STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2014

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, 2014 and 2013.

Common Stock, Options and Stock Grants

Year Ended December 31, 2014

During the year ended December 31, 2014, 114,058 restricted common shares were granted to Directors with an aggregate grant date fair value of approximately $115,000.  During the year ended December 31, 2014, approximately 71,950 restricted common shares with an aggregate grant date fair value of approximately $66,872 vested and 40,398 restricted common shares with an aggregate grant date fair value of approximately $43,332 were forfeited.

During the year ended December 31, 2014, the Company granted, to an employee of the Company, an option to acquire 10,000 shares of common stock with an exercise price of $1.50, 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 issued was determined to be approximately $7,500.  During the year ended December 31, 2014, the Company recognized approximately $112,000 of expense related to the vesting of outstanding stock options.  For the year ended December 31, 2014, options to acquire 97,157 shares of common stock with a weighted average exercise price of $1.18 expired unexercised, and options to acquire 163,878 shares of common stock with a weighted average exercise price of $1.43 were forfeited.

Year Ended December 31, 2013

During the year ended December 31, 2013, 98,000 restricted common shares were granted with an aggregate grant date fair value of approximately $80,000.  During the year ended December 31, 2013, approximately 109,000 restricted common shares with an aggregate grant date fair value of approximately $80,000 vested.

During the year ended December 31, 2013, the Company issued 55,181 shares of restricted common stock with a grant date fair value of approximately $42,000, pursuant to the Company’s Directors’ Deferred Compensation Plan dated January 1, 2008 (the “Directors’ Deferred Compensation Plan”), to a former director for past services.  20,595 of the 55,181 shares of restricted common stock were issued to settle approximately $20,000 of accrued directors’ fees recorded on the Company’s balance sheet.

During the year ended December 31, 2013, the Company granted, to employees of the Company, options to acquire 360,909 shares of common stock with exercise prices of $1.15 (for a grant of 15,000 options), $1.25 per share (for grants of 75,000 options), $1.50 (for a grant of 80,000 options), and $1.65 per share (for grants of 190,909 options), 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 issued was determined to be approximately $330,000.  During the year ended December 31, 2013, the Company recognized approximately $109,000 of expense related to the vesting of outstanding stock options. For the year ended December 31, 2013, options to acquire 56,500 shares of common stock with a weighted average exercise price of $1.43 expired unexercised, and options to acquire 236,875 shares of common stock with a weighted average exercise price of $1.14 were forfeited.  On September 5, 2013, Matthew E. Oakes, the Company’s President and Chief Executive Officer, received 50,348 shares of the Company’s common stock in a cashless exercise of 172,500 stock options that had an exercise price of $1.15 per share.

Stock Option Plans

The Company has granted 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.  On June 3, 2014, the Company’s stockholders approved the adoption of the 2014 Stock Incentive Plan (the “2014 Plan”).  The 2014 Plan replaces the 2004 Stock Option/Stock Issuance Plan which expired on August 20, 2014.  The 2014 Plan provides for the grant of non-qualified stock options, incentive stock options, and stock appreciation rights, shares of restricted stock, stock units and shares of unrestricted stock.  Eligible participants include officers, employees and directors.  The aggregate number of shares authorized for issuance under the 2014 Plan is 1,200,000, and is subject to adjustment as described in the 2014 Plan.  There are 1,085,757 shares available for issue under the 2014 plan.  Awards that expire or are cancelled without delivery of shares general become available for issuance under the plans.

The following is a summary of stock option activity for the year ended December 31, 2014, relating to all of the Company’s common stock plans (share amounts are in thousands):

	Shares (in thousands)			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2014		800		$	1.31		3.77	$	57
Granted		10		$	1.50		--	$	--
Expired		(97	)	$	1.18		--	$	--
Forfeited		(164	)	$	1.43		--	$	--
Outstanding at December 31, 2014		549		$	1.30		2.72	$	--
Exercisable at December 31, 2014		274		$	1.23		2.41	$	--

The fair values of the stock options granted were estimated on the date of grant using the Black-Scholes-Merton option-pricing model that uses the following weighted-average assumptions for the years ended December 31, 2014 and 2013:

	2014		2013
Expected term	3.75 years		3.75 years
Expected volatility		95%		91% - 97%
Expected dividend yield		--		--
Risk-free interest rate		0.8%		0.6% - 0.8%

The following table summarizes stock option information as of December 31, 2014:

Exercise Prices	Number Outstanding (in thousands)		Weighted Average Remaining Contractual Life	Options Exercisable (in thousands)
$1.15		335	2.15 years		201
$1.20		24	1.48 years		24
$1.50		90	4.00 years		20
$1.65		100	3.79 years		29
Total		549	2.72 years		274

As of December 31, 2014, there was approximately $197,000 of unrecognized compensation costs related to stock options outstanding that will be recognized as expense over a weighted average period of 2.92 years.

Restricted Stock Grant

A summary of activity related to the Company’s non-vested stock grants for the year ended December 31, 2014 is presented below:

Non-Vested Shares	Shares (in thousands)			Weighted-Average Grant Date Fair Value
Non-Vested at January 1, 2014		49		$	0.82
Granted		114		$	1.01
Vested		(72	)	$	0.93
Forfeited		(40	)	$	1.07
Non-Vested at December 31, 2014		51		$	0.89

The future expected expense for non-vested shares is approximately $45,000 and will be recognized on a straight-line basis over the period from January 1, 2015 through December 31, 2015.