Stock-Based Compensation

12 Months Ended

Dec. 31, 2012

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Disclosure Of Compensation Related Costs, Share-Based Payments [Text Block]

11. Stock-Based Compensation

On June 23, 2009 the Company adopted the 2009 Stock Option Plan (the “Plan”) and replaced the 1999 Stock Option Plan as amended (the “Prior Plan”), which expired in May of 2009. Options granted under the Prior Plan remain outstanding until expired, exercised or cancelled.

The purpose of the Plan is to align the interests of officers, other key employees, consultants and non-employee directors of the Company and its subsidiaries with those of the stockholders of the Company, to afford an incentive to such officers, employees, consultants and directors to continue as such, to increase their efforts on behalf of the Company and to promote the success of the Company’s business. The availability of additional shares will enhance the Company’s ability to achieve these goals. The basis of participation in the Plan is upon discretionary grants of the Board. The Board may at any time, and from time to time, suspend or terminate the Plan in whole or in part or amend it from time to time.

The maximum number of Common Shares reserved for the grant of awards under the Plan is 400,000, subject to adjustment as provided in Section 9 of the Plan. As of December 31, 2012, 327,000 options were granted, 210,000 options were cancelled, and 283,000 are available for grant under the 2009 stock option plan.

The exercise price of options granted under the Company’s stock option plan may not be less than the fair market value on the date of grant. Stock options under our stock option plan may be awarded to officers, key-employees, consultants and non-employee directors of the Company. Under our stock option plan, every non-employee director of the Company is granted 7,000 options upon first taking office, and then 7,000 upon each additional year in office. Generally, options outstanding vest over periods not exceeding four years and are exercisable for up to five years from the grant date.

Share based compensation expense recognized under ASC 718 for the years ended December 31, 2012 and 2011 were $30,879 and 68,431, respectively.

The stock based compensation expense for the years ended December 31, 2012 and 2011 includes $13,065 and $3,355, respectively, of amortization of the fair value of the 1,000,000 restricted shares granted to the Company’s Chief Executive Officer on September 9, 2011 of $195,968, after adjusting for the effect on the fair value of the stock options related to this transaction. The fair value will be amortized over 15 years (See Note 12).

The fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average share assumptions used for grants in 2012 and 2011, respectively: (1) expected life of 5 years; (2) No annual dividend yield; (3) expected volatility 72.5% to 74.6%; and (4) risk free interest rate of 0.73% to 1.87%.

The following summarizes stock option activity for the years ended December 31, 2012 and 2011:

	Number of  Shares			Weighted  Average  Exercise  Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at January 1, 2011		631,000		$	1.41		2.21	$	469,352
Granted in 2011		173,000			1.53
Exercised in 2011		—			—
Forfeited in 2011		(456,000	)		1.80
Outstanding at December 31, 2011		348,000		$	0.96		2.26	$	177,253
Granted in 2012		28,000			1.02
Exercised in 2012		—			—
Forfeited in 2012		(21,000	)		1.65
Outstanding at December 31, 2012		355,000		$	0.92		1.62	$	173,006
Vested and exercisable at December 31, 2011		344,000		$	0.96		2.23	$	174,856
Vested and exercisable at December 31, 2012		352,000		$	0.92		1.60	$	171,208

The weighted-average fair value of each option granted during the years ended December 31, 2012 and 2011, estimated as of the grant date using the Black-Scholes option-pricing model, was $0.61 per option and $0.82 per option, respectively.

Mr. Ran, our CEO, agreed not to exercise his 210,000 Remaining Options, which are vested and outstanding as of December 31, 2012, in accordance with the Restricted Stock Agreement (See Note 12).

A summary of the status of the Company’s nonvested shares as of December 31, 2012 and 2011, and changes during the years then ended is as presented below:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)
Nonvested shares at January 1, 2011		96,334		$	1.09		3.69
Granted		173,000			1.53		4.77
Forfeited (non vested)		(189,667	)		1.56		—
Vested		(75,667	)		0.92		3.21
Nonvested shares at December 31, 2011		4,000		$	1.01		4.88
Granted		28,000			1.02		4.50
Vested		(29,000	)		1.02		4.48
Nonvested shares at December 31, 2012		3,000		$	1.01		3.88

140,000 out of the 189,667 forfeited (non vested) shares were granted and cancelled in 2011.

The following table summarizes information about stock options outstanding at December 31, 2012:

	Stock Option Outstanding						Exercisable
Range of Exercise Prices	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Number of Shares		Weighted Average Exercise Price
$ 0.50- $ 1.00		196,000	$	0.78		1.21		196,000	$	0.78
$ 1.01- $ 2.00		159,000		1.11		2.13		156,000		1.11
		355,000	$	0.92		1.62		352,000	$	0.92

In connection with the Company’s private placement of senior secured notes the Company issued to Paulson 20,000 warrants. The warrants are convertible into the same number of common shares at an exercise price of $2.50 per warrant. The warrants are exercisable over a five-year period beginning December 28, 2010.