Stock-Based Compensation Arrangements

9 Months Ended

Sep. 30, 2014

Stock-Based Compensation Arrangements [Abstract]

Stock-Based Compensation Arrangements

Note 8—Stock-Based Compensation Arrangements

Total stock-based compensation is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Stock option grants beginning of period	$	108,363	$	19,532	$	348,545	$	71,497
Stock-based arrangements during the period:
Stock option grants		-		3,061		1,166		9,170
Restricted stock issued:
Employee stock purchase plan		1,279		1,732		4,730		3,941
	$	109,642	$	24,325	$	354,441	$	84,608

Stock option and restricted stock grants

The following table details stock option and restricted stock activity:

	Nine Months Ended September 30, 2014			Nine Months Ended September 30, 2013
	Shares	Weighted Average Exercise Price		Shares	Weighted Average Exercise Price
Outstanding, beginning of period	5,884,050	$	0.43	2,302,000	$	1.06
Stock options granted	137,000		0.35	200,000		0.29
Stock options exercised	-		-	(252,000)		0.32
Restricted stock exercised	-		-	(2,500)		-
Canceled/Expired	(1,210,375)		0.43	(644,350)		1.08
Outstanding, end of period	4,810,675	$	0.43	1,603,150	$	1.07
Exercisable, end of period	723,925	$	0.71	668,700	$	2.07

At September 30, 2014, there was approximately $969,000 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 at September 30, 2014 and 2013, there were no outstanding restricted stock awards.

Stock Option Grants

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, 2014, the Company granted 137,000 stock options under the 2013 Plan. The 2013 Plan allows for the issuance of up to 8,860,000 additional shares of our common stock pursuant to awards granted under the 2013 Plan. Additionally, the 2013 plan allows for the issuance of up to a maximum of 2,435,500 additional shares of our common stock, pursuant to the cancellation, forfeiture, or expiry, of awards granted under the 2004 Plan and terminated on or after the 2013 plan approval on August 9, 2013. At September 30, 2014, the Company had recaptured 726,725 shares from the 2004 plan, leaving an aggregate of 5,954,825 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, 2014 and 2013, employees purchased 99,585 and 79,496 shares, respectively, of common stock at a weighted-average purchase price of $0.28 and $0.29, respectively, while the weighted-average market value was $0.32 and $0.34 per share, respectively, resulting in compensation expense of $4,730 and $3,941, respectively.