Stock-Based Compensation

12 Months Ended

Dec. 31, 2012

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

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

Note 14 – Stock-Based Compensation

Stock- Based Compensation Plans

At December 31, 2012, the Company had six stock-based compensation plans, which are described below. All share amounts disclosed below reflect the effect of the 1-for-20 reverse stock split which was approved by the stockholders on November 26, 2003.

1995 Director Stock Option and Appreciation Rights Plan

The 1995 Director Stock Option and Appreciation Rights Plan (the “1995 Director Plan”) provides for the issuance of incentive stock options, non-qualified stock options and stock appreciation rights (“SARs”) to directors of the Company up to 12,500 shares of common stock (subject to adjustment in the event of stock dividends, stock splits, and other similar events). If any incentive option, non-qualified option or SAR terminates prior to exercise thereof and during the duration of the 1995 Director Plan, the shares of common stock as to which such option or right was not exercised will become available under the 1995 Director Plan for the grant of additional options or rights to any eligible director. Each option is immediately exercisable for a period of ten years from the date of grant. The Company has 12,500 shares of common stock reserved for issuance under the 1995 Director Plan. As of December 31, 2012 and 2011, there were no options outstanding under the 1995 Director Plan.

1995 Employee Stock Option and Appreciation Rights Plan

The 1995 Employee Stock Option and Appreciation Rights Plan (the “1995 Employee Plan”) provides for the grant of incentive stock options, non-qualified stock options, and SARs of up to 20,000 shares of common stock (subject to adjustment in the event of stock dividends, stock splits, and other similar events). Directors of the Company are not eligible to participate in the 1995 Employee Plan. The 1995 Employee Plan provides for the grant of stock options, which qualify as incentive stock options under Section 422 of the Internal Revenue Code, to be issued to officers who are employees and other employees, as well as for the grant of non-qualified options to be issued to officers, employees and consultants. In addition, SARs may be granted in conjunction with the grant of incentive and non-qualified options. To the extent that an incentive option or non-qualified option is not exercised within the period of exercisability specified therein, it will expire as to the then unexercisable portion. If any incentive option, non-qualified option or SAR terminates prior to exercise thereof and during the duration of the 1995 Employee Plan, the shares of common stock as to which such option or right was not exercised will become available under the 1995 Employee Plan for the grant of additional options or rights to any eligible employee. The shares of common stock subject to the 1995 Employee Plan may be made available from either authorized but unissued shares, treasury shares or both. The Company has 20,000 shares of common stock reserved for issuance under the 1995 Employee Plan. As of December 31, 2012 and 2011, there were no options outstanding under the 1995 Employee Plan.

1997 Recruitment Stock Option Plan

In October 2000, the stockholders of the Company approved an amendment of the 1997 Recruitment Stock Option Plan (the “1997 Plan”) which provides for the issuance of incentive stock options, non-qualified stock options and SARs up to an aggregate of 370,000 shares of common stock (subject to adjustment in the event of stock dividends, stock splits, and other similar events). The price at which shares of common stock covered by the option can be purchased is determined by the Company’s Board; however, in all instances the exercise price is never less than the fair market value of the Company’s common stock on the date the option is granted. The Board also has discretion to determine, for each grant, the requisite service, vesting and exercise periods.

As of December 31, 2012, there were options to purchase 228,198 shares (2011 – 231,198 shares) of the Company’s common stock outstanding under the 1997 Plan. 225,000 options with an exercise price of $0.66 per share were vested at December 31, 2012 and 2011. 3,198 options with an exercise price of $2.40 per share were vested at December 31, 2012 (2011 – 6,198 options with exercise prices of $1.40 to $2.40 per share). The options with an exercise price of $0.66 must be exercised within seven years of grant date and can only be exercised while the option holder is an employee of the Company. The remaining options must be exercised within ten years of grant date and can only be exercised while the option holder is an employee of the Company. The Company has not awarded any SARs under the 1997 Plan. During 2012 and 2011, no options to purchase shares of common stock were issued. During 2012, 1,750 options were exercised (2011 – 0) and 1,250 options expired (2011 - 2,965).

