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Stock Warrants
9 Months Ended
Sep. 30, 2012
Stock Warrants [Abstract]  
Stock Warrants
Note 9.                      Stock Warrants

The Company accounts for stock warrants based on the estimated fair value of the warrants on the date of grant using the Black-Scholes valuation model.  The Company uses historical data among other factors to estimate the expected price volatility, the expected warrant term and the expected forfeiture rate.  The risk-free rate is based on the U.S. Treasury yield curve in effect at the date of grant for the expected term of the warrant.

In August 2011, the Company granted warrants to purchase unregistered common stock to all members of the Board of Directors and all Officers.  All the warrants are exercisable over a five year term, vest immediately and were priced using the average of the high and low trading price on the date of the grant.  A total of 180,000 warrants were granted at $1.53 per warrant.  To reflect the entire value of the stock warrants granted, the Company took an immediate charge to earnings during the third quarter 2011 totaling approximately $245,000.

Also in August 2011, the Company granted 100,000 warrants to purchase unregistered common stock to Strategic Asset Management, Inc. (SAMI), for additional services performed in connection with a December 2010 consulting agreement between SAMI and the Company.  All the warrants are exercisable over a five year term, vest immediately and were priced at a premium over the fair market value of the Company's common stock as of the date of the grant, or $1.65 per warrant.  To reflect the entire value of the stock warrants granted, the Company is taking a charge to earnings totaling approximately $136,000 through December 2013, the ending date of the consulting agreement.  For the three months ended September 30, 2012 and 2011, the charge to earnings was approximately $11,300 and $35,800, respectively.  For the nine months ended September 30, 2012 and 2011, the charge to earnings was approximately $33,900 and $35,800, respectively.

In March 2012, the Board of Directors approved a plan to automatically extend to two holders of Company warrants the expiration date of the warrants by one (1) year.  All other terms and conditions of each warrant remain unchanged.  The two holders are Timothy R. Kasmoch, President and CEO of the Company, and, Strategic Asset Management Co, Inc., holders of 50,000 and 120,000 warrants, respectively, and extended to March 22, 2013 and March 26, 2013, respectively.  The incremental fair value associated with the extension of the warrant expiration dates has been determined using the Black-Scholes model and has been recorded as a deemed dividend to common stockholders in the Statement of Stockholders' Equity.  For the three months and nine months ended September 30, 2012, the deemed dividend was $105,329.  Additional information is available in the Form 8-K filed by the Company on March 27, 2012.

In April 2012, the Board of Directors approved a plan to modify all Company warrants whose expiration date was before December 31, 2015, by extending that expiration date to December 31, 2015, and to modify all Company warrants, regardless of their expiration date, by reducing the exercise price to $1.00.  All other terms and conditions of each class of warrant remain unchanged.  The incremental fair value associated with the extension of the warrant expiration dates has been determined using the Black-Scholes model and has been recorded as a deemed dividend to common stockholders in the Statement of Stockholders' Equity.  For the three months and nine months ended September 30, 2012, the deemed dividend was $503,281.  Additional information is available in the Form 8-K filed by the Company on April 19, 2012.