SHARE BASED COMPENSATION

3 Months Ended

Mar. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

6. SHARE BASED COMPENSATION

The Company accounts for the issuance of equity awards to employees in accordance with ASC Topic 718 and 505, which requires that the cost resulting from all share based payment transactions be recognized in the financial statements. These pronouncements establish fair value as the measurement objective in accounting for share based payment arrangements and requires all companies to apply a fair value based measurement method in accounting for all share based payment transactions with employees.

All stock-based compensation is included in operating expenses for the periods as follows:

	Three Months Ended
	March 31,
	2014		2013
Compensation cost recognized:
Selling	$	-	$	499
General & Administrative		970		1,314
Research & Development		1,316		2,971
	$	2,286	$	4,784

Stock option activity under the 1998, 1999, 2001, 2003 and 2006 Stock Option Plans during the periods indicated below were as follows:

	Number of Shares Subject to Issuance		Weighted- average Exercise Price		Weighted- average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at December 31, 2013		327,486	$	2.31	2.42 years	$	12,100
Granted		-		-
Forfeited or expired		(28,000)		1.36
Exercised		-		-
Outstanding at March 31, 2014		299,486	$	2.40	2.39 years	$	58,300
Exercisable at March 31, 2014		213,736	$	3.19	1.79 years	$	14,575

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had they all exercised their options on March 31, 2014. This amount changes based upon the fair market value of the Company’s stock.

As of March 31, 2014, there was $23,137 of total unrecognized compensation expense, net of estimated forfeitures, related to all unvested stock options and restricted stock, which is expected to be recognized over a weighted-average period of 3.86 years.

As of March 31, 2014, the Company had 1,714,112 options available for future grants under the Plans.

The Company uses the Black-Scholes option pricing model to value the options. The table below presents the weighted average expected life of the options in years. The expected life computation is based on the time to option expiration. Volatility is determined using changes in historical stock prices. The interest rate for periods within the expected life of the award is based on the U.S. Treasury yield curve in effect at the time of grant.

The fair value of share-based payment units was estimated using the Black-Scholes option pricing model with the following assumptions and weighted average fair values as follows:

	Three Months Ended
	March 31,
	2014		2013
Weighted average fair value of grants	$	0.00	$	0.29
Valuation assumptions:
Expected dividend yield		0		0.00	%
Expected volatility		0		100.4	%
Expected life (in years)		0		5.00
Risk-free interest rate		0		0.77	%

No options were granted during the three months ended March 31, 2014.