6. STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2014

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

STOCK-BASED COMPENSATION

NOTE 6 – STOCK-BASED COMPENSATION

Stock Incentive Plans

Options and Warrants

We have two long-term incentive plans which we refer to as the 2000 Plan and the 2006 Plan. The 2000 Plan was terminated as to future grants when the 2006 Plan was approved by the stockholders in 2006 and as of September 30, 2014 no options or warrants were outstanding under our 2000 Plan. As of September 30, 2014, we have reserved for issuance under the 2006 Plan 11,000,000 shares of common stock. Certain options granted under the 2006 Plan to employees are intended to qualify as incentive stock options under existing tax regulations. In addition, we may issue non-qualified stock options and warrants under the 2006 Plan from time to time to non-employees, in connection with acquisitions and for other purposes and we may also issue restricted stock under the 2006 Plan. Stock options and warrants generally vest over two to five years and expire five to ten years from date of grant.

As of September 30, 2014, 2,037,509, or approximately 96.9%, of the 2,102,509 outstanding stock options and warrants granted under our 2006 Plan are fully vested. During the nine months ended September 30, 2014, we did not grant options or warrants under our 2006 Plan.

We have issued warrants outside the 2006 Plan under various types of arrangements to employees, and in exchange for outside services. All warrants issued to employees or consultants after our February 2007 listing on the NASDAQ Global Market have been characterized as awards under the 2006 Plan. All warrants outside the 2006 Plan have been issued with an exercise price equal to the fair value of the underlying common stock on the date of grant.

As of September 30, 2014, no warrants remain outstanding outside the 2006 Plan.

The following summarizes all of our option and warrant transactions during the nine months ended September 30, 2014:

Outstanding Options and Warrants Under the 2006 Plan and 2000 Plan	Shares			Weighted Average Exercise price Per Common Share		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value
Balance, December 31, 2013		4,701,250		$	3.15
Granted		–			–
Exercised		(2,283,741	)		2.38
Canceled or expired		(315,000	)		5.91
Balance, September 30, 2014		2,102,509			3.57		1.44	$	7,017,488
Exercisable at September 30, 2014		2,037,509			3.62		1.36		6,719,788

Non-Plan Outstanding Warrants	Shares			Weighted Average Exercise price Per Common Share	Weighted Average  Remaining  Contractual Life  (in years)		Aggregate Intrinsic Value
Balance, December 31, 2013	200,000		$	2.62
Granted	–			–
Exercised	(200,000	)		2.62
Canceled or expired	–			–
Balance, September 30, 2014	–			–	–	$	–
Exercisable at September 30, 2014	–			–	–		–

Aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between our closing stock price on September 30, 2014 and the exercise price, multiplied by the number of in-the-money options or warrants, as applicable) that would have been received by the holder had all holders exercised their options or warrants, as applicable, on September 30, 2014. Total intrinsic value of options and warrants exercised during the nine months ended September 30, 2014 and 2013 was approximately $5.9 million and $2.3 million, respectively. As of September 30, 2014, total unrecognized stock-based compensation expense related to non-vested employee awards was $39,000, which is expected to be recognized over a weighted average period of approximately 2.1 years.

Restricted Stock Awards (“RSA’s”)

The 2006 Plan permits the award of restricted stock. On January 2, 2014, we granted awards for 1,011,785 shares of our common stock to certain employees and outside directors. Of these awards granted, 337,262 shares vested on the award date, with the remaining 674,524 shares vesting at the completion of each year’s service by 337,262 shares per year over the next two years. We valued this award based on the closing market price of our stock on January 2, 2014 which was $1.62 per share.

At September 30, 2014, the total unrecognized fair value of all restricted stock awards was approximately $1.1 million, which will be recognized over the remaining vesting period of 2.50 years.

In sum, of the 11,000,000 shares of common stock reserved for issuance under the 2006 Plan, at September 30, 2014, we had 4,834,294 options, warrants and shares of restricted stock outstanding, 2,296,241 options exercised and 3,869,465 shares of common stock available for grant.