10-K
2012-12-31
false
CIMETRIX INC
0000786620
--12-31
4935000
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<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'><b>Note 1: Organization and Significant Accounting Policies</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>Organization</b> – Cimetrix Incorporated, a Nevada corporation, and its subsidiaries (Cimetrix or the Company) are primarily engaged in the development and sale of open architecture, standards-based, personal computer software for controlling machine tools, robots, electronic equipment, and communication products that allow communication between equipment on the factory floor and host systems, and semiconductor connectivity products that connect new semiconductor equipment to other equipment and to host systems.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>            </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'><b>Principles of Consolidation</b> – The consolidated financial statements include the accounts of Cimetrix Incorporated and its wholly owned subsidiaries, Cimetrix Japan K.K., Cimetrix Europe, Inc. and Cimetrix Data Management Solutions, Inc. All significant inter-company accounts and transactions have been eliminated in consolidation.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'><b>Use of Estimates</b> – The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.       </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'><b>Cash </b>– The Company considers all investments purchased with original maturities of three months or less to be cash equivalents. As of December 31, 2012, the Company had $1,027,000 of cash. </p> <p style='margin:0in;margin-bottom:.0001pt'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'><b>Accounts Receivable</b> – Trade receivables are carried at original invoice amount less an estimate made for doubtful accounts. The Company offers credit terms on the sale of its products to a majority of its customers and requires no collateral from these customers. The Company performs ongoing credit evaluations of its customers’ financial condition and maintains an allowance for doubtful accounts based upon historical collection experience and expected collectability of all accounts receivable. Trade receivables are written off when deemed uncollectible. Recoveries of trade receivables previously written off are recorded as income when received.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'><b>Inventories – </b>Inventories, consisting of certain product licenses resold with the Company’s products, are stated at the lower of cost or market, with cost determined on a first-in, first out (FIFO) method.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt'><b>            </b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Software Development Costs – </b>Software development costs associated with software to be sold, leased, or otherwise marketed are expensed as incurred until technological feasibility, defined as a working model or prototype, has been established. At that time, such costs are capitalized until the product is available for general release to customers. To date, costs incurred between the completion of a working model and the point at which the product is ready for general release have been insignificant. Accordingly, the Company has charged all such costs to research and development during the years ended December 31, 2012 and 2011.            </p> <p style='margin:0in;margin-bottom:.0001pt'>            </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Research and Development - </b>Research and development expenses include direct costs for wages, benefits, materials, and education of technical personnel involved in new product development. </p> <p style='margin:0in;margin-bottom:.0001pt'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Patents and Copyrights - </b>The Company has obtained a patent related to certain technology. In addition, the Company has registered most of its software system products with the Copyright Office of the United States and will continue to timely register any updates to current products or any new products. Generally, other than the patent and the copyright registrations, the Company relies on confidentiality and nondisclosure agreements with its employees and customers, appropriate security measures, and the encoding of its software in order to protect the proprietary nature of its technology. No cost has been capitalized with respect to the patent.</p> <p style='margin:0in;margin-bottom:.0001pt'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'><b>Property and Equipment</b> – Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation expense is computed using the straight-line method over the estimated useful lives of the assets ranging from one to seven years. The cost of leasehold improvements is amortized using the straight-line method over the shorter of the estimated life of the asset or the expected term of the related lease. Depreciable lives by asset group are as follows:</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <table border="0" cellspacing="0" cellpadding="0" style='margin-left:41.4pt;border-collapse:collapse'> <tr align="left"> <td width="258" valign="top" style='width:193.3pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> </td> <td width="156" valign="top" style='width:117.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> </td> </tr> <tr align="left"> <td width="258" valign="top" style='width:193.3pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>Equipment</p> </td> <td width="156" valign="top" style='width:117.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>2 - 7 years</p> </td> </tr> <tr align="left"> <td width="258" valign="top" style='width:193.3pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>Office equipment and software</p> </td> <td width="156" valign="top" style='width:117.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>1 - 7 years</p> </td> </tr> <tr align="left"> <td width="258" valign="top" style='width:193.3pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>Furniture and fixtures</p> </td> <td width="156" valign="top" style='width:117.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>5 - 10 years</p> </td> </tr> <tr align="left"> <td width="258" valign="top" style='width:193.3pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>Leasehold improvements</p> </td> <td width="156" valign="top" style='width:117.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>7 years</p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>            Maintenance and repairs are expensed as incurred. The cost and accumulated depreciation of property and equipment sold or otherwise retired are removed from the accounts and any related gain or loss on disposition is reflected in net income or loss for the period.</p> <p style='margin:0in;margin-bottom:.0001pt'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Goodwill</b> – Goodwill is the excess of the purchase price over the fair value of the identifiable net assets acquired. The Company evaluates its goodwill for impairment annually in the fourth quarter or when indicators of impairment exist. Impairment is recognized when the carrying value of goodwill exceeds the fair value of the reporting unit. Since the Company has only one reporting unit, the goodwill carrying value is compared to the enterprise value as a whole. The annual evaluation of the Company’s goodwill resulted in no impairment loss for the years ended December 31, 2012 and 2011.