Stockholders' Equity

12 Months Ended

Dec. 31, 2012

Stockholders' Equity [Abstract]

Stockholders' Equity

K. Stockholders’ Equity

Warrants

In 2003 we issued warrants to purchase common stock to our lenders in connection with a waiver of certain covenant defaults and the extension of our loan. During 2012 there was a cashless exercise of 7,068 warrants which resulted in 6,367 shares being issued. As of December 31, 2012 and 2011, there are 86,221 and 93,289 warrants outstanding, respectively, with an exercise price of $0.815. All warrants expire on September 30, 2014. The warrant holders have certain rights and privileges that provide them with anti-dilution protection in the event that the Company issues stock at a price below the then current market price of the company’s common stock.

Stock Options and Restricted Stock

Description

Under the MicroFinancial 2008 Equity Incentive Plan (the “2008 Plan”), we reserved 1,000,000 shares of common stock for issuance, of which 44,923 shares are unissued as of December 31, 2012. In May, 2012, our stockholders approved our 2012 Equity Inventive Plan (the “2012 Plan”), for which we have 750,000 shares of common stock reserved and unissued as of December 31, 2012. The total potential future grants under the combined 2008 and 2012 plans are 794,923 shares. These plans permit the Compensation and Benefits Committee of our Board of Directors to grant stock options, restricted stock, restricted stock units, shares of common stock without restrictions, and any other right to receive payment from the corporation based in whole or in part on the value of common stock. All employees and directors of the Corporation or any of its affiliates are eligible to receive awards under either plan. For purposes of calculating the shares remaining for grant under both the 2008 and 2012 Plans, grants of stock options or stock appreciation rights to any participant will reduce that reserve by one share for each share subject to the option or the settled portion of the stock appreciation right. Grants of restricted stock, restricted stock units and any other “full share” award will reduce the reserve by three shares for each share of common stock subject to the award, in the case of awards to employees, or by one share for each share of common stock subject to the award, in the case of awards to non-employee directors.

Stock options under the plans may be incentive stock options or non-statutory stock options. The committee determines the terms of the option, including the amount, exercise price, vesting schedule and term, which may not exceed ten years. The per share exercise price of the option may not be less than 100% of the fair market value of the common stock on the grant date. No stock options granted to an employee under the plans shall become fully vested within one year of grant date and no restricted stock or other awards made to an employee without any performance-based criteria other than the employee’s continued service will have a restricted vesting period of less than one year. We may not in any fiscal year grant to any participant options or other awards covering more than 200,000 shares.

Non-employee director stock grants

The following details the stock granted to our non-employee directors under the 2008 Plan during the years ended December 31, 2012, 2011 and 2010. These shares were issued as part of our annual director compensation arrangements and were fully vested on the date of issuance.

Date of Grant	Number of Shares		Fair Value per Share		Fair Value of Grant
February 2010		53,844	$	3.15	$	169
July 2010		34,425		3.66		126
Total 2010 Grants:		88,269			$	295
February 2011		51,642		4.11	$	212
July 2011		25,632		5.54		142
Total 2011 Grants:		77,274			$	354
February 2012		31,820		6.60	$	210
July 2012		16,328		8.36		136
Total 2012 Grants:		48,148			$	346

On February 4, 2004, a new non-employee director was granted 25,000 shares of restricted stock with a fair value of $3.17 per share. On August 15, 2006, a second new non-employee director was granted 25,000 shares of restricted stock with a fair value of $3.35 per share. In each case, the restricted stock vested 20% upon grant, and vested 5% on the first day of each quarter after the grant date. Compensation expense was recognized as vesting occurred. The final unvested portion of these grants, 3,750 shares with a compensation cost of $10,000, vested and was recognized during 2010. As of December 31, 2012, 2011 and 2010, there are no unvested restricted shares under these grants.

Restricted Stock Unit Grants

The following provides details of the RSUs granted during the years ended December 31, 2012, 2011 and 2010:

							As of December 31, 2012:
Year of Grant	Number of RSUs		Fair Value per Share		Fair Value of Grant		Number Vested		Number Non- Vested
2010		33,518	$	3.15	$	105		8,380		25,138
2011		33,044	$	4.11		135		—		33,044
2012		40,393	$	6.60		266		—		40,393
		106,955			$	506		8,380		98,575

The weighted average life in years of these RSU’s is 2.86 years.

The RSUs granted during 2012 consist of two tranches. The first tranche is for 25,165 RSUs which vest over five years at 25% annually beginning on the second anniversary of the grant date. The second tranche is for 15,228 RSUs which cliff vest after three years only if management achieves specific performance measures. The RSUs granted in 2011 and 2010 vest over five years beginning on the second anniversary of the grant date.

Stock Option Grants

The following summarizes stock option activity for the years ended December 31, 2012, 2011 and 2010:

	Shares			Exercise Price Per Share	Weighted Average Exercise Price
Outstanding at December 31, 2009		1,258,028		$1.59 to $13.10	$	6.38
Granted		—		$—	$	—
Expired		(350,000	)	$9.78	$	9.78
Outstanding at December 31, 2010		908,028		$1.59 to $13.10	$	5.07
Granted		—		$—	$	—
Expired		(90,000	)	$13.10	$	13.10
Outstanding at December 31, 2011		818,028		$1.59 to $6.70	$	4.19
Exercised		(150,000	)	$1.59	$	1.59
Granted		—		$—	$	—
Expired		(235,000	)	$6.70	$	6.70
Outstanding at December 31, 2012		433,028		$2.30 to $5.85	$	3.72

The options granted prior to and including 2007 vest over five years based solely on service and are exercisable only after they become vested. At December 31, 2012, 2011 and 2010, 268,072, 520,872 and 510,596, respectively, of the outstanding options were fully vested.

Information relating to our outstanding stock options at December 31, 2012, is as follows:

Outstanding							Exercisable
Exercise Price	Shares		Weighted- Average Life (Years)		Intrinsic Value		Weighted- Average Exercise Price		Shares		Intrinsic Value
$5.77		31,923		4.17	$	48	$	5.77		31,923	$	48
5.85		142,382		5.08		204		5.85		106,787		153
2.30		258,723		6.17		1,288		2.30		129,362		644
		433,028		5.66	$	1,540	$	4.13		268,072	$	845

Stock compensation expense recognized during the years ended December 31, 2012, 2011 and 2010 is as follows:

	Year ended December 31,						Unrecognized Compensation Cost as of December 31, 2012
	2012		2011		2010
Compensation expense—RSUs	$	109	$	46	$	19	$	330
Compensation expense—Options		82		92		93		35
Total	$	191	$	138	$	112	$	365

Common Stock Reserved

We reserved shares of common stock at December 31, 2012, as follows:

Warrants	86,221
Stock options	433,028
Restricted stock units	98,575
Reserved for future grants under 2008 and 2012 Equity Incentive Plans	794,923
Total	1,412,747

Repurchases

On August 10, 2010, our Board of Directors approved a common stock repurchase program under which we are authorized to purchase up to 250,000 of our outstanding shares from time to time. The repurchases may take place in either the open market or through block trades. The repurchase program will be funded by our working capital and may be suspended or discontinued at any time.

During the year ended December 31, 2012, we did not repurchase any shares of our common stock under our repurchase program. During the year ended December 31, 2011, we repurchased and retired 51,883 shares of our common stock under the program, at an average price paid per share of $4.61, for a total cost of $239,000. During the year ended December 31, 2010, we repurchased and retired 34,412 shares of our common stock under the program at an average price paid per share of $4.06, for a total cost of $139,000.