STOCK-BASED EMPLOYEE COMPENSATION

3 Months Ended

Mar. 31, 2014

STOCK-BASED EMPLOYEE COMPENSATION [Abstract]

STOCK-BASED EMPLOYEE COMPENSATION

5. STOCK-BASED EMPLOYEE COMPENSATION

On February 27, 2013, the Board of Directors authorized the Company’s 2013 Equity Incentive Plan (the “Incentive Plan”), which provides for the grant of non-statutory stock options and restricted shares to eligible employees and directors of the Company.  The Incentive Plan authorizes the Company to issue up to 2,600,000 shares of Company’s common stock.  The Company issues new shares upon the exercise of stock options.  Options granted under the Plan generally expire no later than 10 years from the date of grant.  The exercise price of any option granted to a 10% stockholder may be no less than 110% of the fair value of the Company’s common stock on the date of grant.

The Company granted stock options to purchase approximately 850,000 shares of its common stock on February 27, 2013 under the Incentive Plan.   The stock options were granted to an executive officer and members of the Board of Directors, at an exercise price of $0.26 per share (determined by the Board of Directors based upon the range of bid prices for the Company’s common stock on the grant date), and a grant date fair value of $151.  These options become fully exercisable over a two-year period (1/3 exercisable on the grant date, 1/3 exercisable one year after the grant date and the remaining 1/3 exercisable two years after the grant date, respectively) and expire on February 27, 2023.

Total stock-based compensation recorded for the three months ended March 31, 2014 and 2013 was $13 and $55, respectively, and is included in selling, general and administrative expenses.  The fair values of options granted were estimated on the date of grant using the Black-Scholes Merton option pricing model based on the assumptions included in the table below. The fair value of the Company’s stock option awards is charged to expense over the vesting life of the underlying stock options using the straight line method. Expected volatility is based on the historical volatility of the Company’s common stock. The risk-free interest rate for periods within the contractual life of the stock option award is based on the yield of U.S. Treasury bonds on the grant date with a maturity equal to the expected term of the stock option. The expected life of stock option awards granted to employees and non-employee directors is based upon the “simplified” method for “plain vanilla” options described in SEC Staff Accounting Bulletin No. 107, as amended by SEC Staff Accounting Bulletin No. 110. Forfeiture rates are based on management’s estimates.

	Three months ended March 31, 2013
Expected volatility	84%
Expected dividend yield	0.00%
Weighted average risk-free interest rate	1.05%
Expected life	5.50 years
Forfeiture rate	0%

As of March 31, 2014, the Company has approximately $54 of unrecognized stock compensation expense which will be recognized over a period of approximately one year.

	Shares (In thousands)			WeightedAverageExercisePrice			RemainingContractual Life (in years)		AggregateIntrinsicValue (in thousands)
Outstanding at December 31, 2013		905		$	0.28
Grants		—			—
Exercised		(7	)		(0.54	)
Forfeited, cancelled or expired		—			—
Outstanding at March 31, 2014		898		$	0.28			9	$	1,181
Exercisable at March 31, 2014		583		$	0.27			9	$	770

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing price of the Company’s common stock on the date of determination for those awards that have an exercise price currently below the closing price.  During the three months ended March 31, 2014, there were 7,000 shares exercised under the Incentive Plan with an intrinsic value of $4.

Availability for Future Issuance – As of March 31, 2014, stock options to purchase approximately 1,695,000 shares of the Company’s common stock were available for future issuance under the Incentive Plan.