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SHAREHOLDERS' EQUITY
 12 Months Ended
Dec. 31, 2012
SHAREHOLDERS' EQUITY [Abstract]  
SHAREHOLDERS' EQUITY
NOTE 8 - SHAREHOLDERS' EQUITY

 
A.
Rights of Shares:

Holders of ordinary shares are entitled to participate equally in the payment of cash dividends and bonus shares (stock dividends) and, in the event of the liquidation of the Company, in the distribution of assets after satisfaction of liabilities to creditors. Each ordinary share is entitled to one vote on all matters to be voted on by shareholders.

 
B.
Share Purchase Agreement:

On February 28, 2007, the Company entered into Share Purchase Agreement with four investors for the private placement of 1,937,983 ordinary shares of the Company, at a price of $2.58 per share, for gross proceeds of $5,000. As part of the transaction, the Company issued warrants to the investors for the purchase of 1,453,485 additional ordinary shares at an exercise price of $3.05 per share. On March 13, 2007, the shares were issued and the proceeds from the private placement were received. 872,092 warrants were exercised and converted into 336,134 shares by one investor in March, 2010. 581,393 warrants were exercised and converted into 581,393 shares by another investor during January 2011.

 
C.
Employee Incentive Plans:

The Company's Board of directors approves, from time to time, employee incentive plans, the last of which was approved in October 2007. Employee incentive plans include stock options, restricted stock units and restricted stock awards.

Stock Options

The following table summarizes the effects of stock-based compensation resulting from the application of ASC 718 included in the Statements of Operations as follows:

   
Year ended December 31,
  
   
2 0 1 2
    
2 0 1 1
    
2 0 1 0
  
Cost of Revenues:
                  
Products
   $ 305     $ 202     $ 97  
Services
     106       91       35  
Research and Development expenses
     921       601       313  
Sales and Marketing expenses
     497       470       141  
General and Administration expenses
     96       71       124  
Total
   $ 1,925     $ 1,435     $ 710  


Stock options usually vest over four years and their term may not exceed 10 years. The exercise price of each option is usually the market price of the underlying share at the date of each grant.

Through December 31, 2012, 9,958,551 share options have been issued under the plans, of which 3,834,167 options have been exercised, 4,280,037 options have been cancelled, and 867,134 options were exercisable as of December 31, 2012.

The weighted average fair value (in dollars) of the options granted during 2012, 2011and 2010, according to Black-Scholes option-pricing model, amounted to $5.32, $5.94 and $4.06 per option, respectively. Fair value was determined on the basis of the price of the Company's share.

Summary of the status of the Company's share option plans as of December 31, 2012, 2011 and 2010, as well as changes during each of the years then ended, is presented below:

   
2 0 1 2
    
2 0 1 1
    
2 0 1 0
  
   
Share
    
Weighted
average
exercise
    
Share
    
Weighted
average
exercise
    
Share
    
Weighted
average
exercise
  
   
options
    
price
    
options
    
Price
    
options
    
price
  
                                     
Outstanding - beginning of year
     1,575,814       4.84       1,631,072     2.96       1,827,862       1.99  
Granted
     452,494       7.98       444,237     8.81       490,500       5.66  
Exercised
     131,922       2.03       436,601     2.12       557,407       2.45  
Cancelled
     52,039       7.1       62,894     4.05       129,883       1.73  
Outstanding - year end
     1,844,347       5.75       1,575,814     4.84       1,631,072       2.96  
                                               
Options exercisable at year-end
     867,134       3.86       634,252     2.95       697,336       2.23  

The following table summarizes information about share options outstanding as of December 31, 2012:

Outstanding as of
    
Exercisable as of
  
December 31, 2012
    
December 31, 2012
  
prices Range
of exercise
    
Number
outstanding
    
Weighted average remaining contractual life
    
Weighted average exercise price
    
Number
exercisable
    
Weighted average exercise price
  
(US dollars)
          
(in years)
    
(US dollars)
          
(US dollars)
  
                                 
0.43-1.79       344,407     5.72     1.22       284,936     1.23  
2.86-2.87       229,709     1.42     2.86       229,709     2.86  
4.20-4.78       133,000     7.46     4.23       83,792     4.24  
5.48-6.70       302,567     6.70     6.39       163,821     6.36  
7.40-7.91       337,494     6.62     7.81       5,208     7.40  
8.38-8.40       390,501     5.86     8.39       66,750     8.40  
10.12-10.83       106,669     4.84     10.47       32,918     10.41  
        1,844,347     5.74     5.75       867,134     3.86  

Unrecognized compensation expense

As of December 31, 2012, there was $2,093 of total unrecognized compensation cost related to non-vested employee options and $89 of total unrecognized compensation cost related to non-vested employee RSUs. These costs are generally expected to be recognized over a period of four years.

Restricted Share Units

Restricted Share Units ("RSU") grants are rights to receive shares of the Company's common stock on a one-for-one basis and vest 25% on each of the first, second, third and fourth anniversaries of the grant date and are not entitled to dividends or voting rights, if any, until they are vested. The fair value of the RSU awards is being recognized on a straight-line basis over vesting period. As of December 31, 2012, 346,619 RSU's, had been issued, 236,224 RSU's had been vested, 3,425 had been cancelled. As of December 31, 2011, 331,451 RSU's, had been issued, 153,812 RSU's had been vested, 1,350 had been cancelled.