</p> <p style='margin:0in;margin-bottom:.0001pt'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Impairment of Long-Lived Assets – </b>The Company periodically reviews its long-lived assets, including definite-lived intangible assets, for impairment when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The Company evaluates, at each balance sheet date, whether events and circumstances have occurred which indicate possible impairment. The carrying value of a long-lived asset is considered impaired when the anticipated cumulative expected undiscounted cash flows of the related asset or group of assets is less than the carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the estimated fair market value of the long-lived asset. No impairment loss was recognized in 2012 and 2011. </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'><b>Revenue Recognition</b> – The Company derives revenues from two primary sources, software and professional services. Software revenues are reported in two categories, the sale of new software licenses and software license updates and product support. The Company has “off-the-shelf” software packages in the equipment control and factory connectivity product lines. Equipment Control products include items such as CIMControlFramework, CODE 6.0, CIMControl, and CIMulation. Factory Connectivity products include items such as CIM300, CIMConnect and CIMPortal. New software licenses include the sale of software development kits as well as the runtime license fees associated with deployment of the Company’s software products. Software license updates and product support are typically annual contracts with customers paid in advance, which provides the customer access to new software releases, maintenance releases, patches, and technical support personnel. Professional service sales are derived from services that provide customers with training and mentoring to assist them in using Cimetrix software products.  </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>            Before the Company recognizes revenue, the following criteria must be met:</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:.75in;text-align:justify;text-indent:-.25in'>1) Evidence of a financial arrangement or agreement must exist between the Company and its customer. Purchase orders and signed OEM contracts are two examples of items accepted by the Company to meet this criterion.   </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:.75in;text-align:justify;text-indent:-.25in'>2) Delivery of the products or services must have occurred. The Company treats either physical or electronic delivery as having met this requirement. It is the policy of the Company to provide its customers a 30-day right to return. However, because the amount of returns has historically been insignificant, the Company recognizes revenue immediately upon transfer of both title and risk of loss to the customer upon shipment of the product. If the number of returns were to increase, the Company would establish a reserve based on a percentage of sales to account for any such returns. </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:.5in;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:.75in;text-align:justify;text-indent:-.25in'>3) The price of the products or services is fixed and measurable.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:.5in;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:.75in;text-align:justify;text-indent:-.25in'>4) Collectability of the sale is reasonably assured and receipt is probable. Collectability of a sale is determined on a customer-by-customer basis. Typically, Cimetrix sells to large corporations which have demonstrated an ability to pay. If it is determined that a customer may not have the ability to pay, revenue is deferred until the payment is collected.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>            The software component of the Company’s products is an integral part of its functionality. As such, the Company applies the provisions of the ASC Topic 985-605, <i>Software - Revenue Recognition</i>.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>            The Company’s products are fully functional at the time of shipment. The software components of the Company’s products do not require significant production, modification, or customization. As such, revenue from product sales is recognized upon shipment provided that the criteria outlined above are met.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>            Revenue related to professional services is recognized as services are performed if there is not an extended contract related to such services. If the services are provided pursuant to a contract that extends over a period of time, the revenue from services is recorded ratably over the contract period, generally using the percentage of completion method. When the current estimates of total contract revenue and contract cost indicate a loss, a provision for the entire loss on the contract is made in the period in which the loss becomes evident.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>                For sales with a bundled package of new software licenses, software license updates, product support, and professional services, revenue is first allocated to software license updates and product support and professional service obligations at fair market value. The remaining amount is applied to new software license revenue. Assuming all of the above criteria have been met, revenue from the new software license portion of the package is recognized upon shipment. Revenue from material software license updates and product support contracts is recognized ratably over the term of the contract, which is generally 12 months. Revenue from professional services is recognized as services are performed. Standard payment terms for sales are net 30 days for sales in the United States and net 45 to 60 days for foreign customers. On occasion, extended payment terms will be offered. If the Company provides payment terms greater than 90 days and collection is not reasonably assured, then revenues are generally recognized as payments are received. </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>Income Taxes</b> – As part of the process of preparing consolidated financial statements, Cimetrix is required to estimate income taxes in each of the jurisdictions in which it operates. This process involves estimating the Company’s actual current income tax exposure together with assessing temporary differences resulting from differing treatment of items for income tax and financial accounting purposes. These temporary differences result in deferred tax assets and liabilities. When appropriate, the Company records a valuation allowance to reduce its deferred tax assets to the amount that the Company believes is more likely than not to be realized. Key assumptions used in estimating a valuation allowance include potential future taxable income, projected income tax rates, expiration dates of net operating loss and tax credit carry forwards, and ongoing prudent and feasible tax planning strategies. Income tax expense did not increase significantly as a result of the Company’s net income for the year ended December 31, 2012 because of the net operating loss carry-forwards. At December 31, 2012, the Company had fully reduced its net deferred tax assets by recording a valuation allowance of $7,568,000. If the Company were to determine that it would be able to realize its deferred tax assets in the future in excess of the net recorded amount, an adjustment to reduce the valuation allowance would increase income in the period such determination was made.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'><b>Advertising Costs – </b>Advertising costs, including trade show participation, newsletters, press releases and sales literature, are expensed as incurred and totaled $39,000 and $42,000, for the years ended December 31, 2012 and 2011, respectively.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>            </b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Liquidity and Capital Resources </b>–As of December 31, 2012, the Company had an accumulated deficit of $32,303,000 and total stockholders’ equity of $1,335,000. At December 31, 2012, the Company had current assets of $1,787,000, including cash of $1,027,000, and current liabilities of $617,000, resulting in a working capital of $1,170,000. For 2012, the Company reported net income of $68,000 and net cash generated by operating activities of $180,000. Management believes that its existing cash and available borrowings under the line of credit will be sufficient to fund planned operations for the next twelve months. However, there can be no assurance that operations and operating cash flows will continue at the current levels. If the Company is unable to continue profitable operations and maintain positive operating cash flows, it may need to seek additional funding or be forced to scale back its development plans or to significantly reduce or terminate operations. </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'><b>Earnings Per Common Share</b> – The computation of basic earnings per common share is based on the weighted average number of shares outstanding, including unissued but vested restricted stock shares deemed as participating securities, during the period. Diluted earnings per common share is computed by dividing the net income by the sum of the weighted-average number of common shares outstanding plus the weighted average common stock equivalents which would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding options and unvested restricted stock. