Stockholders' Equity

12 Months Ended

Dec. 31, 2012

Stockholders' Equity [Abstract]

STOCKHOLDERS' EQUITY

NOTE 12 – STOCKHOLDERS’ EQUITY

Preferred Stock – Trans Energy has authorized 10,000,000 shares of $.001 par value preferred stock. The preferred stock shall have preference as to dividends and to liquidation of Trans Energy.

Common Stock – Trans Energy has authorized 500,000,000 shares of $.001 par value common stock.

On April 8, 2009, Trans Energy granted 375,000 common stock options to four key employees under the long term incentive bonus program. As of March 31, 2010, these options have been fully expensed. In June 2011, 50,000 of these options were exercised.

In December 2010, Trans Energy granted 136,500 shares of common stock to nine employees under the long-term incentive bonus program. The 136,500 shares are not performance based and vest semi-annually over three years, subject to ongoing employment. These shares were valued at $409,500 using fair market value of the common stock at the date of grant and will be amortized to compensation expense over three years. During 2012 and 2011, we recorded $127,500 and $100,500 respectively, of share based compensation related to these shares. Of the 2012 expense $54,000 was related to the approved severance agreements, see Note 14.

In December 2010, Trans Energy granted 368,000 common stock options to eight employees and one outside board member. These options vest semi-annually over three years and have a five year term. These stock options were granted at an exercise price of $3.00 per common share, which was equal to the fair market value of the common stock at the date of grant and were valued using the Black Scholes valuation model. The options are being amortized to share-based compensation expense over the vesting period. During 2012 and 2011, we recorded $282,174 and $228,494 respectively of share based compensation related to these options. $107,364 of the 2012 expense was related to the approved severance agreements, see Note 14. In June 2011, 36,000 of these options have been cancelled.

The following are assumptions made in computing the 2011 option fair value:

Average risk-free interest rate	1.0	%
Dividend yield	0	%
Expected term	5 years
Average expected volatility	89.96	%

In May 2011, Trans Energy granted 420,000 shares of common stock to eight employees and three outside board members under the long-term incentive bonus program. The 420,000 shares are not performance based and vest semi-annually over a three year period, subject to ongoing employment. These shares were valued at $1,125,600 using fair market value of the common stock at the date of grant and will be amortized to compensation expense over three years. During 2012 and 2011, we recorded $469,000 and $375,200 respectively of share-based compensation expense related to these shares. $160,800 of the 2012 expense was related to the approved severance agreements, see Note 14.

In May 2011, Trans Energy also granted 378,000 common stock options to eight employees and four outside board members. These options vest semi-annually over five years and have a five year term. These stock options were granted at an exercise price of $2.68 per common share, which was equal to the fair market value of the common stock at the date of grant and were valued using the Black Scholes valuation model. The options are being amortized to share-based compensation expense over the vesting period. During 2012 and 2011, we recorded $260,444 and $217,324, respectively, of share-based compensation expense related to these options. $77,616 of the 2012 expense was related to the approved severance agreements, see Note 14. A total of 30,000 of these options were cancelled/expired due to separation from service.

In December 2011, Trans Energy granted 12,000 shares of common stock to an employee under the long-term incentive bonus program. The 12,000 shares are not performance based and vest semi-annually over a three year period, subject to ongoing employment. These shares were valued at $32,160 using fair market value of the common stock at the date of grant and will be amortized to compensation expense over three years. During 2012 and 2011, we recorded $10,720 and $5,360 respectively of share-based compensation expense related to these shares.

In December 2011, Trans Energy also granted 36,000 common stock options to an employee. These options vest semi-annually over five years and have a five year term. These stock options were granted at an exercise price of $2.68 per common share, which was equal to the fair market value of the common stock at the date of grant and were valued using the Black Scholes valuation model. The options are being amortized to share-based compensation expense over the vesting period. During 2012 and 2011, we recorded $20,698 and $10,349, respectively, of share-based compensation expense related to these options. Another employee purchased 10,000 shares of common stock at $2.00 per common share. The discount of $2,100 was recorded as stock-based compensation.

The following are assumptions made in computing the 2012 option fair value:

Average risk-free interest rate	1.72	%
Dividend yield	0	%
Expected term	5 years
Average expected volatility	77.09	%

Effective April 26, 2012, Trans Energy granted 60,000 shares of common stock to six employees under the long-term incentive bonus program. The 60,000 shares are not performance based and vest semi-annually over a three year period, subject to ongoing employment. These shares were valued at $138,000 using fair market value of the common stock at the date of grant and will be amortized to compensation expense over three years. During 2012, we recorded $46,000 of share-based compensation expense related to these shares.

