Note 9 - Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2013 |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' |
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | ' |
Note 9. Stock-Based Compensation |
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The Company uses the Black-Scholes option pricing model to value options granted to employees, directors and consultants. Compensation expense, including the effect of forfeitures, is recognized over the period of service, generally the vesting period. Stock-based compensation totaled $253,813 and $403,765 for the three months ended September 30, 2013 and 2012, respectively. Stock-based compensation totaled $885,116 and $1,249,925 for the nine months ended September 30, 2013 and 2012, respectively. Stock-based compensation is included in general and administrative expenses in the accompanying condensed consolidated statements of operations. |
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The unamortized amount of stock options expense totaled $2,044,445 as of September 30, 2013 which will be recognized over a weighted-average period of 2.4 years. |
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The fair values of stock option grants were calculated on the dates of grant using the Black-Scholes option pricing model and the following weighted average assumptions: |
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| | Three Months Ended September 30, | | | Nine Months Ended September 30, |
| | 2013 | | | 2012 | | | 2013 | | 2012 |
Risk-free interest rate | | | 1.9 | % | | | - | | | | 0.8% | - | 1.90% | | | 0.6% | - | 1.00% |
Expected volatility | | | 68 | % | | | - | | | | 65% | - | 68% | | | 65% | - | 74% |
Expected life (in years) | | | 6 | | | | - | | | | 5 | - | 6.5 | | | 5 | - | 5.3 |
Expected dividend yield | | | - | | | | - | | | | | - | | | | | - | |
Weighted average per share grant date fair value | | $ | 1.42 | | | | - | | | $ | | 1.44 | | | $ | | 2.16 | |
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The risk-free interest rate was based on rates established by the Federal Reserve. The Company’s expected volatility was based upon the historical volatility for its common stock. The expected life of the Company’s options was determined using the simplified method as a result of limited historical data regarding the Company’s activity. The dividend yield is based upon the fact that the Company has not historically paid dividends, and does not expect to pay dividends in the foreseeable future. |
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During the first quarter of 2011, the Company issued 90,000 shares of restricted stock to two executives. The fair value of $354,600 was based on the closing market price of the Company’s common stock on the date of grant. The restricted stock vests over a three year period, of which 45,000 shares were vested as of September 30, 2013. 30,000 shares were forfeited in the fourth quarter of 2012 in connection with an executive’s cessation of employment. Stock-based compensation for restricted stock totaled $14,775 and $29,550 for the three months ended September 30, 2013 and 2012, respectively. Stock-based compensation for restricted stock totaled $44,325 and $88,650 for the nine months ended September 30, 2013 and 2012, respectively. Unrecognized compensation cost of $14,775 at September 30, 2013 will be recognized ratably through December 2013. As of September 30, 2013, 15,000 shares of restricted stock remain unvested. |
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Option transactions under the stock option plans during the nine months ended September 30, 2013 were as follows: |
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| | Number | | | Weighted Average | | | | | | | | | | | |
Exercise Price | | | | | | | | | | |
Outstanding as of December 31, 2012 | | | 3,916,045 | | | $ | 2.85 | | | | | | | | | | | |
Granted during 2013 | | | 950,000 | | | $ | 2.4 | | | | | | | | | | | |
Exercised | | | (420,159 | ) | | $ | 1.23 | | | | | | | | | | | |
Forfeited /expired | | | (390,870 | ) | | $ | 5.07 | | | | | | | | | | | |
Outstanding as of September 30, 2013 | | | 4,055,016 | | | $ | 2.7 | | | | | | | | | | | |
Exercisable as of September 30, 2013 | | | 2,676,434 | | | $ | 2.36 | | | | | | | | | | | |
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In February 2013, the Company granted 75,000 options to its two executive officers in recognition of the completion of an underwritten offering and the formation of Hetnets. These options were granted at an exercise price of $2.62 and vested immediately. In June 2013, the Company made its annual grant to the Board of Directors consisting of 200,000 options with an exercise price of $2.56 vesting monthly through May 2014. In June 2013, the Company granted 50,000 options to an executive officer with an exercise price of $2.56 which vests annually over a five year period. In August 2013, the Company granted 625,000 options to certain employees with an exercise price of $2.31 vesting annually over a three year period. |
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A total of 30,508 and 135,471 options were exercised on a cashless basis during the three and nine months ended September 30, 2013 resulting in the net issuance of 10,016 and 37,770 shares, respectively. Under a cashless exercise, the holder uses a portion of the shares that would otherwise be issuable upon exercise, rather than cash, as consideration for the exercise. The amount of net shares issuable in connection with a cashless exercise will vary based on the exercise price of the option compared to the current market price of the Company’s common stock on the date of exercise. |
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A total of 41,665 and 284,688 options were exercised on a cash basis during the three and nine months ended September 30, 2013, which resulted in proceeds to the Company of $39,199 and $292,389, respectively. |
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Cancellations of options for the three and nine months ended September 30, 2013 were 6,566 and 390,870, respectively, and related to employee terminations. |
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The weighted average remaining contractual life of the outstanding options as of September 30, 2013 was 6.3 years. |
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The intrinsic value of outstanding and exercisable options totaled $3,047,325 and $2,595,864, respectively, as of September 30, 2013. The intrinsic value is calculated as the difference between the closing price of the Company’s common stock as of September 30, 2013, which was $2.85 per share, and the exercise price of the options. |