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per common share by application of the treasury method.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>            The following table sets forth the computation of basic and diluted earnings per common share for 2012 and 2011:  </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" width="505" style='width:378.9pt;margin-left:5.4pt;border-collapse:collapse'> <tr style='height:15.0pt'> <td width="296" valign="bottom" style='width:221.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'></td> <td width="209" colspan="3" valign="bottom" style='width:157.1pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'></td> </tr> <tr style='height:15.75pt'> <td width="296" valign="bottom" style='width:221.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'></td> <td width="209" colspan="3" valign="bottom" style='width:157.1pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>December 31,</b></p> </td> </tr> <tr style='height:15.75pt'> <td width="296" valign="bottom" style='width:221.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'></td> <td width="96" valign="bottom" style='width:71.8pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2012</b></p> </td> <td width="18" valign="bottom" style='width:13.55pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'></td> <td width="96" valign="bottom" style='width:71.75pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2011</b></p> </td> </tr> <tr style='height:15.0pt'> <td width="296" valign="bottom" style='width:221.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Numerator:</p> </td> <td width="96" valign="bottom" style='width:71.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'></td> <td width="18" valign="bottom" style='width:13.55pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'></td> <td width="96" valign="bottom" style='width:71.75pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'></td> </tr> <tr style='height:15.75pt'> <td width="296" valign="bottom" style='width:221.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Net income </p> </td> <td width="96" valign="bottom" style='width:71.8pt;border:none;border-bottom:double windowtext 2.25pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $       68,000 </p> </td> <td width="18" valign="bottom" style='width:13.55pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'></td> <td width="96" valign="bottom" style='width:71.75pt;border:none;border-bottom:double windowtext 2.25pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $      539,000 </p> </td> </tr> <tr style='height:15.75pt'> <td width="296" valign="bottom" style='width:221.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Denominator:</p> </td> <td width="96" valign="bottom" style='width:71.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'></td> <td width="18" valign="bottom" style='width:13.55pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'></td> <td width="96" valign="bottom" style='width:71.75pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'></td> </tr> <tr style='height:15.0pt'> <td width="296" valign="bottom" style='width:221.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Basic weighted average shares outstanding</p> </td> <td width="96" valign="bottom" style='width:71.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>    45,718,000 </p> </td> <td width="18" valign="bottom" style='width:13.55pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'></td> <td width="96" valign="bottom" style='width:71.75pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>    45,243,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="296" valign="bottom" style='width:221.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Effect of dilutive securities:</p> </td> <td width="96" valign="bottom" style='width:71.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'></td> <td width="18" valign="bottom" style='width:13.55pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'></td> <td width="96" valign="bottom" style='width:71.75pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'></td> </tr> <tr style='height:15.0pt'> <td width="296" valign="bottom" style='width:221.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Stock options</p> </td> <td width="96" valign="bottom" style='width:71.8pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>        663,000 </p> </td> <td width="18" valign="bottom" style='width:13.55pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.75pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>      1,467,000 </p> </td> </tr> <tr style='height:15.75pt'> <td width="296" valign="bottom" style='width:221.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Diluted weighted average shares outstanding</p> </td> <td width="96" valign="bottom" style='width:71.8pt;border:none;border-bottom:double windowtext 2.25pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>    46,381,000 </p> </td> <td width="18" valign="bottom" style='width:13.55pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'></td> <td width="96" valign="bottom" style='width:71.75pt;border:none;border-bottom:double windowtext 2.25pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>    46,710,000 </p> </td> </tr> </table> </div> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='text-align:justify;text-indent:27.35pt'>   Potentially dilutive securities representing approximately 3,929,000 and 1,018,000 shares of common stock at December 31, 2012 and 2011 were excluded from the computation of diluted earnings per common share because their effect would have been anti-dilutive.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>Concentration of Credit Risk</b> – Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of trade receivables. In the normal course of business, Cimetrix provides credit terms to its customers. Accordingly, the Company performs ongoing credit evaluations of its customers and maintains allowances for possible losses which, when realized, have been within the range of management's expectations.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>            The Company maintains its cash in bank deposit accounts. At times, the bank deposits may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk in its cash deposits.</p> <p style='margin-right:0in;margin-left:0in;margin:0in;margin-bottom:.0001pt;text-autospace:none'>            </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'><b>Recent Accounting Pronouncements</b> – Effective January 1, 2012, the Company adopted Financial Accounting Standards Board (“FASB”) accounting guidance which requires an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income, or in two separate but consecutive statements. The guidance eliminates the option to present components of other comprehensive income as part of the statement of equity. In addition, in December 2011, the FASB issued an amendment to the accounting standard which defers the requirement to present components of reclassifications of other comprehensive income on the face of the income statement. In accordance with the guidance, the Company has presented statements of income and comprehensive income as a single continuous statement.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>Note 2: Accounts Receivable</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>            </b>Accounts receivable consist of the following:</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" width="517" style='width:388.0pt;margin-left:5.4pt;border-collapse:collapse'> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="210" colspan="3" valign="bottom" style='width:157.