Derivative Liability

6 Months Ended

Jun. 30, 2014

Derivatives Liability [Abstract]

DERIVATIVES LIABILITY

NOTE 5 DERIVATIVES LIABILITY

At June 30, 2014, the Company had one outstanding forward foreign exchange option contract (sell US dollars for RMB), with a notional amount of US$3,000,000, that expires in September 2014. The fair value of this contract at June 30, 2014, as well as gains and losses realized on other foreign currency derivative activity during 2014 and 2013 were not significant.

Subsequent to June 30, 2014, we entered into another forward foreign exchange option contract (sell US dollars for RMB), with a notional amount of US $700,000, that expires in September 2015.

At December 31, 2012, the Company had warrants outstanding to purchase an aggregate of 840,454 shares of the Company’s common stock, which warrants required liability classification because of certain provisions that may have resulted in an adjustment to their exercise price. The warrants expired in June 2013. At the expiration date, the remaining value of the warrants not exercised ($2,000) was reduced to $0. The increase in other income resulting from the decrease in derivative warrant liability was $2,000 and $294,000 for the three and six months ended June 30, 2013, respectively.