STOCK OPTION PLANS

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 8. - STOCK OPTION PLANS

The Company’s board of directors and stockholders have approved stock option plans adopted in 1993, 1994, 1995, 1996, 1997, 1998, 1999, and 2005, which have authority to grant options to purchase up to an aggregate of 4,596,333 common shares at December 31, 2012 (4,608,833 - 2011). No further grants may be made from the 1993, 1994, 1995, 1996, 1997, 1998, and 1999 plans. As of December 31, 2012, 1,141,333 options to purchase shares remain unissued under the 2005 plan. Such options may be designated at the time of grant as either incentive stock options or nonqualified stock options.

On February 3, 2009, the Company’s board of directors approved the 2009 stock option plan, which grants options to purchase up to an aggregate of 4,000,000 common shares. As of December 31, 2012, 563,000 options to purchase shares remain unissued under the 2009 plan. Options issued to date are nonqualified since the Company has decided not to seek stockholder approval of the 2009 Plan.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model based on the following assumptions.

Volatility is based on data used by other companies in the IT services industry and overall greater market volatility of companies during recent periods. The expected life of the options was assumed to be 5.75 years using the simplified method for plain vanilla options as stated in FASB ASC 718 to improve the accuracy of this assumption while simplifying record keeping requirements until more detailed information about the Company’s exercise behavior is available. The risk-free rate for the life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The following assumptions were used for the years ended December 31, 2012 and 2011.

	2012	2011
Risk-free interest rate	.83% - 1.10%	1.16% - 2.46%
Expected dividend yield	0%	0%
Expected stock price volatility	75%	75%
Expected life of options	5.75 years	5.75 years

Stock Option Plans - The Company grants stock options to its key employees and independent service providers as it deems appropriate. Qualified options are exercisable as long as the optionee continues to be an employee of the Company and for thirty days subsequent to employee termination.

The following is a summary of stock option activity, including qualified and non-qualified options for the years ended December 31, 2012 and 2011:

	Number of Options Outstanding			Weighted Average Exercise Price		Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at December 31, 2010		6,414,500		$	.22
Granted		1,786,500		$	.10
Expired		(1,186,500	)	$	.20
Forfeited		(125,000	)	$	.13
Outstanding at December 31, 2011		6,889,500		$	.20
Granted		300,000		$	.19
Expired		(168,500	)	$	.11
Forfeited		(136,500	)	$	.12
Outstanding at December 31, 2012		6,884,500		$	.20	5.5 years	$	610,000
Exercisable at December 31, 2012		5,715,500		$	.21	4.9 years	$	479,000

At December 31, 2012, there was approximately $58,000 of total unrecognized compensation cost related to outstanding non-vested options. This cost is expected to be recognized over a weighted average period of approximately one year. The total fair value of shares vested during the year ended December 31, 2012 was approximately $93,000.

The weighted average fair value of options granted was $.12 and $.06 per share for the years ended December 31, 2012 and 2011, respectively. The exercise price for all options granted equaled or exceeded the market value of the Company’s common stock on the date of grant.

Directors’ Stock Option Plan - In April 1993, the Company’s board of directors and stockholders adopted a non-discretionary outside directors' stock option plan that provides for the grant to non-employee directors of non-qualified stock options to purchase up to 50,000 shares of common stock. No options were issued during 2012 and 2011 and no new options are issuable under the terms of this plan. During 2011, 10,000 options expired. At December 31, 2012, there were 7,500 (7,500 - 2011) options outstanding to directors under this plan, all of which are exercisable. These options are exercisable at $.10 per share and expire in 2013.