Quarterly report pursuant to Section 13 or 15(d)

Note 7 - Stockholders' Equity

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Note 7 - Stockholders' Equity
 3 Months Ended
Mar. 31, 2015
Notes to Financial Statements  
Stockholders' Equity Note Disclosure [Text Block]
7.
Stockholders’ Equity
 
Common Stock
Warrants
Requiring Liability Accounting
 
The net-cash settlement and down round provisions contained in the warrants issued in a January 2013 financing transaction require derivative liability accounting treatment for the warrants. Likewise, a down round provision contained in the terms of warrants issued by the Company in a July 2012 financing transaction also requires derivative liability accounting treatment for those warrants. The fair value of all such warrants was calculated using the Monte Carlo simulation valuation method.
 
Assumptions used in calculating the fair value of the warrants at March 31, 2015 are noted below:
 
Dividend yield
       0%    
Expected volatility
     40.4% - 100.0%  
Risk free interest rates
     0.56% - 0.70%  
Expected remaining term (in years)
     2.26 - 2.82  
 
In addition to the assumptions above, the Company also takes into consideration whether it would participate in another round of equity financing and, if so, what that stock price would be for such a financing at that time.
 
The fair values and the changes in fair values of the warrants accounted for as a derivative liability is reflected below:
 
Fair value at December 31, 2014
   $ 2,198,162  
Loss on change in fair value
     782,802  
Fair value at March 31, 2015
   $ 2,980,964  
 
Stock Incentive Plans
 
The Company has various share-based compensation plans and share-based compensatory contracts (collectively, the “Plans”). The Plans provide for the granting of share-based awards, such as incentive and non-qualified stock options, to employees, directors, consultants and advisors, and some of the Plans provide for cash-based awards. Awards may be subject to a vesting schedule as set forth in each individual award agreement.
 
In June 2013, the stockholders of the Company approved the 2013 Incentive Compensation Plan (the “2013 Plan”). A total of 1,250,000 shares of the Company’s common stock are reserved for issuance under the 2013 Plan, of which awards as to 1,055,667 shares were outstanding as of March 31, 2015. Thus, awards as to 194,333 shares remained available for grants under the 2013 Plan as of March 31, 2015.
 
In December 2013, the Company’s board of directors approved the 2013 Non-Employee Director Equity Incentive Plan (the “Director Plan”). A total of 570,000 shares of the Company’s common stock are reserved for issuance under the Director Plan. The shares reserved for issuance under the Director Plan are intended to be used to cover the stock options granted pursuant to the terms of the Company’s Non-Employee Director Compensation Plan. As of March 31, 2015, awards for 295,000 shares had been issued under the Director Plan. Therefore, 275,000 shares remained available for awards under the Director Plan as of March 31, 2015.
 
Activity under all of the Company’s equity compensation plans during the three months ended March 31, 2015 is summarized below:
 
 
 
Shares
 
 
Weighted - Average Exercise Price
 
Outstanding at December 31, 2014
     10,343,309     $ 1.36  
Granted
     502,500       1.01  
Forfeited
     (35,000 )     0.99  
Outstanding at March 31, 2015
     10,810,809       1.35  
 
The estimated grant date fair values of options granted during the three months ended March 31, 2015 were calculated using the Black-Scholes valuation model, based on the following assumptions:
 
Dividend yield
       0%    
Expected Volatility
     46.7% to 48.8%  
Risk free Interest rates
     1.95% to 2.71%  
Expected lives (in years)
       6.0    
 
The Company records share-based compensation expense on a straight-line basis over the related vesting period. For the periods indicated below, share-based compensation expense related to options was:
 
 
Three Months Ended March 31,
 
 
2015
 
 
2014
 
  $ 367,309     $ 179,746  
 
As of March 31, 2015, there was unrecognized compensation expense of approximately $1,902,000 related to outstanding stock options, which is expected to be recognized over a weighted average period of approximately 2.2 years.
 
Warrants
 
Warrants have generally been issued for terms of up to five years. Common stock warrant activity for the three months ended March 31, 2015 was as follows:
 
 
 
Shares
 
 
Weighted - Average Exercise Price
 
Outstanding at December 31, 2014
     20,759,136     $ 0.91  
Issued
    35,000       1.00  
Terminated
     (25,444 )     8.00  
Outstanding at March 31, 2015
     20,768,692       0.90