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>December 31, </b></p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.85pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2012</b></p> </td> <td width="18" valign="bottom" style='width:13.55pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b> </b></p> </td> <td width="96" valign="bottom" style='width:71.8pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2011</b></p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Trade receivables</p> </td> <td width="96" valign="bottom" style='width:71.85pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $      662,000 </p> </td> <td width="18" valign="bottom" style='width:13.55pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $      964,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Less allowance for doubtful accounts</p> </td> <td width="96" valign="bottom" style='width:71.85pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>         (20,000)</p> </td> <td width="18" valign="bottom" style='width:13.55pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>         (20,000)</p> </td> </tr> <tr style='height:15.75pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.85pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $      642,000 </p> </td> <td width="18" valign="bottom" style='width:13.55pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.8pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $      944,000 </p> </td> </tr> </table> </div> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>Note 3: Property and Equipment       </b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>                </b>Property and equipment consist of the following:</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" width="503" style='width:377.6pt;margin-left:5.4pt;border-collapse:collapse'> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="196" colspan="3" valign="bottom" style='width:146.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>December 31, </b></p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.8pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2012</b></p> </td> <td width="4" valign="bottom" style='width:3.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b> </b></p> </td> <td width="96" valign="bottom" style='width:71.75pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2011</b></p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Software development costs</p> </td> <td width="96" valign="bottom" style='width:71.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $      464,000 </p> </td> <td width="4" valign="bottom" style='width:3.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.75pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $      464,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Equipment</p> </td> <td width="96" valign="bottom" style='width:71.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>        350,000 </p> </td> <td width="4" valign="bottom" style='width:3.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.75pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>        344,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Office equipment and software</p> </td> <td width="96" valign="bottom" style='width:71.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>        121,000 </p> </td> <td width="4" valign="bottom" style='width:3.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.75pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>        103,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Furniture and fixtures</p> </td> <td width="96" valign="bottom" style='width:71.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          32,000 </p> </td> <td width="4" valign="bottom" style='width:3.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.75pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          32,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Leasehold improvements</p> </td> <td width="96" valign="bottom" style='width:71.8pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          85,000 </p> </td> <td width="4" valign="bottom" style='width:3.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.75pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          85,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>      1,052,000 </p> </td> <td width="4" valign="bottom" style='width:3.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.75pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>      1,028,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Less accumulated depreciation and amortization</p> </td> <td width="96" valign="bottom" style='width:71.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'>(971,000)</p> </td> <td width="4" valign="bottom" style='width:3.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.75pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'>(906,000)</p> </td> </tr> <tr style='height:15.75pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.8pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $       81,000 </p> </td> <td width="4" valign="bottom" style='width:3.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.75pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $      122,000 </p> </td> </tr> <tr style='height:5.45pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:5.45pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:5.45pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="4" valign="bottom" style='width:3.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:5.45pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.75pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:5.45pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> </table> </div> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>                </b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'><b>                </b>Depreciation and amortization expense related to property and equipment for the years ended December 31, 2012 and 2012 was $65,000 and $52,000, respectively. </p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-bottom:6.0pt'><b>Note 4: Accounts Payable and Accrued Expenses</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>Accounts payable consist of the following:</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" width="503" style='width:377.6pt;margin-left:5.4pt;border-collapse:collapse'> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="196" colspan="3" valign="bottom" style='width:146.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>December 31,</b></p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="93" valign="bottom" style='width:70.05pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2012</b></p> </td> <td width="4" valign="bottom" style='width:3.35pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b> </b></p> </td> <td width="98" valign="bottom" style='width:73.4pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2011</b></p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Trade</p> </td> <td width="93" valign="bottom" style='width:70.05pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $       49,000 </p> </td> <td width="4" valign="bottom" style='width:3.35pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="98" valign="bottom" style='width:73.4pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $      221,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Related parties</p> </td> <td width="93" valign="bottom" style='width:70.05pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>                -   </p> </td> <td width="4" valign="bottom" style='width:3.35pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="98" valign="bottom" style='width:73.4pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>            3,000 </p> </td> </tr> <tr style='height:15.75pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="93" valign="bottom" style='width:70.05pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $       49,000 </p> </td> <td width="4" valign="bottom" style='width:3.35pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="98" valign="bottom" style='width:73.4pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $      224,000 </p> </td> </tr> <tr style='height:6.