Annual report pursuant to Section 13 and 15(d)

NOTE 13: - STOCKHOLDERS' EQUITY

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NOTE 13: - STOCKHOLDERS' EQUITY
12 Months Ended
Dec. 31, 2012
Stockholders' Equity Note Disclosure [Text Block]
NOTE 13:–               STOCKHOLDERS’ EQUITY

a.              Stockholders’ rights:

The Company’s shares confer upon the holders the right to receive notice to participate and vote in the general meetings of the Company and right to receive dividends, if and when declared.

b.             Warrants:

As part of a securities purchase agreement entered into in August 2008, the Company issued to the purchasers of its 10% senior convertible notes due August 15, 2011, warrants to purchase an aggregate of 558,036 shares of common stock at any time prior to August 15, 2011 at a price of $2.24 per share. Due to certain exercise price reset provisions, the warrants were accounted for as liabilities at fair value with changes in fair value reflected as financial income or expense.

The Notes were fully paid and the warrants expired unexercised on August 15, 2011.

c.              The Company has adopted the following stock award plans, whereby options may be granted for purchase of shares of the Company’s common stock and where restricted shares and restricted stock units may be granted and approved by the Board of Directors. Each restricted stock unit is equal to one share of Company stock and is redeemable only for stock. Under the terms of the award plans, the Board of Directors or the designated committee grants options, restricted stock and restricted stock units.  The Board of Directors or the designated committee also determines the vesting period and the exercise terms:

1.              2007 Non-Employee Director Equity Compensation Plan – 750,000 shares reserved for issuance, of which 400,307 were available for future grants to outside directors as of December 31, 2012.

2.              2009 Equity Incentive Plan – 5,000,000 shares reserved for issuance, of which 3,265,555 were available for future grants to employees and consultants as of December 31, 2012.

3.              Under these plans, options generally expire no later than 5-10 years from the date of grant. Each option can be exercised to purchase one share, conferring the same rights as the other common shares. Options that are cancelled or forfeited before expiration become available for future grants. The options generally vest over a three-year period (33.3% per annum) and restricted shares and restricted stock units also generally vest after three years or pursuant to defined performance criteria; in the event that employment is terminated within that period, unvested restricted shares and restricted stock units generally revert back to the Company.

4.              Deferred stock compensation is amortized and recorded as compensation expense ratably over the vesting period of the option or the restriction period of the restricted shares and restricted stock units. The stock compensation expense that has been charged in the consolidated statements of operations in respect of options, restricted shares and restricted stock units to employees and directors in 2012 and 2011 was $447,680 and $408,492, respectively. The calculated intrinsic value of vested and unvested options for 2012 and 2011 was zero.

5.              A summary of the status of the Company’s plans and other share options, restricted shares and restricted stock units granted as of December 31, 2012 and 2011, and changes during the years ended on those dates, is presented below:

Stock Options:

   
2012
   
2011
 
   
Amount
   
Weighted average
exercise price
   
Amount
   
Weighted average
exercise price
 
Options outstanding at be­ginning of year
    64,953     $ 7.80       186,714     $ 6.36  
Changes during year:
                               
Granted
                       
Exercised
                       
Forfeited
    (52,725 )     8.34       (121,761 )     5.60  
Options outstanding at end of year
    12,228     $ 5.46       64,953     $ 7.80  
Options vested at end of year
    12,228     $ 5.46       64,953     $ 7.80  

Restricted Shares and Restricted Stock Units:

   
2012
   
2011
 
   
Shares
   
Weighted
average fair value at grant date
   
Shares
   
Weighted
average fair value at grant date
 
Non-vested at the beginning of the year
    636,488     $ 1.43       406,813     $ 1.60  
Changes during year:
                               
Restricted stock granted
    517,582     $ 1.17       414,284     $ 1.32  
Restricted units granted
    60,000     $ 1.67       120,000     $ 1.67  
Vested
    (310,497 )   $ 1.29       (304,609 )   $ 1.47  
Forfeited     (59,303 )   $ 1.49           $  
Non-vested at the end of the year
    844,270     $ 1.30       636,488     $ 1.43  
Restricted shares vested at end of year
    2,353,996     $ 1.97       2,043,499     $ 2.07  

6.              The remaining total compensation cost related to non-vested restricted share and restricted stock unit awards not yet recognized (before applying a forfeiture rate) in the income statement as of December 31, 2012 was $327,750. The weighted average period over which this compensation cost is expected to be recognized is approximately two years.

7.              On January 1, 2009, the Company adopted FASB ASC 260-45-28, Share-Based Payment Arrangements, which classifies unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) as participating securities and requires them to be included in the computation of diluted earnings per share using the two class method. The Company has determined that the unvested restricted stock issued to our employees and directors are “participating securities” and as such, are included, net of estimated forfeitures, in the total shares used to calculate the Company’s diluted loss per share unless a net loss is reported, in which situation unvested stock awards are excluded from the number of shares outstanding for both basic and diluted earnings per share calculations..