Effective April 26, 2012, Trans Energy granted 804,000 common stock options to nine employees and four outside board members. These options vest semi-annually over five years and have a five year term. The stock options were granted at an exercise price of $2.30 per common share which was equal to the fair market value of the common stock at the date of the grant and were valued using the Black Scholes valuation model. The model uses key estimates such as estimated useful lives of the options and the estimated volatility of our stock price. The options are being amortized to share-based compensation expense over the vesting period. During 2012 we recorded $349,800 of share-based compensation expense related to these options. As of August, 2012, a total of 18,000 of these options were cancelled due to separation from service.

In June 2012, Trans Energy, due to a severance agreement, granted 150,000 common stock options. These options vested immediately. These options were granted at an exercise price of $2.30 per common share and were valued using the Black Scholes valuation model and similar assumptions as the April, 2012 options. During 2012 we recorded $198,000 of stock compensation expense related to these additional stock options.

In August 2012, Trans Energy granted 30,000 shares of common stock to an outside board member under the long-term incentive bonus program. The 30,000 shares are not performance based and vest semi-annually over a three year period, subject to ongoing employment. These shares were valued at $52,500 using fair market value of the common stock at the date of grant and will be amortized to compensation expense over three years. During 2012, we recorded $8,750 of share-based compensation expense related to these shares.

In August 2012, Trans Energy granted 60,000 common stock options to an outside board member. These options vest semi-annually over five years and have a five year term. The stock options were granted at an exercise price of $2.30 per common share which was equal to the fair market value of the common stock at the date of the grant and were valued using the Black Scholes valuation model. The model uses key estimates such as estimated useful lives of the options and the estimated volatility of our stock price. The options are being amortized to share-based compensation expense over the vesting period. During 2012 we recorded $13,200 of share-based compensation expense related to these options.

In December 2012, Trans Energy granted 9,900 shares of common stock to seventeen employees under the long-term incentive bonus program. The 9,900 shares are vested immediately and the shares were valued using fair market value of the common stock at the date of grant. During 2012, we recorded $25,740 of share based compensation related to these shares.

In August 2006, Trans Energy granted 800,000 common stock options to two employees with an expiration date of August 16, 2011. Trans Energy extended those options in September 2011 to August 16, 2012. Trans Energy recorded $11,831 of additional stock-based compensation in September 2011 related to the one year extension. In 2012 Trans Energy extended these options to August 16, 2014 due to provisions of severance agreements. We recorded an additional stock based compensation in December 2012 of $19,672 related to this two year extension.

Due to severance agreements, effective in April 2012, certain employees became vested 100% on their stock options and stock awards, we recorded an additional $597,536 of share-based compensation expense for accelerating the vesting of these stock options and stock awards.

As a result of the above stock and option transactions, Trans Energy recorded total share-based compensation of $1,831,698 and $975,099 for the twelve months ended December 31, 2012 and 2011, respectively.

A summary of the status of the options granted under various agreements at December 31, 2012 and 2011, and changes during the years then ended is presented below:

	December 31, 2012					December 31, 2011
	Weighted					Weighted
	Average Exercise					Average Exercise
	Shares			Price		Shares			Price
Outstanding at beginning of year		2,674,324		$	1.59		2,871,324		$	1.37
Granted		1,014,000			2.30		414,000			2.68
Exercised		—			—		(50,000	)		0.98
Forfeited		(33,000	)		2.47		(411,000	)		1.06
Expired		(15,000	)		2.68		(150,000	)		0.65
Outstanding at end of year		3,640,324		$	1.76		2,674,324		$	1.59

A summary of the status of the options granted under various agreements at December 31, 2012 is presented below:

Range of Exercise Prices	Number Outstanding		Options  Outstanding Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price		Number Exercisable		Options  Exercisable Weighted- Average Exercise Price
$2.30		996,000		4.50 years	$	2.30		422,000	$	2.30
$3.00		332,000		2.77 years	$	3.00		302,667	$	3.00
$2.75		125,000		2.48 years	$	2.75		125,000	$	2.75
$0.98		200,000		1.27 years	$	0.98		200,000	$	0.98
$0.82		200,000		0.01 years	$	0.82		200,000	$	0.82
$0.65		800,000		1.60 years	$	0.65		800,000	$	0.65
$2.68		384,000		3.50 years	$	2.68		280,000	$	2.68
$0.98		50,000		1.37 years	$	0.98		50,000	$	0.98
$1.50		553,324		2.04 years	$	1.50		553,324	$	1.50
		3,640,324						2,932,991