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="93" valign="bottom" style='width:70.05pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="4" valign="bottom" style='width:3.35pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="98" valign="bottom" style='width:73.4pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> </table> </div> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>            </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Accrued expenses consist of the following:</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" width="503" style='width:377.6pt;margin-left:5.4pt;border-collapse:collapse'> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="196" colspan="3" valign="bottom" style='width:146.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>December 31,</b></p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.8pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2012</b></p> </td> <td width="4" valign="bottom" style='width:3.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b> </b></p> </td> <td width="96" valign="bottom" style='width:71.75pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2011</b></p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Accrued salaries and wages</p> </td> <td width="96" valign="bottom" style='width:71.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $       39,000 </p> </td> <td width="4" valign="bottom" style='width:3.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.75pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $       95,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Accrued vacation</p> </td> <td width="96" valign="bottom" style='width:71.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          73,000 </p> </td> <td width="4" valign="bottom" style='width:3.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.75pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>        104,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Accrued profit sharing plan</p> </td> <td width="96" valign="bottom" style='width:71.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          58,000 </p> </td> <td width="4" valign="bottom" style='width:3.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.75pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>        216,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Other</p> </td> <td width="96" valign="bottom" style='width:71.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          60,000 </p> </td> <td width="4" valign="bottom" style='width:3.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.75pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          70,000 </p> </td> </tr> <tr style='height:15.75pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.8pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $      230,000 </p> </td> <td width="4" valign="bottom" style='width:3.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.75pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $      485,000 </p> </td> </tr> <tr style='height:8.45pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:8.45pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:8.45pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="4" valign="bottom" style='width:3.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:8.45pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.75pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:8.45pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> </table> </div>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>Note 5: Notes Payable </b></p> <p style='margin:0in;margin-bottom:.0001pt'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'><b>Revolving Bank Line of Credit - </b>The Company and Silicon Valley Bank (the “Bank”) entered into a Loan and Security Agreement, effective as of September 27, 2011. On September 26, 2012, the Company and the Bank entered into a First Amendment to Loan and Security Agreement. The First Amendment extended the maturity date of the Agreement to September 25, 2013. Line of credit advances are available to the Company in accordance with a defined “Availability Amount”, based in part on qualifying accounts receivable, up to a maximum of $1 million. The line of credit bears interest at the prime rate plus 1.75%, payable monthly. The line of credit is collateralized by substantially all operating assets of the Company.  Interest payments are payable on the first day of each month with all principal advances payable on the maturity date of the line of credit. As of December 31, 2012, the Company had no borrowings against the line of credit.  </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'>Under the line of credit agreement, the Company is required to comply with the following financial covenants:</p> <ul type="disc" style='margin-top:0in'> <li style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-autospace:ideograph-numeric ideograph-other'>Maintain a ratio of quick assets to current liabilities minus deferred revenue of at least:  1.50 to 1.00</li> <li style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-autospace:ideograph-numeric ideograph-other'>Maintain a tangible net worth equal to or greater than the sum of (i) $500,000, plus (ii) for each successive quarter, commencing as of the quarter ending December 31, 2011, 50% of net proceeds received by Company in the preceding quarter from bona-fide issuances of new equity or bridge financing which constitutes “subordinated debt”.</li> </ul> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'>The line of credit agreement also contains numerous negative comments restricting certain actions by the Company without the bank’s consent, such as are typically included in similar loan agreements, including restrictions on the payment of dividends, restrictions on incurring additional debt, prohibitions restricting major corporation transactions, including a sale of the business, and a requirement that the Company retain certain key employees. </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'>At December 31, 2012, the Company was in compliance with all covenants.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'><b>Note 6 – Common Stock </b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'>In 2011, the Company issued 391,491 shares of its common stock from the exercise of warrants associated with Senior Notes and received proceeds of $20,000. </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'>In 2012 and 2011, the Company issued 333,000 and 0 shares, respectively, of its restricted common stock to officers and directors in satisfaction of awards that had fully vested.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'>The Company had 185,000 and 476,000 vested restricted stock awards for which shares of common stock have not been issued as of December 31, 2012 and 2011, respectively.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'><b>Note 7 – Stock-Based Compensation</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:27.0pt'>Stock-based compensation cost is measured at the grant date based on the fair value of the award granted and recognized as expense using the straight-line method over the period in which the award is expected to vest, which is generally the period from the grant date to the end of the vesting period.  Stock-based compensation expense recognized during a period is based on the value of the portion of stock-based awards that is ultimately expected to vest during the period. </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:27.0pt;text-autospace:ideograph-numeric ideograph-other'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:27.0pt;text-autospace:ideograph-numeric ideograph-other'>The Company currently uses the Black-Scholes option pricing model to determine the fair value of stock options. The determination of the fair value of stock-based awards on the date of grant using an option pricing model is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables. These variables include the expected stock price volatility over the expected term of the awards, actual and projected employee stock option exercise behaviors, the risk-free interest rate and expected dividends.