Commitments and Contingencies

12 Months Ended

Dec. 31, 2012

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

14. Commitments and Contingencies

Operating Leases

On June 9, 2011, the Company entered into a new lease agreement (the “Lease’) to relocate its corporate headquarters to 60 Cutter Mill Road, Great Neck, New York.  The Lease is for a term of five years and two months commencing June 2011 and ending August 2016.  The rent increases annually during the term and ranges from approximately $2,800 per month during the first year to approximately $3,200 per month during the fifth year.

At December 31, 2012, approximate future minimum rental, including utilities, payments under these commitments are as follows:

2013	$	39,300
2014		40,300
2015		41,400
2016		28,100
Total	$	149,100

Rent expense, including utilities, was approximately $38,000 and $49,000 in 2012 and 2011, respectively.

Employment Agreements

In March 1999, we entered into an employment agreement with Assaf Ran, our President and Chief Executive Officer. Mr. Ran’s employment term renews automatically on June 30th of each year for successive one-year periods unless either party gives 180 days written notice of its intention to terminate the agreement. Under the agreement, Mr. Ran receives an annual base salary of $75,000 and annual bonuses as determined by the Compensation Committee of the Board (the “Compensation Committee”), in its sole and absolute discretion, and is eligible to participate in all executive benefit plans established and maintained by us. Under the agreement, Mr. Ran agreed to a one-year non-competition period following the termination of his employment. In March 2003, the Compensation Committee approved an increase in Mr. Ran’s compensation to an annual base salary of $225,000. However, in 2008 and 2009, Mr. Ran agreed to a temporary reduction of his annual base salary by 75% and 55%, respectively, to $56,000 and $100,000. On June 21, 2010, Mr. Ran’s annual base salary was restored to the level of $225,000 per year.

Mr. Ran’s annual base compensation was $225,000, and a bonus of $65,000 for each of the years 2012 and 2011 which was approved by the Compensation Committee.

Derivative Action

The Company has been sued as a nominal defendant in a stockholder derivative action, Alan R. Kahn v. Assaf Ran, et al., Supreme Court of the State of New York, County of Nassau, filed against the members of its Board of Directors.  The plaintiff, who asserts that he was a stockholder of the Company at all pertinent times, alleges wrongdoing by the Board in a transaction in which Director and Chief Executive Officer, Assaf Ran, was granted certain shares of the Company’s restricted stock in exchange for giving up his rights in certain options that he had held at the time of the transaction.  Plaintiff contends that the Company was harmed by the transaction.  The Directors disagree with the plaintiff’s position that the transaction involved any wrongful conduct or that it harmed the Company in any way.  The court dismissed the original complaint, but gave plaintiff leave to file an amended complaint, which the plaintiff did.  The defendants moved to dismiss the amended complaint, but before the court ruled on that motion, the parties reached an agreement to settle the action, subject to approval of the court.  The terms of the settlement include the Company’s agreement to continue utilizing certain corporate governance matters that the Company had already implemented before the lawsuit was filed and would continue to implement regardless of the settlement agreement, and to pay Plaintiff’s counsel’s fees and expenses in an amount to be determined by the court, which amount shall not exceed $80,000. In addition, Assaf Ran will reiterate his commitment to extend his personal guarantee to the Company for up to $5 million. This commitment was available to the Company prior to the settlement agreement. The court has preliminarily approved the settlement, and the Company has provided notice of the settlement to stockholders, in order to provide them with an opportunity to object to the settlement if they choose to do so.  The court has scheduled a final hearing to address the fairness and reasonableness of the settlement for April 2, 2013.  If the court approves the settlement, it is anticipated that any fees and expenses that the court awards to plaintiff’s counsel will be paid by an officers’ and directors’ liability insurance policy, rather than by the Company.  If the court refuses to approve the settlement and the litigation went forward, any ruling in favor of the plaintiff in that event would result in an award that would be paid to the Company, not by the Company, because the litigation is a derivative action, not a direct action.