XML 89 R20.htm IDEA: XBRL DOCUMENT v2.4.0.6
14. STOCK-BASED COMPENSATION
 12 Months Ended
Dec. 31, 2012
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
14. STOCK-BASED COMPENSATION

NOTE 14 – 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 February 2011, the Company granted to the investor relations firm a warrant to purchase 50,000 shares of the Company’s common stock at an exercise price of $12.6 per share and the warrants vested immediately. The warrant was valued at $452,000 fair value, with assumed 193.42% volatility, a five-year expiration term, a risk free rate of 2.30% and no dividend yield. For the year ended December 31, 2011, $452,000 was recognized as general and administrative expenses.

 

In early March 2011, 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 $9.16 per share and the options vested immediately. The options were valued at $35,000 fair value, with assumed 64.5% volatility, a three-year expiration term with expected tenor of 1.49 years, a risk free rate of 0.46% and no dividend yield. For the year ended December 31, 2011, $35,000 was recognized as general and administrative expenses.

 

In late March 2011, the Company granted to 3 executive officers options to purchase 1,200,000 shares of the Company’s common stock at an exercise price of $4.97 per share and the options are exercisable in equal installments over periods of two years. The options were valued at $4,317,000 fair value, with assumed 77.22% to 94.36% volatility, a four-year expiration term with expected tenors of 2 to 2.49 years, risk free rates of 0.81% to 1.05% and no dividend yield. For the year ended December 31, 2011, $1,945,000 was recognized as general and administrative expenses.

 

In late March 2011, the Company also granted to 18 management staff options to purchase 654,000 shares of the Company’s common stock at an exercise price of $4.97 per share and the options are exercisable in equal installments over periods of three years. The options were valued at $2,632,000 fair value, with assumed 77.22% to 118.84% volatility, a four-year expiration term with expected tenors of 2 to 3 years, risk free rates of 0.81% to 1.29% and no dividend yield. For the year ended December 31, 2011, $706,000 was recognized as general and administrative expenses.

 

In early May 2011, 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 $2.93 per share and the option vested immediately. The option was valued at $15,800 fair value, with assumed 79.91% volatility, a four-year expiration term with expected tenor of 2 years, a risk free rate of 0.57% and no dividend yield. For the year ended December 31, 2011, $15,800 was recognized as general and administrative expenses.

 

In late June 2011, 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 $3.10 per share and the option vested immediately. The option was valued at $15,200 fair value, with assumed 86.36% volatility, a three-year expiration term with expected tenor of 1.49 years, a risk free rate of 0.32% and no dividend yield. For the year ended December 31, 2011, $15,200 was recognized as general and administrative expenses.

 

In late September 2011, the Company and certain management staff and directors mutually agreed to cancel certain unexercised and all non-vested stock options previously granted for an aggregate of 1,181,000 shares of the Company’s common stock, having exercise prices between $4.97 to $8.25 per share, without consideration. In accordance with ASC 718-20-35-9, “Awards Classified as Equity — Cancellation and Replacement”, the Company accelerated the remaining expense on these cancelled awards that resulted in $4,298,000 recorded in general and administrative expense for the year ended December 31, 2011.

 

In November 2011, 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 $2.41 per share and the option vested immediately. The option was valued at $14,400 fair value, with assumed 94.7% volatility, a three-year expiration term with expected tenor of 1.5 years, a risk free rate of 0.16% and no dividend yield. For the year ended December 31, 2011, $14,400 was recognized as general and administrative expenses.

 

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.

 

On November 8, 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 $1.37 per share and the options vested immediately. The options were valued at $7,200 fair value, with assumed 94.88% volatility, a three-year expiration term with expected tenor of 1.50 years, a risk free rate of 0.21% and no dividend yield.

 

 

 

NOTE 14 – STOCK-BASED COMPENSATION – Continued

 

The following table summarizes all Company stock option transactions between January 1, 2011 and December 31, 2011.

 

   

Number of Option

and Warrants

Outstanding

    

Number of Option

and Warrants

Non-vested

    

Number of Option

and Warrants

Vested

    

Range of

Exercise Price per Common Share

  
Balance, December 31, 2010     458,971       -       458,971       $0.84 - $12.00  
Granted during the year ended December 31, 2011     1,954,000       1,954,000       -       $2.41 - $12.60  
Vested during the year ended December 31, 2011     -       (918,000 )     918,000       $2.41 - $12.60  

Exercised during the year ended

December 31, 2011

     (12,500 )     -       (12,500 )     $0.84  

Forfeited, canceled or expired during the

year ended December 31, 2011

     (1,256,000 )     (1,036,000 )     (220,000 )     $4.80 - $10.43  
Balance, December 31, 2011     1,144,471       -       1,144,471       $2.41 - $12.60  
Balance, January 1, 2012     1,144,471       -       1,144,471       $2.41 - $12.60  

Granted and vested during the year

ended December 31, 2012

     868,000       -       868,000       $0.95 - $2.77  

Forfeited or expired during the

year ended December 31, 2012

     (38,000 )     -       (38,000 )     $4.97  
Balance, December 31, 2012     1,974,471       -       1,974,471       $0.95 - $12.60  

 

 

    Stock and Warrants Options Outstanding
            Weighted Average   Weighted Average
    Outstanding       Remaining   Exercise Price of
   

at December 31,

 2012

  

Range of

Exercise Prices

  

Contractual Life

 (Years)

  

Options Currently

 Outstanding

Exercisable and outstanding   1,974,471   $0.95 - $12.60   2.59   $4.00

 

The weighted average grant-date fair values as at December 31, 2012 and 2011 were $4.62 and $7.29 respectively.