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:27.0pt;text-autospace:ideograph-numeric ideograph-other'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:27.0pt;text-autospace:ideograph-numeric ideograph-other'>The Company estimates the expected term of options granted by calculating the average term from the historical stock option exercise experience. The volatility of the common stock is estimated by using historical volatility. The risk-free interest rate is based on zero-coupon yields implied from U.S. Treasury issues with remaining terms similar to the expected term on the options. The Company does not anticipate paying any cash dividends in the foreseeable future and therefore an expected dividend yield of zero is used in the option pricing model. </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:27.0pt;text-autospace:ideograph-numeric ideograph-other'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'>Stock-based compensation expense was included in the following captions within the consolidated statement of income for the years ended December 31, 2012 and 2011 as follows:</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" width="513" style='width:385.0pt;margin-left:5.4pt;border-collapse:collapse'> <tr style='height:14.25pt'> <td width="320" valign="bottom" style='width:239.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="194" colspan="3" valign="top" style='width:145.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Years Ended December 31,</b></p> </td> </tr> <tr style='height:15.0pt'> <td width="320" valign="top" style='width:239.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="89" valign="top" style='width:66.65pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2012</b></p> </td> <td width="16" valign="top" style='width:11.9pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b> </b></p> </td> <td width="89" valign="top" style='width:66.65pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2011</b></p> </td> </tr> <tr style='height:15.0pt'> <td width="320" valign="top" style='width:239.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Cost of revenues</p> </td> <td width="89" valign="top" style='width:66.65pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'> $       26,000 </p> </td> <td width="16" valign="top" style='width:11.9pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="89" valign="top" style='width:66.65pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'> $         5,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="320" valign="top" style='width:239.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Sales and marketing</p> </td> <td width="89" valign="top" style='width:66.65pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'>            9,000 </p> </td> <td width="16" valign="top" style='width:11.9pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="89" valign="top" style='width:66.65pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'>          11,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="320" valign="top" style='width:239.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Research and development</p> </td> <td width="89" valign="top" style='width:66.65pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'>          11,000 </p> </td> <td width="16" valign="top" style='width:11.9pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="89" valign="top" style='width:66.65pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'>          11,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="320" valign="top" style='width:239.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>General and administrative</p> </td> <td width="89" valign="top" style='width:66.65pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'>          36,000 </p> </td> <td width="16" valign="top" style='width:11.9pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="89" valign="top" style='width:66.65pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'>          41,000 </p> </td> </tr> <tr style='height:15.75pt'> <td width="320" valign="top" style='width:239.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Total stock-based compensation expense </p> </td> <td width="89" valign="top" style='width:66.65pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'> $       82,000 </p> </td> <td width="16" valign="top" style='width:11.9pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="89" valign="top" style='width:66.65pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'> $       68,000 </p> </td> </tr> <tr style='height:6.6pt'> <td width="320" valign="top" style='width:239.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:6.6pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="89" valign="top" style='width:66.65pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:6.6pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="16" valign="top" style='width:11.9pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:6.6pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="89" valign="top" style='width:66.65pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:6.6pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> </table> </div> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'>As of December 31, 2012, the total future compensation cost related to non-vested stock-based awards not yet recognized in the consolidated statements of income was $207,000, and the weighted average period over which these awards are expected to be recognized was 2.79 years.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'><b>Stock Incentive Plan </b>- In May 2006, the Company’s shareholders approved the combined amendment and restatement of the Cimetrix Incorporated 1998 Incentive Stock Option Plan and the Cimetrix Incorporated Director Stock Option Plan as the Cimetrix 2006 Long-Term Incentive Plan (the “Plan”). In May 2011, the shareholders approved an amendment to the Plan to authorize an additional 3,000,000 shares of common stock to be made available for awards. In addition to stock options, the Plan authorizes the grant of stock appreciation rights, restricted stock awards, and other stock units and equity-based performance awards. The number of shares of common stock available for issuance under the Plan was 1,223,000 at December 31, 2012.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'><b>Stock Options </b>– During the years ended December 31, 2012 and 2011, options to purchase 909,000 and 1,452,000 shares, respectively, of the Company’s common stock were issued to the Company’s employees, with exercise prices ranging from $0.12 to $0.19 and $0.17 to $0.40 per share, respectively. The Company estimated the grant-date fair value of these options using the Black-Scholes option pricing model using the following assumptions:</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <table border="0" cellspacing="0" cellpadding="0" width="545" style='width:408.65pt;margin-left:18.9pt;border-collapse:collapse'> <tr style='height:12.6pt'> <td width="215" valign="top" style='width:161.55pt;padding:0in 5.4pt 0in 5.4pt;height:12.6pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:-18.9pt'> </p> </td> <td width="177" valign="top" style='width:133.05pt;padding:0in 5.4pt 0in 5.4pt;height:12.6pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b><u>2012</u></b></p> </td> <td width="152" valign="top" style='width:114.05pt;padding:0in 5.4pt 0in 5.4pt;height:12.6pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b><u>2011</u></b></p> </td> </tr> <tr style='height:13.2pt'> <td width="215" valign="top" style='width:161.55pt;padding:0in 5.4pt 0in 5.4pt;height:13.2pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>Expected dividend yield</p> </td> <td width="177" valign="top" style='width:133.05pt;padding:0in 5.4pt 0in 5.4pt;height:13.2pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>0.00%</p> </td> <td width="152" valign="top" style='width:114.05pt;padding:0in 5.4pt 0in 5.4pt;height:13.2pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>0.00%</p> </td> </tr> <tr style='height:12.6pt'> <td width="215" valign="top" style='width:161.55pt;padding:0in 5.4pt 0in 5.4pt;height:12.6pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>Expected stock price volatility</p> </td> <td width="177" valign="top" style='width:133.05pt;padding:0in 5.4pt 0in 5.4pt;height:12.6pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>76.31% to 77.87%</p> </td> <td width="152" valign="top" style='width:114.05pt;padding:0in 5.4pt 0in 5.4pt;height:12.6pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>75.42% to 77.86%</p> </td> </tr> <tr style='height:13.2pt'> <td width="215" valign="top" style='width:161.55pt;padding:0in 5.4pt 0in 5.4pt;height:13.2pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>Risk free interest rate</p> </td> <td width="177" valign="top" style='width:133.05pt;padding:0in 5.4pt 0in 5.4pt;height:13.2pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>1.02% to 1.60%</p> </td> <td width="152" valign="top" style='width:114.05pt;padding:0in 5.4pt 0in 5.4pt;height:13.2pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>0.93% to 2.84%</p> </td> </tr> <tr style='height:.35in'> <td width="215" valign="top" style='width:161.55pt;padding:0in 5.4pt 0in 5.4pt;height:.35in'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>Expected life of options</p> </td> <td width="177" valign="top" style='width:133.05pt;padding:0in 5.4pt 0in 5.4pt;height:.35in'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>6.63 years to 7.10 years</p> </td> <td width="152" valign="top" style='width:114.05pt;padding:0in 5.4pt 0in 5.4pt;height:.35in'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>5.59 years to 6.61 years</p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'>The weighted average fair value of options granted during the years ended December 31, 2012 and 2011, was $0.09 and $0.13, respectively.  </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-bottom:6.0pt;text-align:justify;text-indent:.5in'>The following table summarizes the stock option activity during 2012:</p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" width="670" style='width:502.3pt;border-collapse:collapse'> <tr style='height:15.0pt'> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Weighted </b></p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Weighted</b></p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.0pt'> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b> </b></p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Average</b></p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Average</b></p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Aggregate</b></p> </td> </tr> <tr style='height:15.0pt'> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b> </b></p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Exercise  </b></p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Remaining </b></p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Intrinsic   </b></p> </td> </tr> <tr style='height:15.0pt'> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Options</b></p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Price</b></p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Contract Term</b></p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Value</b></p> </td> </tr> <tr style='height:15.0pt'> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'><b>Outstanding at January 1, 2012</b></p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>           4,177,444 </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>$                 0.21 </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.0pt'> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.0pt'> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Granted</p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>              908,500 </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>$0.12</p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.0pt'> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.0pt'> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Exercised</p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>                       -   </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>                       -   </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.0pt'> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.0pt'> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Expired</p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>                       -   </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>                       -   </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.0pt'> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.0pt'> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Forfeited</p> </td> <td valign="bottom" style='border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>                       -   </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>                       -   </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.0pt'> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.75pt'> <td valign="top" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'><b>Outstanding at December 31, 2012</b></p> </td> <td valign="top" style='border:none;border-bottom:double windowtext 2.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>           5,085,944 </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="top" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>$                 0.19 </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="top" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>5.35</p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="top" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $        120,481 </p> </td> </tr> <tr style='height:15.75pt'> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'><b>Options vested and exercisable at </b></p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.75pt'> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'><b>    December 31, 2012</b></p> </td> <td valign="bottom" style='border:none;border-bottom:double windowtext 2.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>           3,052,194 </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $                 0.21 </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>                 3.09 </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $          88,781 </p> </td> </tr> <tr style='height:13.5pt'> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> </table> </div> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>            </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'>The aggregate intrinsic value (calculated as the difference between the market value and the exercise price of the shares) in the preceding table represents the total pretax intrinsic value, based on the Company’s closing stock price of $0.19 as of December 31, 2012, which would have been received by the holders of in-the-money options had the option holders exercised their options as of that date.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'>The following table summarizes the activity of non-vested stock option awards during 2012.  </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" width="518" style='width:388.2pt;margin-left:5.4pt;border-collapse:collapse'> <tr style='height:15.0pt'> <td width="320" valign="bottom" style='width:239.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="90" valign="bottom" style='width:67.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="17" valign="bottom" style='width:12.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="90" valign="bottom" style='width:67.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Weighted  </b></p> </td> </tr> <tr style='height:15.0pt'> <td width="320" valign="bottom" style='width:239.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="90" valign="bottom" style='width:67.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Non-vested</b></p> </td> <td width="17" valign="bottom" style='width:12.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="90" valign="bottom" style='width:67.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Average</b></p> </td> </tr> <tr style='height:15.75pt'> <td width="320" valign="bottom" style='width:239.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="90" valign="bottom" style='width:67.8pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Stock Options</b></p> </td> <td width="17" valign="bottom" style='width:12.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="90" valign="bottom" style='width:67.8pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Fair Value</b></p> </td> </tr> <tr style='height:15.0pt'> <td width="320" valign="bottom" style='width:239.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Unvested Options at December 31, 2011</p> </td> <td width="90" valign="bottom" style='width:67.8pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>      1,715,000</p> </td> <td width="17" valign="bottom" style='width:12.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="90" valign="bottom" style='width:67.