Note 9 - Stockholders' Equity

12 Months Ended

Dec. 31, 2013

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

9. Stockholders' Equity

Common Stock. During 2013, the Company awarded 1,745,000 shares of restricted common stock to employees, and 122,500 to consultants. Restricted shares vest ratably over a 33-month period commencing in the fourth month after the grant date. Upon a grantee’s termination of service to us prior to full vesting any unvested shares will be cancelled. The fair market value of the awards made to employees ranged from $0.30 to $0.59 per share, and the fair market value of the awards made to consultants ranged from $0.34 to $0.56 per share.

During 2013, the Company granted 700,000 options to purchase common stock to one of its directors at an exercise price of $0.37 per share, and 23,000 to an employee at an exercise price of $0.45 per share. Also, the Company issued 2,464,332 shares of common stock as a result of the exercise of employee stock options, at an average exercise price of $0.18 per share, which resulted in $433,800 of proceeds to the Company.

During 2013, the Company issued 11,772,500 shares of common stock as a result of the exercise of warrants, at an average exercise price of $0.25, which resulted in $2,970,600 of proceeds to the Company.

During 2012, the Company awarded 3,764,500 shares of restricted common stock to its officers and 393,000 shares of restricted common stock to employees. The fair market value of the shares of restricted common stock awarded to the officers was $0.18 per share, and ranged from $0.22 to $0.26 for the shares of restricted common stock awarded to the employees.

During 2012, the Company granted 4,522,500 options to purchase common stock to its officers and directors at exercise prices ranging from $0.15 to $0.37 per share, and 790,000 to various employees at exercise prices ranging from $0.14 to $0.22 per share. Also, the Company issued 615,447 shares of common stock as a result of the exercise of employee stock options, at an average exercise price of approximately $0.08 per share that resulted in $49,800 of proceeds to the Company.

Stock Repurchase Program

During the years ended December 31, 2013 and 2012, the Company did not repurchase any of its common stock under the terms of its Board-approved $1,000,000 stock repurchase program (“stock repurchase program”). As of December 31, 2013, approximately $782,600 remained available for future purchases under this program. The Company is not obligated to repurchase any specific number of shares and the stock repurchase program may be suspended or terminated at the Company’s discretion.

Stock-Based Compensation Plans

Active Plans

2012 Equity Incentive Plan. In November 2012, the Company’s 2012 Equity Incentive Plan (the “12 Plan”) was approved by the stockholders. Pursuant to the terms of the 12 Plan, stock options, stock appreciation rights, restricted stock and restricted stock units (sometimes referred to individually or collectively as “awards”) may be granted to officers and other employees, non-employee directors and independent consultants and advisors who render services to the Company. The Company is authorized to issue options to purchase up to 9,656,958 shares of common stock, stock appreciation rights, or restricted stock in accordance with the terms of the 12 Plan.

In the case of a restricted stock award, the entire number of shares subject to such award would be issued at the time of the grant and subject to vesting provisions based on time or other conditions specified by the Board or an authorized committee of the Board. For awards based on time, should the grantee’s service to the Company end before full vesting occurred, all unvested shares would be forfeited and returned to the Company. In the case of awards granted with vesting provisions based on specific performance conditions, if those conditions were not met, then all shares would be forfeited and returned to the Company. Until forfeited, all shares issued under a restricted stock award would be considered outstanding for dividend, voting and other purposes.

Under the 12 Plan, the exercise price of non-qualified stock options granted is to be no less than 100% of the fair market value of the Company’s common stock on the date the option is granted. The exercise price of incentive stock options granted is to be no less than 100% of the fair market value of the Company’s common stock on the date the option is granted provided, however, that if the recipient of the incentive stock option owns greater than 10% of the voting power of all shares of the Company’s capital stock then the exercise price will be no less than 110% of the fair market value of the Company’s common stock on the date the option is granted. The purchase price of the restricted stock issued under the 12 Plan shall also not be less than 100% of the fair market value of the Company’s common stock on the date the restricted stock is granted.

All options granted under the 12 Plan are immediately exercisable by the optionee; however, there is a vesting period for the options. The options (and the shares of common stock issuable upon exercise of such options) vest, ratably, over a 33-month period; however, no options (and the underlying shares of common stock) vest until after three months from the date of the option grant. The exercise price is immediately due upon exercise of the option. The maximum term of options issued under the 12 Plan is ten years. Shares issued upon exercise of options are subject to the Company’s repurchase, which right lapses as the shares vest. The 12 Plan will terminate no later than November 7, 2022.

During the year ended December 31, 2013, options to purchase 723,000 shares of common stock, with a weighted average grant date fair value of $0.31, were granted under the 12 Plan, 1,747,500 shares of restricted common stock, with a weighted average grant date fair value of $0.43 were granted, no options had been exercised and 2,644,115 shares of common stock remained available for issuance under the 12 Plan.

No options previously issued under the 12 Plan were exercised during the year ended December 31, 2012.

Grant to Consultant. In March 2013, the Company made a grant to a consultant of 120,000 shares of restricted common stock, with a grant date fair value of $0.56 per share. The terms of the grant were substantially similar to those that would apply to grants made from the 12 Plan.

