Equity-Based Compensation

3 Months Ended

Mar. 31, 2014

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

Equity-Based Compensation

Equity-Based Compensation

The fair value of each option and equity warrant award is estimated on the date of grant using a Black-Scholes-Merton option pricing valuation model. Expected volatility is based on the historical volatility of the price of the Company’s stock. The risk-free interest rate is based on U.S. Treasury issues with a term equal to the expected life of the option and equity warrant. The Company uses historical data to estimate expected dividend yield, expected life and forfeiture rates. There were no options or equity warrants granted in the three months ended March 31, 2014. The fair values of the options and equity warrants granted in the three months ended March 31, 2013, were estimated based on the following weighted average assumptions:

	Three Months Ended March 31,
	2014	2013
Risk-free interest rate	—	0.14% - 0.38%
Expected dividend yield	—	—
Expected lives	—	1 year to 2.5 years
Expected volatility	—	87.727% - 118.222%
Weighted average grant date fair value for options and equity warrants issued	—	$0.09 per warrant for 1,500,000 options equity/warrants

Stock option for employees' activity during the three months ended March 31, 2014 is as follows:

Stock option activity for employees:

	Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding January 1, 2014	10,611,480	$	1.73	4.92	$	—
Granted	—	—		—	—
Forfeited	—	—		—	—
Outstanding March 31, 2014	10,611,480	$	1.73	4.67	$	—
Vested and expected to vest March 31, 2014	10,303,147	$	1.76	4.41	$	—
Exercisable March 31, 2014	10,303,147	$	1.76	4.41	$	—

No options to purchase shares were granted to employees during the three months ended March 31, 2014.

Unvested stock option activity for employees:

	Number of Options		Weighted Average Exercise  Price		Average  Remaining Contractual  Term  (Years)	Aggregate  Intrinsic Value
Outstanding January 1, 2014	525,000		$	0.29	8.38	$	—
Granted	—		—		—	—
Vested	(216,667	)	0.27		9.34	28,000
Forfeited	—		—		—	—
Outstanding March 31, 2014	308,333		$	0.30	7.28	$	31,000

Stock option activity for non-employees:

	Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding January 1, 2014	4,128,432	$	1.48	5.01	$	—
Granted	—	—		—	—
Exercised	—	—		—	—
Forfeited	—	—		—	—
Outstanding March 31, 2014	4,128,432	$	1.48	4.76	$	—
Vested and expected to vest March 31, 2014	3,832,599	$	1.79	4.47	$	—
Exercisable March 31, 2014	3,832,599	$	1.79	4.47	$	—

No options to purchase shares were granted to non-employees during the three months ended March 31, 2014.

Unvested stock option activity for non-employees during the year:

	Number of Options		Weighted Average Exercise  Price		Weighted  Average Remaining  Contractual Term  (Years)	Aggregate  Intrinsic Value
Outstanding January 1, 2014	470,833		$	0.25	9.61	$	—
Options granted	—		—		—	—
Options vested	(175,000	)	0.25		9.36	26,000
Options forfeited	—		—		—	—
Outstanding March 31, 2014	295,833		$	0.25	9.36	$	44,000

The impact on the Company’s results of operations of recording equity-based compensation for the three months ended March 31, 2014 and 2013 was to increase general and administrative expenses by approximately $88,000 and $121,000, respectively. There was no impact on basic and fully diluted earnings per share for the three months ended March 31, 2014 and 2013.

As of March 31, 2014 and 2013, respectively, there was $261,000 and $208,000 of unrecognized equity-based compensation cost related to options granted under the Equity Incentive Plan.