Note 14 - Employee Equity Incentive Plans

3 Months Ended

Mar. 31, 2013

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

NOTE 14:             EMPLOYEE EQUITY INCENTIVE PLANS

Stock Option Plan

Description of 2009 Equity Incentive Plan

In 2009, the Company’s Board of Directors and shareholders approved the 2009 Equity Incentive Plan of OmniComm Systems, Inc. (the “2009 Plan”).  The 2009 Plan provides for granting Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Phantom Stock Unit Awards and Performance Share Units.  Pursuant to the 2009 Plan, 7,500,000 shares of the Company’s common stock are authorized for issuance.

The maximum term for any option grant under the 2009 Plan is ten years from the date of the grant; however, options granted under the 2009 Plan will generally expire five years from the date of grant for most employees, officers and directors of the Company.  Options granted to employees generally vest either upon grant or in two installments.  The first vesting, which is equal to 50% of the granted stock options, occurs upon completion of one full year of employment from the date of grant and the second vesting occurs on the second anniversary of the employee’s employment.  The vesting period typically begins on the date of hire for new employees and on the date of grant for existing employees.

As of March 31, 2013, there were 3,961,000 outstanding options and 1,225,000 restricted stock shares that have been granted under the 2009 Plan.  At March 31, 2013, there were 2,314,000 shares available for grant as options or other forms of share-based compensation under the 2009 Plan.

Description of 1998 Stock Incentive Plan

In 1998, the Company’s Board of Directors and shareholders approved the 1998 Stock Incentive Plan of OmniComm Systems, Inc. (the “1998 Plan”).  The 1998 Plan provides for granting Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Phantom Stock Unit Awards and Performance Share Units.  Pursuant to the 1998 Plan, 12,500,000 shares of the Company’s common stock were authorized for issuance.  The 1998 Plan expired as of December 31, 2008.  As of March 31, 2013, there were 2,689,000 outstanding options that have been granted under the 1998 Plan.

The following table summarizes the stock option activity for the Company’s equity incentive plans:

	Number of shares			Weighted average exercise price (per share)		Weighted average remaining contractual term (in years)		Aggregate intrinsic value
Outstanding at December 31, 2011		11,158,000		$	0.37		2.52	$	-0-
Granted		425,000			0.12
Exercised		(265,000	)		0.20
Forfeited/cancelled/expired		(865,500	)		0.43
Outstanding at December 31, 2012		10,452,500			0.36		1.68	$	149,598
Granted		50,000			0.14
Exercised		-0-			-0-
Forfeited/cancelled/expired		(3,852,500	)		0.43
Outstanding at March 31, 2013		6,650,000		$	0.31		2.08	$	176,275
Vested and exercisable at March 31, 2013		5,310,333		$	0.39		1.36	$	66,971

The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the Company’s closing stock price at quarter-end  and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on March 31, 2013.

The total number of shares vesting and the fair value of shares vesting for the three month periods ended March 31, 2013 and March 31, 2012, respectively, was:

	Number of options  vested		Fair value of options vested
Fair value of options vesting during the three months ended March 31, 2013		25,000	$	1,055
Fair value of options vesting during the three months ended March 31, 2012		25,000	$	2,675

Cash received from stock option exercises for the three month periods ended March 31, 2013 and March 31, 2012 was $-0- and $-0-, respectively.  Due to the Company’s net loss position, no income tax benefit has been realized during the three month periods ended March 31, 2013 and March 31, 2012.

The following table summarizes information concerning options outstanding at March 31, 2013:

Awards breakdown by price range at March 31, 2013
			Outstanding						Vested
Strike price range ($)			Outstanding stock options		Weighted average remaining contractual life		Weighted average outstanding strike price		Vested stock options		Weighted average remaining vested contractual life		Weighted average vested strike price
0.00	to	0.20		3,321,000		2.78	$	0.15		1,981,333		2.24	$	0.17
0.21	to	0.29		925,000		1.59		0.25		925,000		1.59		0.25
0.30	to	0.49		455,000		0.95		0.46		455,000		0.95		0.46
0.50	to	0.70		1,949,000		1.38		0.59		1,949,000		1.38		0.59
0.00	to	0.70		6,650,000		2.08	$	0.31		5,310,333		1.70	$	0.36

The following table summarizes information concerning options outstanding at December 31, 2012:

Awards breakdown by price range at December 31, 2012
			Outstanding						Vested
Strike price range ($)			Outstanding stock options		Weighted average remaining contractual life		Weighted average outstanding strike price		Vested stock options		Weighted average remaining vested contractual life		Weighted average vested strike price
0.00	to	0.20		3,428,500		3.02	$	0.15		2,035,083		2.50	$	0.17
0.21	to	0.29		2,550,000		1.18		0.26		2,550,000		1.18		0.26
0.30	to	0.49		755,000		0.79		0.45		755,000		0.79		0.45
0.50	to	0.70		3,719,000		0.97		0.60		3,719,000		0.97		0.60
0.00	to	0.70		10,452,500		1.68	$	0.36		9,059,083		1.36	$	0.39

The weighted average fair value (per share) of options granted during the three month period ended March 31, 2013 was $0.13 and n/a during the three month period ended March 31, 2012 as no options were granted in the first quarter of 2012. The Black Scholes option-pricing model was utilized to calculate these values.

Basis for Fair Value Estimate of Share-Based Payments

Based on analysis of its historical volatility, the Company expects that the future volatility of its share price is likely to be similar to the historical volatility the Company experienced since the Company’s commercialization activities were initiated during the second half of 2000. The Company used a volatility calculation utilizing the Company’s own historical volatility to estimate its future volatility for purposes of valuing the share-based payments that have been granted. Actual volatility, and future changes in estimated volatility, may differ substantially from the Company’s current estimates.

The Company utilizes the historical data available regarding employee and director exercise activity to calculate an expected life of the options. The table below presents the weighted average expected life in years of options granted under the Plan as described above. The risk-free rate of the stock options is based on the U.S. Treasury yield curve in effect at the time of grant, which corresponds with the expected term of the option granted.

Below are the assumptions for the fair value of share-based payments for the three month periods ended March 31, 2013 and March 31, 2012.

	Stock option assumptions for the three months ended
Stock option assumptions	March 31, 2013		March 31, 2012
Risk-free interest rate		0.40%		n/a
Expected dividend yield		0.0%		n/a
Expected volatility		199.8%		n/a
Expected life of options (in years)		5		n/a

The following table summarizes weighted average grant date fair value activity for the Company incentive stock plans:

	Weighted average grant date fair value
	2013		2012
Stock options granted during the three month period ended March 31,	$	0.13		n/a
Stock options vested during the three month period ended March 31,	$	0.04	$	0.11
Stock options forfeited during the three month period ended March 31,	$	0.28	$	0.10

A summary of the status of the Company’s non-vested shares underlying stock options as of March 31, 2013, and changes during the three month period ended March 31, 2013 is as follows:

	Shares underlying stock options		Weighted average grant date fair value
Nonvested shares at January 1, 2013		1,393,417	$	0.10
Nonvested shares at March 31, 2013		1,339,667	$	0.10

As of March 31, 2013, approximately $83,543 of total unrecognized compensation cost related to unvested stock options is expected to be recognized over a weighted-average period of 1.13 years.