Stock-Based Compensation Arrangements

9 Months Ended

Sep. 30, 2013

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

Stock-Based Compensation Arrangements

Note 9—Stock-Based Compensation Arrangements

Total stock-based compensation is as follows:

		Three Months Ended September 30,			Nine Months Ended September 30,
	2013		2012		2013		2012
Stock option grants beginning of period	$	19,532	$	73,507	$	71,497	$	168,294
Stock-based arrangements during the period:
Stock option grants		3,061		1,238		9,170		1,249
Restricted stock issued:
Employee stock purchase plan		1,732		—		3,941		1,332
	$	24,325	$	74,745	$	84,608	$	170,875

Stock option and restricted stock grants

The following table details stock option and restricted stock activity for the nine months ended September 30, 2013 and 2012:

	Nine Months Ended		September 30, 2013	Nine Months Ended		September 30, 2012
	Shares		Weighted Avg Exercise Price	Shares		Weighted Avg Exercise Price
Outstanding, beginning of period	2,302,000	$	1.06	2,228,067	$	1.14
Stock options granted	200,000		0.29	81,000		0.45
Stock options exercised	(252,000)		0.32	—		—
Restricted stock exercised	(2,500)		0.00	(2,500)		0.00
Canceled/Expired	(644,350)		1.08	(475,800)		0.55
Outstanding, end of period	1,603,150	$	1.07	1,830,767	$	1.27
Exercisable, end of period	668,700	$	2.07	1,397,767	$	1.49

At September 30, 2013, there was approximately $217,000 of total unrecognized compensation related to non-vested share-based compensation arrangements granted under the Company’s stock plans.

Restricted Stock Awards

Holders of restricted stock awards participate fully in the rewards of stock ownership of the Company, including voting and dividend rights. Recipients of restricted stock awards are generally not required to pay any consideration to the Company for these restricted stock awards. The Company measures the fair value of the shares based on the last reported price at which the Company’s common stock traded on the date of the grant and compensation cost is recognized over the remaining service period. During the nine months ended September 30, 2013, 2,500 shares of restricted stock were cancelled and during the nine months ended September 30, 2013 and 2012, the Company granted no restricted stock awards.

On August 9, 2013, the Company’s shareholders’ approved the 2013 Employee, Director and Consultant Equity Incentive Plan (the “2013 Plan”). During the nine month period ended September 30, 2013, the Company granted 200,000 stock options under the 2004 Employee, Director & Consultant Stock Plan (the “2004 Plan”). The 2013 Plan will allow for the issuance of up to 8,860,000 additional shares of our common stock pursuant to awards granted under the 2013 Plan and will allow for the issuance of up to a maximum of 2,435,500 shares of common stock that are represented by options outstanding under our 2004 Plan, that expire or are cancelled without delivery of shares of common stock on or after the date of stockholder approval of the 2013 Plan. At September 30, 2013, the Company had an aggregate of 9,392,500 shares of common stock available for grant under the 2013 Plan.

It is the Company’s policy to grant stock options with an exercise price equal to the fair market value of the Company’s common stock at the grant date, and stock options to employees generally vest over four years based upon continuous service. Historically, the majority of the Company’s stock options have been granted in connection with the employee’s start date with the Company. In addition, the Company may grant stock options in recognition of promotion and/or performance.

Employee Stock Purchase Plan

Purchases made under the Company’s Employee Stock Purchase Plan are deemed to be compensatory because employees may purchase stock at a price equal to 85% of the fair market value of the Company’s common stock on either the first day or the last day of a calendar quarter, whichever is lower. During the nine months ended September 30, 2013 and 2012, employees purchased 79,496 and 52,158 shares, respectively, of common stock at a weighted-average purchase price of $0.29 and $0.17, respectively, while the weighted-average market value was $0.34 and $0.20 per share, respectively, resulting in compensation expense of $3,941 and $1,332, respectively.