Stock-Based Compensation

12 Months Ended

Dec. 31, 2012

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

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

Note 11 – Stock-Based Compensation

We have five stock option plans, as summarized below. Options issued under these plans have a term of 10 years. The plans allow for exercise prices of options issued under the Option Plans to be set at amounts less than the fair market value per share of our common stock on the date of grant. Options may be granted with any vesting schedule as approved by the stock option committee of our Board of Directors, but generally the vesting periods range from immediate vesting to 5 years. Common shares required to be issued on the exercise of stock options would be issued from our authorized and unissued shares.

				Shares Available For
		Shares Reserved		Issuance at
Plan	Date Adopted	For Issuance		December 31, 2012
2011 Stock Incentive Plan	April 7, 2011		2,000,000		1,250,105
2005 Stock Option Plan	December 16, 2005		600,000		600,000
2003 Stock Option Plan	September 24, 2003		1,500,000		437,532
2003 Stock Incentive Plan	October 31, 2003		300,000		300,000
2002 Stock Option Plan	June 6, 2002		100,000		100,000
					2,687,637

We have not registered the 600,000 shares underlying the options in the 2005 Plan, and as a result, subject to their registration, all 600,000 options remain available for issuance.

The 2003 Stock Incentive Plan provides for up to 300,000 non-qualified options to be issued to pay compensation and other expenses related to employees, former employees, consultants, and non-employee directors. No shares were issued during 2012 and 2011 under the 2003 Stock Incentive Plan.

The 2002 Stock Option Plan provides for up to 100,000 non-qualified options to be issued to pay compensation and other expenses related to employees, former employees, consultants, and non-employee directors. No options were issued during 2012 and 2011 under the 2002 Stock Option Plan.

On April 7, 2011, the Board approved the 2011 Stock Incentive Plan (the “2011 Plan”) and on April 22, 2011, we filed a registration statement on Form S-8 to register the shares of our common stock, $0.001 par value, underlying the Plan.

On April 7, 2011, the Board approved and issued option agreements with two employees and a contractor for a total of 210,000 shares of our common stock from our 2003 Stock Option Plan at an exercise price of $0.017 per share. The grants to employees vest in equal annual installments over a four year period. The grant to the contractor vests over the term of the contract.

The Board also approved the cancellation and re-issuance of most, but not all, outstanding options previously issued to our directors and employees under the 2003 Stock Option Plan and 2003 Stock Incentive Plan. Those options with exercise prices of $1.00 or greater were cancelled and replaced with an equivalent number of options at an exercise price of $0.017. The impact to our statement of operations from this transaction was not material.

Further, on April 7, 2011, the Board approved and issued option agreements with three members of our Board for a total of 300,000 shares of our common stock from our 2011 Stock Incentive Plan at an exercise price of $0.017 per share. Two of the three grantees’ options vest in equal monthly installments over an 18 month period, and the third grantee’s options vested on the date of the grant. On April 7, 2011, we cancelled 422,503 vested and non-vested stock options held by 17 employees, directors, officers and consultants, and granted 500,105 replacement stock options to employees, directors, officers and consultants under the 2011 Plan, at an exercise price of $0.017 per share. The replacement options were issued to most, but not all, employees whose exercise prices were $1.00 or greater.

On October 3, 2011, the Board approved and issued option agreements with three members of our Board for a total of 450,000 shares of our common stock from our 2011 Stock Incentive Plan at an exercise price of $0.014 per share. Two of the three grantees’ options vest over three years from the grant date, and the third grantees’ options vest in equal monthly installments over an 18 month period from the date of the grant.

On April 2, 2012 and April 25, 2012, the Board approved and issued two option agreements for a total of 25,000 shares and 50,000 shares, respectively, of our common stock from our 2011 Stock Incentive Plan at an exercise price of $0.03 per share and $0.01 per share, respectively. These grantees’ options were to vest over four years from the grant date. However, both grantees were terminated and the options forfeited upon their departure.

On July 23, 2012, the Board approved the issuance, under our 2011 Stock Incentive Plan, of four option agreements (each for 25,000 shares of our common stock) to each member of the Board of Directors, at an exercise price of $0.008 per share. Each of these grantees’ options vested on the grant date.

On August 27, 2012, our Chief Financial Officer received a stock option grant of 100,000 shares from our 2011 Stock Incentive Plan at an exercise price of $0.008 per share. The options vest over four years from the date of grant.

On November 10, 2012 our Secretary Treasurer received a stock option grant of 100,000 shares from our 2011 Stock Incentive Plan at an exercise price of $.008 per share. The options vest over four years from the date of the grant.

The fair value of stock-based awards was estimated using the Black-Scholes-Merton model with the following weighted-average assumptions:

A summary of the transactions during the years ended December 31, 2012 and 2011 with respect to our stock option plans follows:

	Year Ended December 31,
	2012	2011
Volatility	156%-169%	148%-210%
Expected dividends	-	-
Expected term (in years)	5.79	5.69
Risk-free rate	2.7%-2.89%	0.90%-2.89%

A summary of the transactions during the year ended December 31, 2012 with respect to our stock option plans follows:

								Weighted-
								Average
				Weighted-				Contractual
				Average		Aggregate		Life
				Exercise		Intrinsic		Remaining
	Shares			Price		Value		in Years
	(in thousands)					(in thousands)
Outstanding at January 1, 2011		1,127		$	0.02
Granted		375		$	0.01
Exercised		-		$	-
Forfeited		(162	)	$	0.03
Outstanding at December 31, 2012		1,340		$	0.02	$	-		9.0
Exercisable at December 31, 2012		627		$	0.02	$	-		8.7

A summary of the status of our non-vested options as of December 31, 2012, and changes during such year is presented below:

				Weighted
				Average
				Grant Date
Nonvested Shares	Shares			Fair Value
	(in thousands)
Nonvested at December 31, 2011		657		$	0.01
Granted		375		$	0.01
Vested		(157	)	$	0.04
Forfeited		(162	)	$	0.03
Nonvested at December 31, 2012		713		$	0.01

Total stock-based compensation expense is attributable to the granting of stock options and the remaining requisite service periods of stock options previously granted. Compensation expense attributable to stock-based compensation for the years ended December 31, 2012 and 2011 was $14,000 and $66,000, respectively As of December 31, 2012, the total unrecognized compensation cost related to non-vested stock options was $38,000 net of expected forfeitures and the related weighted-average period over which it is expected to be recognized is approximately 2.0 years.

The following table summarizes information about our stock options outstanding as of December 31, 2012:

Options Outstanding								Options Exercisable
Exercise Prices		Number of Shares		Weighted- Average Remaining Life		Weighted- Average Exercise Price		Number of Shares		Weighted- Average Exercise Price
		(in thousands)		(in years)				(in thousands)
	$0.008		200		9.6	$	0.008		12	$	0.008
	$0.010		50		9.3	$	0.010		6	$	0.010
	$0.014 to $0.017		970		8.8	$	0.016		559	$	0.020
	$0.050		110		8.7	$	0.050		47	$	0.050
	$0.140		10		8.1	$	0.140		3	$	0.140
			1,340		8.6	$	0.020		627	$	0.020

Subsequent Events

On February 4, 2013, the Board of Directors voted to extend Mr. J.J. Keil’s 131,025 options until April 7, 2016.