Note 6. Common Stock, Stock Options, Warrants and Benefit Plan

Common Stock

In 2011 and 2010, the Company issued 2,666 and 12,696 shares of common stock, respectively, to non-management directors in lieu of director fees. The number of shares of common stock issued, in each case was based on the fair value of the Company’s common stock as of the date of the meetings to which such fees related. Expense related to these director’s fees totaled $8,000 for each of the years ended December 31, 2011, and 2010.

The Company has issued options to acquire shares of its common stock under two equity incentive plans and pursuant to certain employment agreements with current and former executive officers. The terms of these equity incentive plans and non-plan option grants are described below.

2006 Omnibus Equity Incentive Plan

On May 4, 2006, at the Company’s annual meeting of stockholders, the stockholders approved the adoption of the Company’s newly created 2006 Omnibus Equity Incentive Plan (the “2006 Plan”). The 2006 Plan became effective on May 31, 2006. The 2006 Plan provides for the granting of stock options and other equity incentives to the Company’s officers, employees, directors and consultants who provide services to the Company. The 2006 Plan has a term of ten years unless terminated by the board of directors. Stock options are granted with an exercise price not less than fair market value of the common stock on the date of the grant. Vesting schedules and expiration dates for the grants issued under this plan are specified at the time of grant.

2001 Omnibus Equity Incentive Plan

In June 2001, the stockholders of iSECUREtrac approved the 2001 Omnibus Equity Incentive Plan (the “2001 Plan”). As of May 31, 2006, the Company’s 2001 Plan expired. The 2001 Plan provided for the granting of stock options and other equity incentives for up to 100,000 shares of the Company’s Common Stock to the Company’s officers, directors, and consultants who provided services to the Company and key employees at an exercise price 85% of the average daily closing price of the Company’s common stock for the week prior to when the options were granted. The options are to vest on a monthly basis over a one month to a 36-month period of time from the date of grant. As of January 1 of each year, commencing with the year 2002, the aggregate number of options that were awarded under the 2001 Plan was automatically increased by a number equal to the lesser of 1% of the total number of Common Shares then outstanding or 20,000.

The Company may issue options to acquire shares of its common stock under its 2011 Omnibus Equity Incentive Plan. The terms of this equity incentive plan are described below.

2011 Omnibus Equity Incentive Plan

On May 4, 2011, at the Company’s annual meeting of stockholders, the stockholders approved the adoption of the Company’s newly created 2011 Omnibus Equity Incentive Plan (the “2011 Plan”). The 2011 plan became effective on April 30, 2011. The 2011 Plan provides for granting of stock options and other equity incentives for up to 3,000,000 shares of the Company’s common stock to the Company’s officers, employees, directors and consultants who provide services to the Company. The 2011 Plan has a term of ten years unless terminated by the board of directors. Stock options are granted with an exercise price not less than fair market value of the common stock on the date of the grant. Vesting schedules and expiration dates for the grants issued under this plan are specified at the time of the grant.

Non-Plan Stock Options

In 2004 and prior, the Company has granted options to purchase common stock outside of the 2001 Plan and 2006 Plan to various executive officers pursuant to the terms of their employment agreements. These options have exercise prices ranging from $2.30 to $3.15 per share and have terms expiring through April 30, 2014. These options vest on a monthly basis over two year periods from their grant date.

The options granted, exercised, forfeited and outstanding under the various Plans for the years ended December 31, 2011 and 2010 are detailed as follows:

A summary of employee stock option activity during the years ended December 31, 2011, and 2010, is as follows:

Additional information regarding options outstanding at December 31, 2011, is as follows:

No stock options were exercised during 2011.

As of December 31, 2011, there was approximately $74,857 of total unrecognized compensation costs related to non-vested share based compensation agreements granted to the Company’s executives and employees. The weighted average period in which the unrecognized compensation costs will be recognized into income is 0.81 years.

Common Stock Warrants

Warrants to purchase shares of common stock were granted, exercised, forfeited and outstanding at December 31, 2011 and 2010 as follows:

(a) Held by Mykonos 6420 LP

(b) Does not include 6,287,045 warrants issued to Mykonos 6420 LP in connection with the Convertible Preferred Stock

A further summary about warrants outstanding at December 31, 2011, is as follows:

Benefit Plan

The “iSECUREtrac Corporation Retirement Plan” offers all regular full-time employees, 21 years of age and older, to participate in a 401k savings plan.  The plan offers either a pre-tax contribution option or the Roth, after-tax contribution option.   iSECUREtrac provides a match of 25% up to 10% of the employee’s contribution, with a maximum match of $2,500.  The employer contribution vests over a 4-year graded schedule. The total expense related to the plan was $25,577 and $31,482 for the years ended December 31, 2011 and 2010, respectively.