Inactive Plans

The following table summarizes options outstanding as of December 31, 2013 and 2012 that were granted from stock based compensation plans that are inactive. As of December 31, 2013 such plans can no longer grant options.

		Options Outstanding
	Year	Beginning of Year		Granted		Exercised			Cancelled			End of Year
2008 Stock Option Plan	2013		11,884,000		—		(1,851,832	)		(413,340	)		9,618,828
2005 Equity Incentive Plan	2013		1,447,500		—		(475,000	)		—			972,500
1998 Stock Option/Stock Issuance Plan	2013		137,500		—		(137,500	)		—			—
Supplemental Stock Option Agreement	2013		5,000		—		—			—			5,000
			13,474,000		—		(2,464,332	)		(413,340	)		10,596,328
2008 Stock Option Plan	2012		9,469,194		4,262,500		(390,447	)		(1,457,247	)		11,884,000
2005 Equity Incentive Plan	2012		1,705,000		350,000		(25,000	)		(582.500	)		1,447,500
1998 Stock Option/Stock Issuance Plan	2012		432,500		—		(200,000	)		(95,000	)		137,500
Supplemental Stock Option Agreement	2012		30,000		—		—			(25,000	)		5,000
			11,636,694		4,612,500		(615,447	)		(2,159,747	)		13,474,000

Summary – All Plans

A summary of the status of all of the options outstanding under all of the Company’s stock option plans, and non-plan grants to consultants, as of December 31, 2013 and 2012, and changes during the years then ended, is presented in the following table:

	2013					2012
	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
Beginning		14,174,000		$	0.20		11,636,694		$	0.18
Granted		723,000		$	0.37		5,312,500		$	0.22
Exercised		(2,464,332	)	$	0.18		(615,447	)	$	0.08
Forfeited or expired		(413,340	)	$	0.21		(2,159,747	)	$	0.20
Ending		12,019,328		$	0.21		14,174,000		$	0.20
Exercisable at year-end		12,019,328		$	0.21		14,174,000		$	0.20
Vested or expected to vest at year-end		11,857,821		$	0.21		13,901,838		$	0.20
Weighted average fair value of options granted during the period				$	0.31				$	0.22

As of December 31, 2013 and 2012, of the options exercisable, 8,015,960 and 6,803,675 were vested, respectively.

The following table summarizes information about stock options outstanding as of December 31, 2013:

			Options Outstanding						Options Exercisable
Range of Exercise Price			Number Outstanding		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$0.0500	-	$0.1800		3,439,061		6.03	$	0.13		3,439,061	$	0.13
$0.1801	-	$0.2200		3,271,085		4.83	$	0.20		3,271,085	$	0.20
$0.2201	-	$0.2300		2,776,182		5.92	$	0.23		2,776,182	$	0.23
$0.2301	-	$0.4450		2,533,000		8.62	$	0.33		2,533,000	$	0.33
				12,019,328		6.22	$	0.21		12,019,328	$	0.21

As of December 31, 2013, there were outstanding options to purchase 12,019,328 shares of common stock with a weighted average exercise price of $0.21 per share, a weighted average remaining contractual term of 6.22 years and an aggregate intrinsic value of $1,879,500. Of the options outstanding as of December 31, 2013, 8,020,808 were vested, 3,841,861 were estimated to vest in future periods and 156,659 were estimated to be forfeited or to expire in future periods.

As of December 31, 2013, there was approximately $356,700 of total unrecognized compensation cost, net of estimated forfeitures, related to unvested options. That cost is expected to be recognized over a weighted-average period of approximately ten months.

During 2013, the Company awarded 1,867,500 shares of restricted common stock, which vest ratably, over a 33-month period; however, no shares vest until after three months from the date of the restricted stock award. The Company includes the common stock underlying the restricted stock award in shares outstanding once the common stock underlying the restricted stock award has vested and the restriction has been removed (“releases” or “released”).

A summary of the status of all of the Company’s unreleased restricted stock awards as of December 31, 2013 and 2012 and changes during the years then ended, is summarized in the following table.

	2013					2012
	Shares			Weighted Average Fair Value		Shares			Weighted Average Fair Value
Beginning unreleased		4,043,123		$	0.18		—		$	—
Awarded		1,867,500		$	0.44		4,157,500		$	0.18
Released		(1,657,040	)	$	0.22		(114,377	)	$	0.18
Forfeited		(315,157	)	$	0.28		—		$	—
Ending unreleased		3,938,426		$	0.28		4,043,123		$	0.18

Of the restricted stock awards unreleased at December 31, 2013, 3,663,652 were estimated to be released in future periods and 274,774 were estimated to be forfeited in future periods. The aggregate fair market value of the unreleased restricted stock awards at December 31, 2013, based on the closing price of our stock as of such date of $0.37 was $1,457,200.

As of December 31, 2013, there was approximately $925,600 of total unrecognized compensation cost, net of estimated forfeitures, related to unreleased restricted stock awards. That cost is expected to be recognized over a weighted-average period of approximately two years.