend yield 0%, risk-free interest rate of 1.23% and expected option life of four years. The volatility assumption was 76.72% and the forfeiture rate was assumed to be 0%. These stock options were granted in connection with the annual compensation for services as a Company director. Such equity awards are intended to replace the cash component of the director compensation.

On June 30, 2016, the service-based stock option to acquire 70,000 shares of common stock that was granted to Timothy Whelan on June 8, 2016, was terminated, unvested, in connection with his appointment as Chief Executive Officer of the Company.

Under the terms of the remaining service-based stock option agreements relating to the June 8, 2016 stock option grants to the non-employee directors of the Company, the awards will fully vest on the date of the Company’s next annual shareholder’s meeting to be held in May 2017, or a vesting period of approximately one year, provided that the director’s service continues through the vesting date.

On June 30, 2016, the Company granted to Timothy Whelan, its newly appointed Chief Executive Officer, a service-based stock option to acquire 400,000 shares of common stock at an exercise price of $1.34 per share, which represented the closing price of the Company’s common stock as reported on the NYSE MKT on the date of grant. The per share fair-value of this service-based option was $0.76. The per share fair-value was estimated on the date of grant using the Black-Scholes option pricing method and included the following range of assumptions: dividend yield 0%, risk-free interest rate of 1.01% and expected option life of four years. The volatility assumption was 76.68% and the forfeiture rate was assumed to be 0%.

Under the terms of the service-based stock option agreement relating to the June 30, 2016 stock option grant, the award vests in sixteen equal quarterly installments over a period of four years and shall be fully vested on June 30, 2020.

Under the terms of Mr. Whelan’s employment agreement, dated June 30, 2016, if Mr. Whelan’s employment is terminated by the Company without Cause, upon a Change of Control or by Mr. Whelan for Good Reason (as such terms are defined in his employment agreement), in each case, subject to his compliance with certain conditions, Mr. Whelan is entitled to (among other benefits) extension of the post-termination exercise period for all outstanding stock options of the Company’s common stock held by Mr. Whelan as of the date of his termination to the earlier of (a) the first anniversary of the date of termination, and (b) the date of expiration of the respective option, during which post-termination period such options shall continue to vest in accordance with their respective terms (to the extent not already fully vested).

On September 16, 2016, the Company granted to certain employees of the Company service-based stock options to acquire a total of 200,000 shares of common stock at an exercise price of $1.60 per share, which represented the closing price of the Company’s common stock as reported on the NYSE MKT on September 16, 2016, the date of grant. The per share fair-value of these service-based options was $0.95. The per share fair-value was estimated on the date of grant using the Black-Scholes option pricing method and included the following range of assumptions: dividend yield 0%, risk-free interest rate of 1.21% and expected option life of four years. The volatility assumption was 81.21% and the forfeiture rate was assumed to be 0%.

Under the terms of the service-based stock option agreements relating to the September 16, 2016 stock option grants, the awards vest in four equal annual installments over a period of four years and shall be fully vested on September 16, 2020.

On October 24, 2016, the Company granted to an employee of the Company service-based stock options to acquire 20,000 shares of common stock at an exercise price of $1.62 per share, which represented the closing price of the Company’s common stock as reported on the NYSE MKT on October 24, 2016, the date of grant. The per share fair-value of these service-based options was $0.95. The per share fair-value was estimated on the date of grant using the Black-Scholes option pricing method and included the following range of assumptions: dividend yield 0%, risk-free interest rate of 1.27% and expected option life of four years. The volatility assumption was 79.84% and the forfeiture rate was assumed to be 0%.

Under the terms of the service-based stock option agreement relating to the October 24, 2016 stock option grant, the award vests in four equal annual installments over a period of four years and shall be fully vested on October 24, 2020.

On November 9, 2016, the Company granted to a non-employee director of the Company service-based stock options to acquire 35,000 shares of common stock at an exercise price of $1.64 per share, which represented the closing price of the Company’s common stock as reported on the NYSE MKT on November 9, 2016, the date of grant. The per share fair-value of these service-based options was $0.97. The per share fair-value was estimated on the date of grant using the Black-Scholes option pricing method and included the following range of assumptions: dividend yield 0%, risk-free interest rate of 1.49% and expected option life of four years. The volatility assumption was 80.05% and the forfeiture rate was assumed to be 0%. These stock options were granted in connection with the annual compensation for services as a Company director. Such equity awards are intended to replace the cash component of the director compensation.

Under the terms of the service-based stock option agreement relating to the November 9, 2016 stock option grant to a non-employee director of the Company, the award will fully vest on the date of the Company’s next annual shareholder’s meeting to be held in May 2017, or a vesting period of approximately six months, provided that the director’s service continues through the vesting date.

On November 13, 2016, the Company granted to a non-employee director of the Company service-based stock options to acquire 35,000 shares of common stock at an exercise price of $1.59 per share, which represented the closing price of the Company’s common stock as reported on the NYSE MKT on November 13, 2016, the date of grant. The per share fair-value of these service-based options was $0.94. The per share fair-value was estimated on the date of grant using the Black-Scholes option pricing method and included the following range of assumptions: dividend yield 0%, risk-free interest rate of 1.56% and expected option life of four years. The volatility assumption was 80.07% and the forfeiture rate was assumed to be 0%. These stock options were granted in connection with the annual compensation for services as a Company director. Such equity awards are intended to replace the cash component of the director compensation.

Under the terms of the service-based stock option agreement relating to the November 13, 2016 stock option grant to a non-employee director of the Company, the award will fully vest on the date of the Company’s next annual shareholder’s meeting to be held in May 2017, or a vesting period of approximately six months, provided that the director’s service continues through the vesting date.

As of December 31, 2016, the unearned compensation related to the service-based stock options granted in 2016 and 2015 was $544,617, which will be amortized over each of the grant’s respective service periods.

At December 31, 2016, the Company’s service-based stock options granted prior to November 2015 were fully amortized.