| Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | NOTE 7 - ACCOUNTING FOR SHARE BASED
COMPENSATION The Company follows the provisions
of ASC 718, “ Share-Based Payment. Incentive Compensation Plan: In 2012, the Company’s Board
of Directors and shareholders approved the 2012 Incentive Compensation Plan (the “Initial 2012 Plan”), which provides
for the grant of restricted stock awards, non-qualified stock options and incentive stock options in compliance with the Internal
Revenue Code of 1986, as amended, to employees, officers, directors, consultants and advisors of the Company who are expected
to contribute to the Company’s future growth and success. When originally approved, the Initial 2012 Plan provided for the grant
of awards relating to 2,000,000 shares of common stock, plus those shares still available under the Company’s prior incentive
compensation plan. In June 2014, the Company’s
shareholders approved the Amended and Restated 2012 Incentive Compensation Plan (the “2012 Plan”) allowing for an
additional 1,658,045 shares of the Company’s common stock to be available for future grants under the 2012 Plan. As of June
30, 2016, there were 1,286,001 shares available for issuance under the 2012 Plan, including those shares available under the Company’s
prior incentive compensation plan as of such date. All service-based options granted
have ten-year terms from the date of grant and vest annually and become fully exercisable after a maximum of five years. Performance-based
options granted have ten-year terms and vest and become fully exercisable when determinable performance targets are achieved.
Performance targets are agreed to, and approved by, the Company’s Board of Directors or the Compensation Committee of the
Board of Directors. Provisions of the 2012 Plan require
that all awards that are stock options be made at exercise prices equal to or greater than the fair market value on the date of
the grant. The following summarizes the components
of share-based compensation expense by equity type for the three and six-months ended June 30:
Three Months Ended Six Months Ended
2016 2015 2016 2015
Service-based Restricted Common Stock $ 55,500 $ 49,800 $ 111,000 $ 99,600
Performance-based Stock Options 28,650 30,035 57,300 60,070
Service-based Stock Options 9,116 — 18,232 —
Performance-based Restricted Common Stock 5,353 6,128 10,706 12,256
Total Share-Based Compensation Expense $ 98,619 $ 85,963 $ 197,238 $ 171,926 Stock-based compensation for the
three and six-months ended June 30, 2016 and 2015 is included in general and administrative expenses in the accompanying condensed
consolidated statement of operations. Restricted Common Stock
Awards: On June 8, 2016, the Company granted
150,000 shares of restricted common stock to certain non-employee directors of the Company under the 2012 Plan. The shares were
granted at a price of $1.33 per share. On June 30, 2016, Timothy Whelan, the Company’s newly appointed Chief Executive Officer,
forfeited the 30,000 shares of restricted common stock that were granted to him on June 8, 2016 as a non-employee director in
connection with his appointment as Chief Executive Officer of the Company. The remaining 120,000 shares of restricted common stock
granted on June 8, 2016 will fully vest on the date of the Company’s next annual shareholders meeting to be held in June
2017, or a vesting period of approximately one year, provided that the director’s service continues through the vesting
date. The total compensation expense to be recognized over the one-year vesting period with respect to the remaining 120,000 shares
of restricted common stock is $159,600. On June 30, 2016, the Company
granted 8,333 shares of restricted common stock to its newly appointed Chief Executive Officer under the 2012 Plan. The shares
were granted at a price of $1.34 per share and will vest in sixteen equal quarterly installments over a period of four years,
provided that the executive officer’s service with the Company continues through each quarterly vesting date, so that the
shares will fully vest on June 30, 2020. The total compensation expense to be recognized over the four-year vesting period is
$11,166. A summary of the status of the
Company’s non-vested restricted common stock, as granted under the Company’s approved equity compensation plans, as
of June 30, 2016, and changes during the six-months ended June 30, 2016, are presented below:
Non-vested Restricted Shares Number of Shares Weighted Average
Non-vested at January 1, 2016 187,000 $ 2.01
Granted 158,333 $ 1.33
Forfeited (30,000 ) $ 1.33
Vested (100,000 ) $ 2.22
Non-vested at June 30, 2016 215,333 $ 1.51 Under the terms of the performance-based
restricted common stock award agreements pertaining to the 87,000 shares of restricted stock granted to employees in 2013, the
awards will fully vest and become exercisable on the date on which the Company’s Board of Directors shall have determined
that specific financial milestones have been met, provided the employee remains in the employ of the Company at such time; provided,
however, upon a Change in Control (as defined in the award agreements and the 2012 Plan), the restricted stock shall automatically
vest as permitted by the 2012 Plan. For the performance-based restricted stock awarded in 2013, the Company’s Board of Directors
adopted specific revenue and earnings performance targets as vesting conditions. During the first quarter of 2015, management
determined the performance conditions related to these restricted stock awards are probable to be achieved by the year ending
2020. As a result, the Company adjusted the amortization of the fair market value of these awards over the revised implicit service
period from December 2017 to December 2020. If management determines in future periods the achievement of performance conditions
are probable to occur sooner than expected, the Company will accelerate the expensing of the unamortized balance as of that determination
date. As of June 30, 2016, the unearned
compensation related to Company granted restricted common stock was $267,124 of which $159,600 (pertaining to 120,000 service-based
restricted common stock awards) will be amortized on a straight-line basis through the date of the Company’s next annual
shareholders meeting scheduled to be held in June 2017, the vesting date, and $11,166 (pertaining to 8,333 service-based restricted
common stock awards) will be amortized on a straight-line basis through June 30, 2020, the date which they will have fully vested.