2003 Stock Option and Appreciation Rights Plan

In November 2003, the stockholders of the Company approved the 2003 Stock Option and Appreciation Rights Plan (the “2003 Plan”) which provides for the issuance of incentive stock options, non-qualified stock options and SARs up to an aggregate of 2,000,000 shares of common stock (subject to adjustment in the event of stock dividends, stock splits, and other similar events). The price at which shares of common stock covered by the option can be purchased is determined by the Company’s Board or a committee thereof; however, in the case of incentive stock options the exercise price shall not be less than the fair market value of the Company’s common stock on the date the option is granted. As of December 31, 2012, there were options to purchase 1,565,000 shares (2011 – 1,430,000 shares) of the Company’s common stock outstanding under the 2003 Plan. The outstanding options vest over four years at exercise prices ranging from $0.08 to $2.40 per share. During 2012, 415,000 options (2011 – 1,040,000 options) were granted, and 30,000 options were exercised (2011 – 50,000). During 2012, 250,000 options to purchase shares of common stock were forfeited or expired (2011 – 53,250). No SARs have been issued under the 2003 Plan.

2010 Non-Qualified Stock Option Plan

In the fourth quarter of 2010, the Company’s Board approved the 2010 Non-Qualified Stock Option Plan (the “2010 Plan”) to induce certain key employees of the Company or any of its subsidiaries who are in a position to contribute materially to the Company’s prosperity to remain with the Company, to offer such persons incentives and rewards in recognition of their contributions to the Company’s progress, and to encourage such persons to continue to promote the best interests of the Company. The Company reserved 1,250,000 shares of common stock (subject to adjustment under certain circumstances) for issuance or transfer upon exercise of options granted under the 2010 Plan. Options may be issued under the 2010 Plan to any key employees or consultants selected by the Company’s Board (or a committee appointed by the Board). Options may not be granted with an exercise price less than the fair market value of the common stock of the Company as of the day of the grant. Options granted pursuant to the plan are subject to limitations on transfer and execution and may be issued subject to vesting conditions. Options may also be forfeited in certain circumstances. As of December 31, 2012 and 2011, there were options to purchase 1,250,000 shares of the Company’s common stock outstanding under the 2010 Plan. The outstanding options vest over four years at an exercise price of $1.83 per share. During 2012, no options (2011 - 1,250,000) were granted under the 2010 Plan. There were no exercises, expiries or forfeitures in 2012 or 2011.

Equity Partners Stock Option Plan

In the second quarter of 2011, the Company’s Board approved the Equity Partners Stock Option Plan (the “Equity Partners Plan”) to allow the Company to issue options to purchase common stock as a portion of the purchase price of Equity Partners. The Company reserved 230,000 shares of common stock for issuance upon exercise of options granted under the Equity Partners Plan. During 2011, 230,000 options with an exercise price of $1.83, vesting immediately, were granted under the Equity Partners Plan. There were no grants, exercises or forfeitures during 2012.

Other options issued

In the first quarter of 2012, the Company’s Board approved the issuance of options as part of the acquisition of Heritage Global Partners, and reserved 625,000 shares of common stock for issuance upon option exercise. During 2012, 625,000 options with an exercise price of $2.00, vesting over four years, were granted. Unlike other options issued by the Company under its stock option plans, the options issued as part of the Heritage Global Partners acquisition survive termination of employment. During 2012 there were no forfeitures, and none of the option holders terminated their employment with the Company.

Stock-Based Compensation Expense

Total compensation cost related to stock options in 2012 and 2011 was $593 and $296, respectively. These amounts were recorded in selling, general and administrative expense in both years. During 2012, a tax benefit of $25 was recognized in connection with the exercise of 31,750 options, compared to $44 recognized in 2011 in connection with the exercise of 50,000 options. During 2012, the Company received $14 of cash in connection with the exercise of options; as compared to receiving $17 in 2011. Option holders are not entitled to receive dividends or dividend equivalents.

