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STOCKHOLDERS' EQUITY
 12 Months Ended
Dec. 31, 2012
STOCKHOLDERS' EQUITY [Abstract]  
SHAREHOLDERS' EQUITY
Note 6 – Stockholders' Equity

Preferred Stock

The Company has 2,000,000 authorized preferred shares of which none were issued and outstanding at December 31, 2012, and 2011.

Common Stock, Options and Stock Grants

Year Ended December 31, 2012

During the year ended December 31, 2012, 150,000 restricted common shares were granted with an aggregate grant date fair value of approximately $99,000.  During the year ended December 31, 2012, 89,607 restricted common shares with an aggregate grant date fair value of approximately $65,000 vested, and 35,000 of unvested restricted common shares with an aggregate grant date fair value of approximately $26,000 were forfeited.

During the year ended December 31, 2012, the Company granted, to certain employees of the Company, options to acquire an aggregate of 875,000 shares of common stock for an exercise price of $1.15 per share, exercisable over a term of five years from the date of grant.  The options vest over a four year period, with 25% vesting on the first anniversary of the grant date and the remaining 75% vesting in equal monthly amounts through the fourth anniversary of the grant date.  The grant date fair value of the stock options granted during the year ended December 31, 2012 was determined to be approximately $527,000, of which approximately $98,000 was recognized as stock compensation expense for the year ended December 31, 2012.  During the year ended December 31, 2012, options to acquire 17,000 shares of common stock with a grant date fair value of approximately $12,000 expired unexercised and options to acquire 80,000 shares of common stock with a grant date fair value of approximately $46,000 were forfeited.  On April 5, 2012, the Company issued 261,503 shares of common stock with a grant date fair value of approximately $277,000, pursuant to the Direct Insite Corp. Directors' Deferred Compensation Plan dated January 1, 2008, to two former Directors for past services.

Year Ended December 31, 2011

During the year ended December 31, 2011, 111,000 restricted common shares were granted with an aggregate grant date fair value of approximately $87,000.  During the year ended December 31, 2011, 73,000 restricted common shares with a grant date fair value of approximately $60,000 vested.  During the year ended December 31, 2011, the Company issued 17,000 common shares with a fair value of approximately $11,000 to a director in lieu of cash for director fees.  The Company also issued 350,000 shares to the former Chief Executive Officer on exercise of 350,000 options for $217,000.  During the year ended December 31, 2011, the Company granted to certain employees of the Company, options to acquire an aggregate of 77,500 shares of common stock, of which 55,000 are exercisable at $1.20 per, and 22,500 are exercisable at $1.15 per share.  The options, all of which vested during the year ended December 31, 2011, had a weighted average grant date fair value of approximately $55,000, which was recognized as stock compensation expense for the year ended December 31, 2011.

Stock Option Plans

The Company grants options under multiple stock-based compensation plans that do not differ substantially in the characteristics of the awards.  Nonqualified and incentive stock options have been granted to directors, officers and employees of the Company under the Company's Stock Option Plans.  Options generally vest over three to four years and expire five years from the date of the grant.  At December 31, 2012, 395,785 shares were available for issuance under the stock option plans.  Awards that expire or are cancelled without delivery of shares generally become available for issuance under the plans.  The Company issues new shares to satisfy stock option exercises.

 
The following is a summary of stock option activity for the year ended December 31, 2012 relating to all of the Company's common stock plans (share amounts are in thousands):

Weighted Average
Weighted
Remaining
Shares
Average Exercise
Contractual Term
Aggregate Intrinsic Value
(in thousands)
Price
(in years)
(in thousands)
Outstanding at January 1, 2012
128$1.313.2$--
Granted
875$1.153.8$--
Expired
(17)$1.20$--
Forfeited
(80)$1.15$--
Outstanding at December 31, 2012
906$1.173.9$--
Exercisable at December 31, 2012
111$1.332.0$--
 
 
During the years ended December 31, 2012 and 2011, Company granted approximately 875,000 and 78,000 stock options with respective weighted average grant date fair values of $0.60 and $0.72 per share.The fair values of the stock options granted were estimated on the date of grant using the Black-Scholes option-pricing model that uses the following weighted-average assumptions for the years ended December 31, 2012 and 2011:

2012
2011
Expected term
3.75 years
2.56 years
Expected volatility
154% - 175%
105%
Expected dividend yield
--
--
Risk-free interest rate
0.36% - 0.74%
0.54%


 
The following table summarizes stock option information as of December 31, 2012:

Outstanding Options
Weighted Average
Number Outstanding
Remaining
Options Exercisable
Exercise Prices
(in thousands)
Contractual Life
(in thousands)
$1.5050
0.3 years
50
$1.2038
3.5 years
38
$1.15818
4.2 years
23
Total
906
3.9 years
111
 
 
As of December 31, 2012, there was approximately $383,000 of unrecognized compensation costs related to stock options outstanding that will be recognized as expense over a weighted average period of 3.2 years.

Restricted Stock Grants

 
A summary of activity related to the Company's non-vested stock grants for the year ended December 31, 2012 is presented below:

Non-Vested Shares
Shares
(in thousands)
Weighted-Average
Grant Date Fair Value
Non-Vested at January 1, 2012
35$0.93
Granted
150$0.66
Vested
(90)$0.74
Forfeited
(35)$0.74
Non-Vested at December 31, 2012
60$0.66
 
 
The future expected expense for non-vested shares is approximately $40,000 and will be recognized on a straight-line basis over the period from January 1, 2013 through December 31, 2013.