The remaining balance of $96,358 (pertaining to 87,000 performance-based shares of restricted common stock awarded in 2013) will
be amortized on a straight-line basis through December 31, 2020, the implicit service period. Performance-Based Stock
Option Awards: A summary of performance-based
stock option activity, and related information for the six-months ended June 30, 2016 follows:
Options Weighted Average
Outstanding, January 1, 2016 1,965,000 $ 1.32
Granted 200,000 $ 1.36
Exercised — —
Forfeited — —
Expired — —
Outstanding, June 30, 2016 2,165,000 $ 1.32
Options exercisable:
June 30, 2016 1,090,000 $ 0.96 The aggregate intrinsic value
of performance-based stock options outstanding and exercisable as of June 30, 2016 and December 31, 2015 was $449,750 and $846,350,
respectively. On September 8, 2015, the Company
granted a performance-based stock option to a non-executive officer employee to acquire 50,000 shares of common stock at an exercise
price of $1.83 per share, which represented the closing price of the Company’s common stock as reported on the NYSE MKT
on the date of grant. The per share fair-value of this performance-based option was $1.03. The per share fair-value was estimated
on the date of grant using the Black-Scholes option pricing method and included the following range of assumptions: dividend yield
0%, risk-free interest rate of 1.53% and expected option life of 4 years. Volatility assumption was 75.46% and the forfeiture
rate was assumed to be 0%. Under the terms of the performance-based
stock option agreements granted prior to 2016, the awards will fully vest and become exercisable on the date on which the Company’s
Board of Directors shall have determined that specific financial performance milestones have been met, provided the employee remains
in the employ of the Company at such time; provided, however, upon a Change in Control (as defined in the stock option agreements
and the 2012 Plan), the stock options shall automatically vest as permitted by the 2012 Plan. During the first quarter of 2015,
management determined the performance conditions related to the stock option awards granted in 2013 and grants made subsequent
thereto (but on or prior to the date of determination) are probable to be achieved by the year ending 2020. As a result, the Company
adjusted the amortization of the fair market value of these awards over the revised implicit service period from December 2017
to December 2020. If management determines in future periods the achievement of performance conditions are probable to occur sooner
than expected, the Company will accelerate the expensing of the unamortized balance as of that determination date. On May 16, 2016, the Company granted
a performance-based stock option to a non-executive officer employee to acquire 200,000 shares of common stock at an exercise
price of $1.36 per share, which represented the closing price of the Company’s common stock as reported on the NYSE MKT
on the date of grant. The per share fair-value of this performance-based option was $0.78. The per share fair-value was estimated
on the date of grant using the Black-Scholes option pricing method and included the following range of assumptions: dividend yield
0%, risk-free interest rate of 1.26% and expected option life of four years. The volatility assumption was 77.54% and the forfeiture
rate was assumed to be 0%. Under the terms of the performance-based
stock option agreement granted on May 16, 2016, the award will incrementally vest and become exercisable upon achievement of specific
annualized revenue targets in the Company’s network solutions segment. As of June 30, 2016, the Company had not incurred
expense relating to this performance-based stock option as management determined it was more likely than not that the revenue
targets would not be achieved. As of June 30, 2016, the unearned
compensation related to the performance-based stock options to acquire 825,000 shares of common stock granted in August 2013 (with
a weighted average per share exercise price of $1.77) and the performance-based stock option to acquire 50,000 shares of common
stock granted in September 2015 (with a weighted average per share exercise price of $1.83) is $471,533 and $44,166, respectively,
which have been, and are expected to be, amortized on a straight-line basis through December 31, 2020, the implicit service period.
