STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2013

STOCK-BASED COMPENSATION [Text Block]

11.    STOCK-BASED COMPENSATION

Stock Options

The Company has granted incentive and non-qualified stock options to its employees and directors under its 2006 Stock Incentive Plan. The Company has also granted non-qualified, non-plan stock options, which have been authorized by the Company’s board of directors. Stock options are generally granted at an exercise price equal to or greater than the quoted market price on the date of grant.

There are 4,431,744 stock options outstanding at June 30, 2013 issued pursuant to the Company’s 2006 Stock Incentive Plan. The outstanding options expire at various dates from 2013 to 2017. The Company did not grant any stock options during the three and six month periods ended June 30, 2013. During the three and six month periods ended June 30, 2013, the Company recognized $9,071 and $19,367, respectively, in compensation expense related to employee stock options that vest over time. The Company did not grant any stock options during the three and six month periods ended June 30, 2012. During the three and six month periods ended June 30, 2012, the Company recognized $23,535 and $49,522, respectively, in compensation expense related to employee stock options that vest over time.

As summarized in the following tables, during the three and six month periods ended June 30, 2013, there were no stock options granted nor exercised, and 0 and 6,750 were cancelled or forfeited, respectively.

			Weighted
	Number of		Average
	Shares		Exercise Price
Three months ended June 30, 2013
Options outstanding at March 31, 2013	4,431,744	$	.18
Granted	-		-
Exercised	-		-
Cancelled/Forfeited	-		-
Options outstanding at June 30, 2013	4,431,744	$	.18

				Weighted
	Number of			Average
	Shares			Exercise Price
Six months ended June 30, 2013
Options outstanding at December 31, 2012	4,438,494		$	.18
Granted	-			-
Exercised	-			-
Cancelled/Forfeited	(6,750	)		.16
Options outstanding at June 30, 2013	4,431,744		$	.18

The following table summarizes certain additional information about the Company’s total and exercisable stock options outstanding as of June 30, 2013:

		Weighted
		Average		Weighted
		Remaining		Average
	Number	Contractual		Exercise		Intrinsic
	Outstanding	Life in Years		Price		Value
Total stock options	4,431,744	2.19	$	.18	$	-
Exercisable stock options	3,826,747	2.16	$	.19	$	-

The closing price of the Company’s common stock on the OTC Pink Sheets Market on June 28, 2013 was $0.02 per share. Accordingly, the intrinsic values of total stock options and exercisable stock options as of June 30, 2012 was $0.

The following table summarizes the unvested stock options outstanding as of June 30, 2013:

				Weighted Average
				Grant Date
	Number of Shares			Fair Value
Three months ended June 30, 2013
Unvested options outstanding at March 31, 2013	811,747		$	.11
Granted	-			-
Vested	(206,750	)		.11
Cancelled/Forfeited	-			-
Unvested Options outstanding at June 30, 2013	604,997		$	.10

				Weighted Average
				Grant Date
	Number of Shares			Fair Value
Six months ended June 30, 2013
Unvested options outstanding at December 31, 2012	811,747		$	.11
Granted	-			-
Vested	(206,750	)		.11
Cancelled/Forfeited	-			-
Unvested Options outstanding at June 30, 2013	604,997		$	.10

The total grant date fair value of options vested during the three and six month periods ended June 30, 2013 was $23,301. The Company recognizes stock option compensation expense on stock options with a graded vesting schedule on a straight line basis over the requisite service period for each separately vesting portion of the award as if the award was, in substance, multiple awards. As of June 30, 2013, 604,997 stock options remain unvested, which will result in $10,381 in compensation expense to be recognized during the next year.

Deferred Stock Units

During the three and six months ended June 30, 2012, certain equity-based fees have been paid to the Company’s non-executive directors in the form of awards issued pursuant to the Company’s 2006 Stock Incentive Plan. The non-executive directors have limited rights, exercisable within applicable time limits, to elect to have any percentage of such awards, and any percentage of cash fees, payable in deferred stock units. Each of the Company’s non-executive directors exercised such rights in respect of the equity-based fees payable to him for the three and six months ended June 30, 2012.

During the three and six months ended June 30, 2012, Douglas Hamilton, the Chairman of the Company’s Audit Committee, received 190,476 and 308,123 deferred stock units, respectively; John Cook, the Chairman of the Company’s Compensation Committee, received 154,762 and 250,350 deferred stock units, respectively; Stephen Seymour, the Chairman of the Company’s Corporate Governance and Nominating Committee, received 154,762 and 250,350 deferred stock units, respectively. During the three and six months ended June 30, 2012, the Company recognized expense of $26,250 and $52,500, respectively, related to the issuance of deferred stock units to its independent directors. The deferred stock units were granted under the 2006 Deferred Stock Unit Plan, which forms part of the Company’s 2006 Stock Incentive Plan. During the three and six months ended June 30, 2012, 0 and 310,977 deferred stock units were converted into shares of the Company’s common stock, respectively. As of June 30, 2012, there were 2,637,086 deferred stock units outstanding.

During the three and six months ended June 30, 2013, 0 and 790,721 deferred stock units were converted into shares of the Company’s common stock, respectively. As of June 30, 2013, there were 3,592,179 deferred stock units outstanding.