Note 4 - Accounting for Stock-based Compensation

3 Months Ended

Mar. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

NOTE 4:-           ACCOUNTING FOR STOCK-BASED COMPENSATION

a.         Share option plans:

1.            Under the Company's Digital Power 2012 (as amended) (“Incentive Share Option Plan”), options may be granted to employees, officers, consultants, service providers and directors of the Company or its subsidiary.

2.           As of March 31, 2015, the Company had authorized according to the Incentive Share Option Plan, the grant of options to officers, management, other key employees and others of up to 1,372,360 options for the Company's common shares. The maximum term of the options is ten years from date of grant. As of March 31, 2015, an aggregate of 690,130 of the Company's options were still available for future grant.

3.            The options granted generally become fully exercisable after four years and expire no later than 10 years from the date of the option grant. Any options that are forfeited or cancelled before expiration become available for future grants.

A summary of the Company's employee share option activity (except options to consultants and service providers) and related information is as follows:

	Three months ended March 31, 2015
	Amount of options		Weighted average exercise price		Weighted average remaining contractual term (years)		Aggregate intrinsic value *)
Outstanding at the beginning of the period		1,262,763	$	1.57		7.65	$	40.57
Outstanding at the end of the period		1,227,763	$	1.57		7.56	$	8.09
Exercisable options at the end of the period		482,763	$	1.47		5.22	$	6.09

*)       Calculation of aggregate intrinsic value is based on the share price of the Company's common stock as of March 31, 2015 ($ 0.88 per share).

Under the provisions of ASC 718 “Compensation – Stock Compensation (“ASC 718”) the fair value of each option is estimated on the date of grant using a Black-Scholes option valuation model that uses the assumptions such as stock price on the date of the grant, exercise price, risk-free interest rate, expected volatility, expected life and expected dividend yield of the option. Expected volatility is based exclusively on historical volatility of the entity's stock as allowed by ASC 718. The Company uses historical information with respect to the employee options exercised to estimate the expected term of options granted, representing the period of time that options granted are expected to be outstanding. The risk-free interest rate of the period within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

No options were granted during the first three months of 2015.

As of March 31, 2015, there was $680 of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under the share option plans. That cost is expected to be recognized over a period of the next 3.16 years.