Unearned compensation in the amount of $155,810 related to the performance-based stock option granted in May 2016 (with a weighted
average per share exercise price of $1.36) will begin to be amortized when achievement of specific annualized revenue targets
in the Company’s network solutions segment are determined to be probable. The Company’s performance-based
stock options granted prior to 2013 (consisting of options to acquire 1,090,000 shares) are fully amortized. Service-Based Stock Option Awards: A summary of service-based stock
option activity, and related information for the six-months ended June 30, 2016 follows:
Options Weighted Average
Outstanding, January 1, 2016 523,000 $ 2.23
Granted 750,000 $ 1.34
Exercised — —
Forfeited (70,000 ) $ 1.34
Expired (120,000 ) $ 2.72
Outstanding, June 30 1,083,000 $ 1.61
Options exercisable:
June 30, 2016 282,167 $ 2.41 The aggregate intrinsic value
of service-based stock options outstanding (regardless of whether or not such options are exercisable) as of June 30, 2016 and
December 31, 2015 was $7,600 and $0, respectively. The aggregate intrinsic value
of service-based stock options exercisable as of June 30, 2016 and December 31, 2015 was $967 and $0, respectively. On November 19, 2015, the Company
granted to the members of the Company’s Strategic Planning and Operating Committee service-based stock options to acquire
145,000 shares of common stock at an exercise price of $1.30 per share, which represented the closing price of the Company’s
common stock as reported on the NYSE MKT on November 19, 2015, the date of grant. The per share fair-value of these service-based
options was $0.75. The per share fair-value was estimated on the date of grant using the Black-Scholes option pricing method and
included the following range of assumptions: dividend yield 0%, risk-free interest rate of 1.68% and expected option life of 4
years. The volatility assumption was 78.22% and the forfeiture rate was assumed to be 0%. Under the terms of the service-based
stock option agreements relating to the November 19, 2015 stock option grants, the awards vest in twelve equal quarterly installments
over a period of three years and shall be fully vested on November 19, 2018. On June 8, 2016, the Company granted
to certain non-employee directors of the Company service-based stock options to acquire collectively 350,000 shares of common
stock at an exercise price of $1.33 per share, which represented the closing price of the Company’s common stock as reported
on the NYSE MKT on June 8, 2016, the date of grant. The per share fair-value of these service-based options was $0.76. The per
share fair-value was estimated on the date of grant using the Black-Scholes option pricing method and included the following range
of assumptions: dividend yield 0%, risk-free interest rate of 1.23% and expected option life of four years. The volatility assumption
was 76.72% and the forfeiture rate was assumed to be 0%. These stock options were granted in connection with the annual compensation
for services as a Company director. Such equity awards are intended to replace the cash component of the director compensation. On June 30, 2016, the service-based
stock option to acquire 70,000 shares of common stock that was granted to Timothy Whelan on June 8, 2016, was terminated, unvested,
in connection with his appointment as Chief Executive Officer of the Company. Under the terms of the remaining
service-based stock option agreements relating to the June 8, 2016 stock option grants to the non-employee directors of the Company,
the awards will fully vest on the date of the Company’s next annual shareholder’s meeting to be held in June 2017,
or a vesting period of approximately one year, provided that the director’s service continues through the vesting date. On June 30, 2016, the Company
granted to Timothy Whelan, its newly appointed Chief Executive Officer, a service-based stock option to acquire 400,000 shares
of common stock at an exercise price of $1.34 per share, which represented the closing price of the Company’s common stock
as reported on the NYSE MKT on the date of grant. The per share fair-value of this service-based option was $0.76. The per share
fair-value was estimated on the date of grant using the Black-Scholes option pricing method and included the following range of
assumptions: dividend yield 0%, risk-free interest rate of 1.01% and expected option life of four years. The volatility assumption
was 76.68% and the forfeiture rate was assumed to be 0%. Under the terms of the service-based
stock option agreements relating to the June 30, 2016 stock option grants, the awards vest in sixteen equal quarterly installments
over a period of four years and shall be fully vested on June 30, 2020. Under the terms of Mr. Whelan’s
employment agreement, dated June 30, 2016, if Mr. Whelan’s employment is terminated by the Company without Cause, upon a
Change of Control or by Mr. Whelan for Good Reason (as such terms are defined in his employment agreement), in each case, subject
to his compliance with certain conditions, Mr. Whelan is entitled to (among other benefits) extension of the post-termination
exercise period for all outstanding stock options of the Company’s common stock held by Mr. Whelan as of the date of his
termination to the earlier of (a) the first anniversary of the date of termination, and (b) the date of expiration of the respective
option, during which post-termination period such options shall continue to vest in accordance with their respective terms (to
the extent not already fully vested). As of June 30, 2016, the unearned
compensation related to the service-based stock option to acquire 145,000 shares of common stock granted in November 2015 (with
a weighted average per share exercise price of $1.30) was $91,155, which will be amortized on a straight-line basis over the service
period through November 2018. As of June 30, 2016, the unearned
compensation related to the service-based stock option to acquire 280,000 shares granted in June 2016 (with a weighted average
per share exercise price of $1.33) to non-executive directors was $211,461, which will be amortized on a straight-line basis over
the service period through June 2017. As of June 30, 2016, the unearned
compensation related to the service-based stock option to acquire 400,000 shares granted in June 2016 (with a weighted average
per share exercise price of $1.34) to the Company’s newly appointed Chief Executive Officer was $303,207, which will be
amortized on a straight-line basis over the service period through June 2020. At June 30, 2016, the Company’s
service-based stock options granted prior to November 2015 were fully amortized. |
