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Shareholders' Equity
 9 Months Ended
Sep. 30, 2012
Shareholders' Equity [Abstract]  
Shareholders' Equity
9)       Shareholders' Equity

Common Stock

During the nine months ended September 30, 2012, the Company issued 66,070 shares of common stock.  These shares consist of (a) 45,000 shares issued to officers of the Company pursuant to the 2001 Stock Compensation Plan, (b) 20,000 shares issued as a result of options being exercised by a former director of the Company and (c) a net of 1,070 shares issued as a result of the exercise of options by an employee of the Company.
 
The following table details the changes in common stock during the nine months ended September 30, 2012:

(Amounts in thousands, except for share amounts)
 
 
 
 
 
 
 
 
Additional
 
 
Common Stock
 
 
Paid-In
 
 
Shares
 
 
Amount
 
 
Capital
 
 
 
 
 
 
 
 
 
 
 Balance January 1, 2012
 
 
27,409,908
 
 
$
274
 
 
$
122,523
 
 2001 stock compensation plan
 
 
45,000
 
 
 
1
 
 
 
130
 
 Exercise of employee stock options
 
 
1,070
 
 
 
--
 
 
 
--
 
 Exercise of outside director options
 
 
20,000
 
 
 
--
 
 
 
50
 
 Expense of employee options vesting
 
 
--
 
 
 
--
 
 
 
16
 
 Expense of outside director warrants vesting
 
 
--
 
 
 
--
 
 
 
53
 
 Balance September 30, 2012
 
 
27,475,978
 
 
$
275
 
 
$
122,772
 
 
Stock Option Plans

The following table represents the activity in employee stock options and non-employee director stock options for the nine months ended September 30, 2012:

 
September 30, 2012
 
 
Employee Stock
Options
 
 
Director Stock Purchase
Options
 
 
 
 
 
Weighted
 
 
 
 
 
Weighted
 
 
 
 
 
Average
 
 
 
 
 
Average
 
 
 
 
 
Exercise
 
 
 
 
 
Exercise
 
 
Options
 
 
Price
 
 
Options
 
 
Price
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding balance at December 31, 2011
 
 
2,318,399
 
 
$
3.94
 
 
 
210,000
 
 
$
3.10
 
Granted
 
 
150,000
 
 
$
2.32
 
 
 
80,000
 
 
$
2.78
 
Forfeited
 
 
--
 
 
$
--
 
 
 
--
 
 
$
--
 
Expired
 
 
(105,000
)
 
$
4.39
 
 
 
(120,000
)
 
$
3.05
 
Exercised
 
 
(4,167
)
 
$
2.52
 
 
 
(20,000
)
 
$
2.52
 
Outstanding at September 30, 2012
 
 
2,359,232
 
 
$
3.82
 
 
 
150,000
 
 
$
3.05
 
Exercisable at September 30, 2012
 
 
2,209,232
 
 
$
3.92
 
 
 
63,335
 
 
$
3.01
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted Average Remaining Contractual Life - Years
 
 
 
4.63
 
 
 
 
 
 
 
8.35
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aggregate intrinsic value of options / warrants outstanding
 
 
$
-
 
 
 
 
 
 
$
-
 
 
Employee Stock Option Plans.  During the three and nine months ended September 30, 2012, we issued 150,000 options to employees under the 2012 Equity Plan.  The options were issued at the closing price of $2.32 on the date of grant, vest over a three year period and expire ten years from the date of grant.  These options were valued under Black-Scholes using a risk free interest rate of 0.815%, expected life of six years and expected volatility of 61.87%.  All other options outstanding at September 30, 2012 were granted pursuant to the U.S. Energy Corp. 2001 Incentive Stock Option Plan (the "2001 ISOP").  The 2001 ISOP had a term of 10 years, and expired on December 6, 2011.  Options issued prior to that date will survive to their expiration date which does not exceed a ten year period from date of grant and are subject to vesting and forfeiture provisions.

During the three and nine months ended September 30, 2012, we recorded $15,000 and $17,000, respectively, in compensation expense for employee stock options.  We will recognize an additional $181,000 in expense over the vesting period of the outstanding employee options.

As a result of the exercise of 4,167 options held by a former employee, 1,070 shares of common stock were issued during the nine months ended September 30, 2012.

Director Option Plans.  From time to time we issue stock options to non-employee directors for services.  During the three and nine months ended September 30, 2012, we issued 10,000 and 80,000 options, respectively, to non-employee directors.  Seventy thousand options were issued at the closing price of $2.85 on the date of grant; of these, 60,000 options vest over a three year period and expire ten years from the date of grant or one year after the Board member no longer serves on the Board and 10,000 options vested immediately and expire ten years from the date of grant or one year after the Board member no longer serves on the Board.  These options were valued under Black-Scholes using a risk free interest rate of 1.13% to 1.41%, expected life of 5 to 6 years and expected volatility of 62.75% to 63.59%.  Ten thousand options were issued at the closing price of $2.32 on the date of grant, vest over a three year period and expire ten years from the date of grant or one year after the Board member no longer serves on the Board.  These options were valued under Black-Scholes using a risk free interest rate of 0.815%, expected life of six years and expected volatility of 61.87%.

During the three and nine months ended September 30, 2012, we recorded $16,000 and $53,000, respectively, in expense for options issued to non-employee directors.  We will recognize an additional $128,000 in expense over the vesting period of the outstanding director options.

During the nine months ended September 30, 2012, we issued 20,000 shares of common stock to a former director of the Company as the result of the exercise of 20,000 outstanding options.