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Stock-based Compensation
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Jun. 30, 2011
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| Stock-based Compensation |
Note 6: Stock-based Compensation
From
time to time, the Company grants restricted stock awards and stock
options to officers, directors, employees and
consultants. Such awards are valued based on the grant
date fair-value of the instruments, net of estimated
forfeitures. The value of each award is amortized on a
straight-line basis over the requisite service period.
Stock Options
During
the three and nine months ended June 30, 2011, the Company
recognized compensation expense of $12,839 and $36,338,
respectively, and $15,365 and $22,739 for the three and nine months
ending June 30, 2010, respectively, related to stock option awards
granted to certain employees and executives based on the grant date
fair value of the awards, net of estimated forfeitures. During
the three months ended December 31, 2009, the Company changed the
estimated forfeiture rate of awards from 40% to 60% based on actual
forfeiture experience and other factors, resulting in a net benefit
from the expense reversal of $8,160. There were no
changes in the estimated forfeiture rate in the nine months ending
June 30, 2011.
On
March 24, 2011, pursuant to the Company’s 2003 Stock Plan,
the Company issued its CEO options to purchase an aggregate of
13,487 shares of the Company’s common stock at an exercise
price equal to $3.53, which was the adjusted closing price of the
Company’s common stock on the date of grant. The
option will vest and be exercisable according to the following
schedule: one quarter (25%) on the first anniversary of the date of
grant and the remainder shall vest 1/36 at the end of each month
thereafter over the next 36 months so long as the CEO continues to
provide services to the Company. Notwithstanding the
foregoing, all unvested shares shall become immediately vested and
exercisable upon a change of control.
The
grant date fair value of the award was $19,834 (net of estimated
forfeitures of 50%) using a Black-Scholes option pricing model
using the following assumptions: adjusted closing stock
price of $3.53, volatility of 108 percent, expected life of 6.1
years, and risk free rate of 2.82 percent.
On
May 20, 2011, pursuant to the Company’s 2003 Stock Plan, the
Company issued its CFO options to purchase an aggregate of 10,526
shares of the Company’s common stock at an exercise price
equal to $3.77, which was the adjusted closing price of the
Company’s common stock on the date of grant. The options will
vest and be exercisable according to the following schedule: 3,728
options vesting immediately and the remainder shall vest 1/31 at
the end of each month thereafter over the next 31 months so long as
the CEO continues to provide services to the Company.
Notwithstanding the foregoing, all unvested shares shall become
immediately vested and exercisable upon a change of
control.
The
grant date fair value of the award was $21,447 (net of estimated
forfeitures of 50% on the unvested portion) based on a
Black-Scholes option pricing model using the following
assumptions: adjusted closing stock price of $3.77,
volatility of 107 percent, expected life of 5.4
years, and risk free rate of 1.82 percent.
The
following represents a summary of stock option activity for the
nine months ended June 30, 2011:
As
of June 30, 2011, the Company has $28,442 of unrecognized
compensation expense (net of estimated forfeitures) associated with
stock option awards which the Company expects will be recognized
over a weighted-average period of 3.3 years.
Restricted Stock Awards
From
time to time, the Company also has historically granted shares of
restricted stock to certain individuals. The following
table sets forth the activity with respect to compensation-related
restricted stock grants during the nine months ended June 30,
2011:
As
the Company’s outstanding unvested stock was reduced to an
immaterial amount, the Company recognized all expense associated
with unvested awards based on estimated forfeiture rates ranging
from 25 percent to 70 percent based on the outstanding duration of
the awards during the three months ended December 31,
2010. As a result of these actions, the Company
recognized an aggregate expense of $0 and $17,885 during the three
and nine months ended June 30, 2011, respectively. To
the extent that actual forfeiture rates differ from estimates,
future expense recognition or reversals could result.
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