Quarterly report pursuant to sections 13 or 15(d)

STOCK-BASED COMPENSATION

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STOCK-BASED COMPENSATION
 9 Months Ended
Sep. 30, 2013
STOCK-BASED COMPENSATION [Abstract]  
STOCK-BASED COMPENSATION
11. STOCK-BASED COMPENSATION
 
Stock Options – On May 29, 2013, the Company awarded 10 year options to Executive Vice President, Simon Upfill-Brown for 90,000 shares.  These options have an exercise price equal to the closing price of the stock on May 29, 2013, which was $7.71 and vest in 25% increments over a 4 year period.  Compensation expense recognized during the three and nine months ending September 30, 2013, in connection with this award was approximately $50,000 and $52,000. The fair value of the options granted was calculated using the Black-Scholes option valuation model with the following assumptions:

Expected volatility
85%
Expected dividends
None
Expected term (in years)
6.25
Risk free interest rate
1.326%

A summary of the status of the Company’s stock option awards is presented below:

   
Number of StockOptions
   
Weighted Average Exercise Price per Share
   
Weighted
Average
Remaining
Contractual
Life
  
                   
Outstanding at January 1, 2013
     1,173,180     $ 4.04        
   Granted
     90,000       7.71        
   Exercised
     (29,320 )     4.29        
   Expired
     --       --        
   Cancelled
     --       --        
   Forfeited
     --       --        
Outstanding at September 30, 2013
     1,233,860     $ 4.31       7.0  
Exercisable at September 30, 2013
     428,356     $ 3.55       6.2  

The fair value of the options granted below was calculated using the Black Scholes option valuation model with the assumptions as disclosed in prior quarterly and annual filings.

Directors’ compensation of approximately $94,000 and $68,000 during the three months and $283,000 and $194,000 during the nine months ended September 30, 2013, and 2012, respectively, were recognized related to options to purchase shares vesting through 2017.

Employee compensation, excluding the May issuance described above, of approximately $119,000 and $119,000 during the three months and $356,000 and $371,000 during the nine months ended September 30, 2013, and 2012, respectively, was recognized related to options with a 4 year vesting period which were awarded to officers and key employees.  These options vest through 2017.

Post-retirement compensation of approximately $24,000 was recognized during the three months and $73,000 was recognized during the nine months ended September 30, 2013, and 2012, related to options awarded to Mr. Hatem El Khalidi in July 2009.  On May 9, 2010, the Board of Directors determined that Mr. El Khalidi forfeited these options and other retirement benefits when he made various demands against the Company and other AMAK Saudi shareholders which would benefit him personally and were not in the best interests of the Company and its shareholders.  The Company is litigating its right to withdraw the options and benefits and as such, these options and benefits continue to be shown as outstanding.  See further discussion in Note 16.

On February 1, 2013, the Company issued a warrant for the purchase of 100,000 shares of common stock to Genesis Select Corporation (“Genesis”) at a strike price of $10.00 per share.  The term of the warrant is 5 years with 50% vesting in equal increments of 1/12th each calendar month throughout the first year.  The remaining 50% will vest in equal increments of 1/36th each calendar month over years 2 through 4 contingent upon continuous investor relations service under the consulting agreement with Genesis.  Investor relations expense recognized in connection with this warrant was approximately $47,000 and $118,000 for the three and nine months ended September 30, 2013.