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STOCK-BASED COMPENSATION
 9 Months Ended
Sep. 30, 2012
STOCK-BASED COMPENSATION [Abstract]  
STOCK-BASED COMPENSATION

NOTE 12 - STOCK-BASED COMPENSATION

 

Pursuant to the Company's Amended and Restated 2007 Equity Incentive Plan, the aggregate number shares of the Company's common stock available for grant of stock options and issuance is 4,341,989 shares.

 

The fair value of each option award below is estimated on the date of grant using the Black-Scholes option-pricing model. The risk free rate is based on the yield-to-maturity in continuous compounding of the US Government Bonds with the time-to-maturity similar to the expected tenor of the option granted, volatility is based on the annualized historical stock price volatility of the Company, and the expected life is based on the estimated average of the life of options using the "simplified" method, as prescribed in FASB ASC 718, due to insufficient historical exercise activity during recent years as a basis from which to estimate future exercise patterns.

 

In early March 2012, the Company granted to an independent director an option to purchase 12,500 shares of the Company's common stock at an exercise price of $2.77 per share and the options vested immediately. The options were valued at $15,300 fair value, with assumed 95.89% volatility, a three-year expiration term with expected tenor of 1.49 years, a risk free rate of 0.21% and no dividend yield.

 

On May 7, 2012, the Company entered into a service agreement with an independent director in which he would be entitled to receive stock option grants of 12,500 shares of common stock on the date of the agreement and on each anniversary date from that date through May 7, 2014. The exercise price of the options which will equal or exceed the fair market value of a share of the Company's common stock on the day before the grant date, shall be determined by the Board of Directors and the options shall vest immediately upon the grant date. This agreement remains effective as long as the director continues to serve as a non-employee director of the Company. Pursuant to this agreement, on May 7, 2012, the Company granted to this independent director an option to purchase 12,500 shares of the Company's common stock at an exercise price of $2.06 per share and the options vested immediately. The options were valued at $11,000 fair value, with assumed 95.21% volatility, a three-year expiration term with expected tenor of 1.49 years, a risk free rate of 0.21% and no dividend yield.

 

On July 2, 2012, the Company granted to an independent director an option to purchase 12,500 shares of the Company's common stock at an exercise price of $1.22 per share and the options vested immediately. The options were valued at $7,000 fair value, with assumed 94.92% volatility, a three-year expiration term with expected tenor of 1.49 years, a risk free rate of 0.24% and no dividend yield.

 

On July 17, 2012, the Company granted to 3 executive officers and 18 management staff options to purchase 600,000 shares and 218,000 shares of the Company's common stock, respectively, at an exercise price of $0.952 per share and the options vested immediately. The options to executive officers and management staff were valued at $344,743 and $125,257 fair value, respectively, both with assumed 88.03% volatility, a four-year expiration term with expected tenor of 2 years, a risk free rate of 0.24% and no dividend yield.

 

For the three-month and nine-month periods ended September 30, 2012, aggregated sums of $477,000 and $503,300 were recognized as general and administrative expenses for the above stock options granted.

 

The following table summarizes all Company stock option transactions between January 1, 2012 and September 30, 2012.

 

    Number of Option
and Warrants
Outstanding		     Number of Option
and Warrants
Vested		     Range of
Exercise Price per
Common Share		  
Balance, January 1, 2012     1,144,471       1,144,471     $ 2.41 - $12.60  
Granted and vested during the nine-month period ended September 30, 2012     855,500       855,500     $ 0.95 - $2.77  
Balance, September 30, 2012     1,999,971       1,999,971     $ 0.95 - $12.60  

 

    Stock and Warrants Options Outstanding  
                Weighted Average     Weighted Average  
                Remaining     Exercise Price of  
    Outstanding at
September 30, 2012		     Range of
Exercise Prices		     Contractual Life
(Years)		     Options Currently
Outstanding		  
Exercisable and outstanding     1,999,971     $ 0.95 - $12.60       2.84     $ 4.03  

 

The weighted average grant-date fair values as at September 30, 2012 and December 31, 2011 were $4.68 and $7.29, respectively.