During 2012 the Company also recognized $1,054 of stock-based compensation expense, which was included in selling, general and administrative expense, with respect to the 400,000 common shares of the Company that were issued to each of its Co-CEOs in exchange for intellectual property licensing agreements, as discussed above in Notes 11 and 13.

During 2012, the Company granted a total of 1,040,000 options. Of these, 365,000 were issued to employees of the Company. 625,000 were issued to the former owners of Heritage Global Partners in connection with the Company’s acquisition of Heritage Global Partners, and 50,000 were issued to the Company’s independent directors in accordance with their standard compensation. During 2011, the Company granted a total of 2,520,000 options. Of these, 2,250,000 were issued to officers and employees of the Company and its parent, Counsel. 230,000 were issued to the former owners of Equity Partners in connection with the Company’s acquisition of Equity Partners, and 40,000 were issued to the Company’s independent directors in accordance with their standard compensation.

The fair value of each option grant was estimated on the date of the grant using the Black-Scholes option pricing model with the following assumptions:

	2012	2011
Risk-free interest rate	1.25% - 1.47%	1.49% - 2.90%
Expected life (years)	4.75	4.75 – 6.80
Expected volatility	133% - 135%	262% - 323%
Expected dividend yield	Zero	Zero
Expected forfeitures	Zero	Zero

The risk-free interest rates are those for U.S. Treasury constant maturities, for terms matching the expected term of the option. The expected life of the options is calculated according to the simplified method for estimating the expected term of the options, based on the vesting period and contractual term of each option grant. Expected volatility is based on the Company’s historical volatility. The Company has never paid a dividend on its common stock and therefore the expected dividend yield is zero.

The following summarizes the changes in common stock options for the years ended December 31, 2012 and 2011:

	2012					2011
	Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price
Outstanding at beginning of year		3,141,198		$	1.65		728,246		$	0.89
Granted		1,040,000		$	2.04		2,520,000		$	1.88
Exercised		(31,750	)	$	0.61		(50,000	)	$	0.90
Expired		(1,250	)	$	1.40		(57,048	)	$	2.73
Forfeited		(250,000	)	$	1.83		—		$	—
Outstanding at end of year		3,898,198		$	1.75		3,141,198		$	1.65
Options exercisable at year end		1,298,198		$	1.39		791,198		$	1.08
Weighted-average fair value of options granted during the year				$	1.75				$	0.93

As of December 31, 2012, the total unrecognized stock-based compensation expense related to unvested stock options was $1,642, which is expected to be recognized over a weighted-average period of thirty months.

The following summarizes the changes in unvested common stock options for the years ending December 31, 2012 and 2011:

	Options			Weighted Average Grant Date Fair Value
Unvested at December 31, 2011		2,350,000		$	0.83
Granted		1,040,000		$	1.75
Vested		(540,000	)	$	0.87
Forfeited		(250,000	)	$	0.20
Unvested at December 31, 2012		2,600,000		$	1.23

	Options			Weighted Average Grant Date Fair Value
Unvested at December 31, 2010		97,500		$	0.29
Granted		2,520,000		$	0.93
Vested		(267,500	)	$	1.77
Unvested at December 31, 2011		2,350,000		$	0.83

The total fair value of options vesting during the years ending December 31, 2012 and 2011 was $468 and $474, respectively. The unvested options have no associated performance conditions. Therefore, the Company expects that, barring the departure of individual directors or employees, all of the unvested options will vest according to the standard four-year timetable.

The following table summarizes information about all stock options outstanding at December 31, 2012:

Exercise price	Options Outstanding		Weighted Average Remaining Life (years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Remaining Life (years)		Weighted Average Exercise Price
$ 0.08 to $ 0.15		80,000		3.75	$	0.12		50,000		3.65	$	0.12
$ 0.51 to $ 1.11		545,000		1.07	$	0.82		515,000		0.82	$	0.81
$ 1.83 to $ 1.97		2,130,000		7.00	$	1.87		705,000		6.63	$	1.86
$ 2.00 to $ 2.40		1,143,198		6.13	$	2.07		28,198		5.08	$	2.40
		3,898,198		5.85	$	1.75		1,298,198		4.18	$	1.39