Annual report pursuant to Section 13 and 15(d)

Stockholders' Equity

v2.4.0.6
Stockholders' Equity
12 Months Ended
Dec. 31, 2011
Stockholders' Equity [Abstract]  
Stockholders' Equity

NOTE D - STOCKHOLDERS' EQUITY

[1] Stock options:

During 1996, the Board of Directors and stockholders approved the adoption of the 1996 Stock Option Plan (the "1996 Plan"). The 1996 Plan, as amended, provided for the granting of both incentive and non-qualified options to purchase common stock of the Company. A total of 4,000,000 were eligible to be issued under the 1996 Plan. As of March 2006, in accordance with the terms of the plan, no further options were eligible to be issued under the Plan.

The term of options granted under the 1996 Plan may not exceed ten years (five years in the case of an incentive stock option granted to an employee/director owning more than 10% of the voting stock of the Company) ("10% stockholder"). The option price for incentive stock options cannot be less than 100% of the fair market value of the shares of common stock at the time the option is granted (110% for a 10% stockholder). Option terms and vesting periods were set by the Compensation Committee (or the Board of Directors) in its discretion.

The fair value of options on the date of grant is estimated using the Black-Scholes option-pricing model utilizing the following weighted average assumptions:

      Year Ended  
  December 31,  
  2011   2010  
 
Risk-free interest rates 2.05% – 2.18%   2.71 %
Expected option life in years 5 years   5 years  
Expected stock price volatility 42.04 % 42.25 %
Expected dividend yield 0.00 % 0.00 %

 

The weighted average fair value on the option grant date during the years ended December 31, 2011 and 2010 was $0.63 and $0.37 per option, respectively.

The following table summarizes stock option activity for the years ended December 31:

      2011     2010      
          Weighted       Weighted
          Average       Average
  Options       Exercise Options     Exercise
  Outstanding       Price Outstanding     Price
 
Options outstanding at                  
beginning of year 7,947,613     $ 0.62 9,103,895   $ 0.61
Granted 430,000     $ 1.60 200,000   $ 0.90
Cancelled/expired/exercised (1,169,531 )   $ 0.55 (1,356,282 ) $ 0.61
 
Options outstanding at end of                  
year 7,208,070     $ 0.69 7,947,613   $ 0.62
 
Options exercisable at end of                  
year 6,853,903     $ 0.65 7,593,446   $ 0.61

 

During the years ended December 31, 2011 and 2010, the Company granted an aggregate of 430,000 and 200,000 5-year options to its officers, directors and consultants, respectively. The fair value of these options based on the Black-Scholes option-pricing model amounted to $271,000 and $73,000, respectively, for the 2011 and 2010 grants. The Company recorded non-cash compensation of $104,000 and $73,000 for the vesting portion of these options for the years ended December 31, 2011 and 2010, respectively. The Company also recognized non-cash compensation of $164,000 and $176,000 in 2011 and 2010, respectively, for the options that were granted in prior years but vested in 2011 and 2010.

On February 2, 2011, the Company extended for three years the expiration dates of certain outstanding options issued to a consultant to purchase an aggregate of 75,000 shares of common stock at $0.68 per share. The Company incurred non-cash compensation charges of $5,000 with respect to this option extension.

On May 20, 2011, the Company extended the expiration dates of options (expiring in 2011) for three years to purchase an aggregate of 745,218 shares of common stock held by officers, directors and a third party. The extensions of the expiration dates for an aggregate of 690,218 shares of such options were subsequently cancelled in December 2011 and the Company recorded non-cash compensation of $5,000 with respect to the option extensions which were not cancelled. (See Note H[3]).

On April 16, 2010, the Board of Directors of the Company approved a three year extension of the expiration dates (which were to expire in 2010) for certain outstanding options to purchase an aggregate of 955,000 shares of common stock, exercisable at $0.68 per share. The Company recorded additional compensation of $153,000 for this modification (See Note H[1]).

During the year ended December 31, 2011, options to purchase an aggregate of 1,031,467 shares of the Company's common stock were exercised at prices of between $0.13 and $0.70 per share, for total proceeds to the Company of $163,028. As some of these options were exercised on a cashless basis, 851,157 shares of common stock were issued. In addition, 230,234 shares were delivered with a value of $283,000 to fund payroll withholding taxes on exercise.

The following table presents information relating to all stock options outstanding and exercisable at December 31, 2011:

          Weighted      
        Weighted Average     Weighted
  Range of     Average Remaining     Average
  Exercise Options   Exercise Life in Options   Exercise
  Price Outstanding   Price Years Exercisable   Price
 
$ 0.12 - $1.60 7,188,070 $ 0.68 2.19 6,833,903 $ 0.64
$ 3.06 - $3.75 20,000 $ 3.75 0 .96 20,000 $ 3.75
 
 
    7,208,070 $ 0.69 2.09 6,853,903 $ 0.65

 

[2] Warrants:

As of December 31, 2011, the following are the outstanding warrants to purchase shares of the Company's common stock:

Number of   Exercise  
Warrants   Price Expiration Date
 
300,000 $ 0.68 July 11, 2014
250,000 $ 0.68 October 8, 2013
234,960 $ 1.50 April 16, 2012
1,666,667 $ 1.75 April 16, 2012
120,000 $ 2.00 April 16, 2012
2,571,627      

 

On April 16, 2010, the Board of Directors of the Company approved a three year extension of the expiration dates (which were to expire in October, 2010) for certain warrants to purchase an aggregate of 250,000 shares of common stock, exercisable at $0.68 per share.

On May 21, 2010, the Board of Directors of the Company approved a 5 day extension of the expiration date (from May 21, 2010 to May 26, 2010) for certain outstanding warrants to purchase an aggregate of 473,750 shares issued as part of a private placement in December 2004/January 2005 and also reduced the exercised price of such warrants to $0.82 per share (from $1.75 per share).

On May 21, 2010, the Board of Directors of the Company approved a one year extension of the expiration date (from May 21, 2010 to May 21, 2011) of certain outstanding warrants to purchase an aggregate of 50,000 shares of common stock exercisable at $0.68 per share.

On May 20, 2011, the Company extended for three years the expiration dates of warrants (expiring in 2011) to purchase an aggregate of 350,000 shares of common stock held by the Chief Executive Officer and a Director and the Company recorded non-cash compensation of $30,000 with respect to such extensions.

During the year ended December 31, 2011, warrants to purchase an aggregate of 50,000 shares of the Company's common stock were exercised at a price of $0.68 per share, on a cashless basis resulting in the issuance of 24,815 shares.