STOCK BASED COMPENSATION

12 Months Ended

Dec. 31, 2012

Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range, End Of Period [Abstract]

STOCK BASED COMPENSATION

10.           STOCK BASED COMPENSATION

Stock Options.  The Company has adopted three stock option plans: the 1997 Stock Option Plan (the “1997 Plan”), the 2000 Stock Option and Incentive Award Plan (the “2000 Plan”) and the 2010 Innotrac Stock Award Plan (the “2010 Plan” and the three plans together “The Plans”).  The Plans provide key employees, officers, directors, contractors and consultants an opportunity to own shares of common stock of the Company and to provide incentives for such persons to promote the financial success of the Company.  Awards under The Plans may be structured in a variety of ways, including as “incentive stock options,” as defined in Section 422 of the Internal Revenue Code, as amended, non-qualified stock options, restricted stock awards, and stock appreciation rights (“SARs”).  Incentive stock options may be granted only to full-time employees (including officers) of the Company.  Non-qualified options, restricted stock awards, SARs, and other permitted forms of awards may be granted to any person employed by or performing services for the Company, including directors, contractors and consultants.  In November 2007, the 1997 Plan expired and in March 2010, the 2000 Plan expired.  The 2010 Plan provides for the issuance of an aggregate 1,200,000 shares of the Company’s Common Stock, plus any shares that are subject to outstanding grantsunder the terminated Innotrac Corporation 2000 Stock Option and Incentive Award Plan, which expire, are forfeited or otherwise terminate without delivery of shares. At December 31, 2012, there were 1,149,750 shares available to be issued under the 2010 Plan.

Incentive stock options are also subject to certain limitations prescribed by the Internal Revenue Code, including the requirement that such options may not be granted to employees who own more than 10% of the combined voting power of all classes of voting stock of the Company, unless the option price is at least 110% of the fair market value of the common stock subject to the option. The Board of Directors of the Company (or a committee designated by the Board) otherwise generally has discretion to set the terms and conditions of options and other awards, including the term, exercise price and vesting conditions, if any; to select the persons who receive such grants and awards; and to interpret and administer The Plans.

A summary of the options outstanding and exercisable by price range as of December 31, 2012 is as follows (shares in 000’s):

	Options Outstanding						Options Exercisable
Range of Exercise Prices	As of December 31, 2012		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		As of December 31, 2012		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life
$1.77 - $3.54		60		4.35	$	2.70		60	$	2.70		4.35
$3.54 - $5.31		291		2.53		4.56		291		4.56		2.53
		351		2.84	$	4.24		351	$	4.24		2.84

A summary of activity in the Company’s three stock option plans is as follows (shares in 000’s):

	Shares		Weighted Average Price
Outstanding at December 31, 2010		761	$	4.08
Granted		-		-
Exercised		-		-
Expired		241		4.33
Forfeited		-		-
Outstanding at December 31, 2011		520	$	3.97
Granted		-		-
Exercised		-		-
Expired		169		3.40
Forfeited		-		-
Outstanding and exercisable at December 31, 2012		351	$	4.24

The Company did not issue any options during 2012 and 2011.  When the Company issues options, the Black-Sholes pricing model is used to value stock options at issuance date.  Stock option grants generally have a contractual term of 10 years.  No options vested during 2012, and the grant date fair value of options vesting in 2011 was $44,000.  The aggregate intrinsic value of stock options outstanding at December 31, 2012 was $21,000.  The Company recorded no expense related to stock options in 2012 due to all outstanding stock options having become fully vested in the second quarter of 2011.  We recognized approximately $2,000 of compensation expense relating to our stock option grants in 2011.  As of December 31, 2012, there was no amount of unrecognized compensation expense related to non-vested stock options.

Restricted Stock. Restricted shares were issued under the Innotrac Corporation 2000 Stock Option and Incentive Award Plan and the Innotrac Corporation 2010 Stock Award Plan. Both plans provide for immediate voting rights, forfeiture of unvested shares if a grantee’s employment or service with the Company ends for any reason (other than a change in control, as defined in the plan), and vesting of shares upon the earlier of a change in control or on specific vesting dates. On April 16, 2007, 265,956 shares of restricted stock were issued to certain executives under the terms provided in the 2000 Plan.  The grant date fair value of this award was $2.82 per share.  On March 29, 2010, 260,000 restricted shares were issued to certain executives and the Board of Directors under the terms provided in the 2010 Plan which plan was ratified on June 2, 2010 at the Company’s 2010 annual meeting.  The grant date fair value of this award was $1.64 per share.  On June 10, 2011, 310,000 shares of restricted stock were issued to certain executives and the Board of Directors under the terms provided in the 2010 Plan.  On August 31, 2012, 145,000 shares of restricted stock were issued to certain executive and the Board of Directors under the terms provided in the 2010 Plan.  The vesting period for all restricted shares issued prior to June 2012 is 25% on each of the 7th, 8th, 9th and 10th anniversary of the issuance date, or earlier upon a change in control.  Vesting for restricted shares issued to employees in June 2011 follow the same schedule of 25% on each of the 7th, 8th, 9th and 10th anniversary of the issuance date, or earlier upon a change in control.  The vesting period for restricted shares issued to Directors of the Company beginning in June 2012 follows the same schedule of 25% on each of the 7th, 8th, 9th, and 10th anniversary (or earlier upon a change in control), unless the Director’s service with the Company terminates other than for cause prior to all shares vesting, in which case shares vest one third on the date of issuance and one third on each of the 1st and 2ndanniversary of the issuance date.

A summary of restricted stock activity during the years ended December 31, 2012 and 2011 is as follows:

	Shares			Weighted Average Grant Date Fair Value
Non-vested at December 31, 2010		525,956		$	2.24
Granted		310,000			1.70
Vested		(13,333	)		1.70
Forfeited		(135,319	)		2.54
Non-vested at December 31, 2011		687,304			2.09
Granted		145,000			1.50
Vested		(23,333	)		2.63
Forfeited		(25,000	)		1.70
Non-vested at December 31, 2012		783,971		$	2.12

We recognized approximately $164,000 and $39,000 of compensation expense relating to our restricted stock grants in 2012 and 2011, respectively.  As of December 31, 2012, there was approximately $1.0 million of unrecognized compensation expense related to non-vested restricted stock.  This cost is expected to be recognized over a weighted average period of 7.2 years.