STOCK OPTIONS - Note 15

12 Months Ended

Dec. 31, 2013

Notes to Financial Statements

STOCK OPTIONS - Note 15

NOTE 15 - STOCK OPTIONS

The 2009 Equity Incentive Compensation Plan

On October 11, 2011, the Company's BOD approved of the granting of 150,000 options to employees and executives of Portables Unlimited LLC, the Company's newly acquired subsidiary, with the exercise prices of $18.30 and $37.50 per share, with 25% of the options vesting immediately and the balance equally per quarter over three years. These options expire in four years.

On October 8, 2012, the Company's BOD approved of the re-pricing of 120,000 out of the above-mentioned 150,000 options from the exercise price of $37.50 to $18.30 per share.

On October 26, 2011, the Company's BOD approved of the granting of 1,000 options to its new independent director, with the exercise price of $20.40 per share, vesting over one year and expiring in two years.

On November 29, 2011, the Company's BOD approved of the granting of 30,000 options to a consultant, with the exercise price of $10.00 per share, with 1/3 vesting immediately and the balance equally over two quarters. These options expire in two years.

On May 22, 2012, the Company issued 30,280 shares of its common stock to its employees, and directors in replacement for cancelling 133,900 outstanding options that were held by the same recipients. The shares have the same vesting schedule as the options and were valued at $1.12 per share, the closing price on the date of Board Approval, which is considered the market price at that time. Based on the difference between the market value of the shares and the Black-Scholes value of the cancelled options as of May 22, 2012, there was no extra non-cash compensation expense for the year ended December 31, 2013.

The following summary represents options activity during the year ended December 31, 2013 under the New Plan.

			Weighted-
	Under		Average		Aggregate
	New		Exercise		Intrinsic
	Plan		Price		Value
Balance, December 31, 2012	181,000	$	16.90	$	-
Granted	65,000		3.66		-
Lapsed
Exercised
Cancelled	(46,875)		16.90		-
Balance, December 31, 2013	199,125	$	12.58	$	-

The following represents options summary as of December 31, 2013 under the New Plan.

	Options Outstanding				Options Exercisable
		Weighted-		Weighted-			Weighted-
		Average		Average			Average
	Number	Remaining		Exercise	Number		Exercise
	Outstanding	Contractual Life		Price	Exercisable		Price
Options	199,125	3.05 years	$	12.58	144,958	$	15.91

For the re-pricing of the 120,000 options on October 8, 2012, from the exercise price of $37.5 to $18.30 per share, the Company determined the incremental fair value of $0.058 per share which was calculated by taking the difference between the Black Scholes values of the new exercise price and that of the old exercise price. Other data used in the calculations include: the stock market price of $9.00, expected life of 3 years, volatility of 39.22% and discount rate of 0.35%.

On November 29, 2011, the Company's BOD approved of the granting of 30,000 options to a consultant, with the exercise price of $1.00 per share, with 1/3 vesting immediately and the balance equally over two quarters. These options expire in two years.

On February 14, 2013, the Company's BOD approved of the granting of 10,000 options to an employee with an exercise price of $6.50, with monthly vesting beginning in February 2013. The options expire four years from the date of grant. The Company determined the grant date fair value of 10,000 options of $0.17 per share which was calculated using the Black Scholes Options Pricing Model as follows: Stock price of $6.50 per share, exercise price of $6.50 per share, expected life of 4.00 years, volatility of 32.48% and discount rate of 0.64%.

In November of 2013, the Company's BOD approved of the granting of 55,000 options to certain employees with an exercise price of $3.14, with monthly vesting beginning in November 2013. The options expire four years from the date of grant. The Company determined the grant date fair value of 55,000 options of $1.14 per share which was calculated using the Black Scholes Options Pricing Model.

As a result, of the issuances in February and November of 2013 of 10,000 and 55,000 shares respectively, the total options issued during 2013 was 65,000.

The Company recorded $135,718 of non-cash compensation expense related to stock options for the year ended December 31, 2013. As of December 31, 2013, there was $49,781 of non-cash compensation to be recorded up to 2014 based on options valued at grant date.