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $           0.12 </p> </td> </tr> <tr style='height:15.0pt'> <td width="320" valign="bottom" style='width:239.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:11.0pt;text-autospace:ideograph-numeric ideograph-other'>Granted</p> </td> <td width="90" valign="bottom" style='width:67.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>        909,000 </p> </td> <td width="17" valign="bottom" style='width:12.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="90" valign="bottom" style='width:67.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>0.09</p> </td> </tr> <tr style='height:15.0pt'> <td width="320" valign="bottom" style='width:239.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:11.0pt;text-autospace:ideograph-numeric ideograph-other'>Vested</p> </td> <td width="90" valign="bottom" style='width:67.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>       (590,000)</p> </td> <td width="17" valign="bottom" style='width:12.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="90" valign="bottom" style='width:67.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $           0.11 </p> </td> </tr> <tr style='height:15.75pt'> <td width="320" valign="bottom" style='width:239.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Unvested Options at December 31, 2012</p> </td> <td width="90" valign="bottom" style='width:67.8pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>      2,034,000 </p> </td> <td width="17" valign="bottom" style='width:12.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="90" valign="bottom" style='width:67.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $           0.11 </p> </td> </tr> <tr style='height:13.5pt'> <td width="320" valign="bottom" style='width:239.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="90" valign="bottom" style='width:67.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="17" valign="bottom" style='width:12.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="90" valign="bottom" style='width:67.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> </table> </div> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'><b>Restricted Stock </b>- During the year ended December 31, 2011, the Company granted restricted stock awards to officers and directors of 93,000 valued at $18,000 based on the closing stock price of the Company’s common stock on the date of grant. The Company did not grant any restricted stock awards to officers and directors in 2012. The compensation is being expensed over the vesting period. The weighted average grant date fair value of restricted stock awards granted during the year ended December 31, 2011 was $0.36.   </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'>The total fair value of restricted stock awards vested in 2012 and 2011 was $15,000 and $39,000, respectively.    </p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'><b>Note 8: Income Taxes</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>            The benefit (provision) for income taxes is different than amounts which would be provided by applying the statutory federal income tax rate to income before income taxes for the following reasons: </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <table border="0" cellspacing="0" cellpadding="0" width="511" style='width:383.0pt;margin-left:5.4pt;border-collapse:collapse'> <tr style='height:14.25pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="203" colspan="3" valign="bottom" style='width:152.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>December 31, </b></p> </td> </tr> <tr style='height:14.25pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2012</b></p> </td> <td width="18" valign="bottom" style='width:13.6pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b> </b></p> </td> <td width="92" valign="bottom" style='width:69.3pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2011</b></p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="18" valign="bottom" style='width:13.6pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Book income or income tax benefit at statutory rate</p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $       32,000 </p> </td> <td width="18" valign="top" style='width:13.6pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $      221,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Tax depreciation (over)/under book</p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>       (149,000)</p> </td> <td width="18" valign="bottom" style='width:13.6pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>       (180,000)</p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Meals and entertainment</p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>            4,000 </p> </td> <td width="18" valign="bottom" style='width:13.6pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          (5,000)</p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Stock-based compensation</p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          32,000 </p> </td> <td width="18" valign="bottom" style='width:13.6pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          26,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>NOL carryover</p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          27,000 </p> </td> <td width="18" valign="bottom" style='width:13.6pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          18,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Change in payroll accruals</p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          11,000 </p> </td> <td width="18" valign="bottom" style='width:13.6pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>            5,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Change in deferred revenues</p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          49,000 </p> </td> <td width="18" valign="bottom" style='width:13.6pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>         (48,000)</p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Valuation allowance</p> </td> <td width="92" valign="bottom" style='width:69.3pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>                -   </p> </td> <td width="18" valign="bottom" style='width:13.6pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>         (26,000)</p> </td> </tr> <tr style='height:15.75pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Income tax expense</p> </td> <td width="92" valign="bottom" style='width:69.3pt;border:none;border-bottom:double windowtext 2.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $         6,000 </p> </td> <td width="18" valign="bottom" style='width:13.6pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;border:none;border-bottom:double windowtext 2.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $       11,000 </p> </td> </tr> <tr style='height:6.6pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:6.6pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:6.6pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="18" valign="bottom" style='width:13.6pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:6.6pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:6.6pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>Deferred tax assets (liabilities) are comprised of the following:</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:4.5pt'>           </p> <table border="0" cellspacing="0" cellpadding="0" width="503" style='width:377.6pt;margin-left:5.4pt;border-collapse:collapse'> <tr style='height:14.25pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="196" colspan="3" valign="bottom" style='width:146.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>December 31, </b></p> </td> </tr> <tr style='height:14.25pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2012</b></p> </td> <td width="11" valign="bottom" style='width:8.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b> </b></p> </td> <td width="92" valign="bottom" style='width:69.3pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2011</b></p> </td> </tr> <tr style='height:14.25pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'><b>Deferred tax assets:</b></p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="11" valign="bottom" style='width:8.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:8.75pt;text-autospace:ideograph-numeric ideograph-other'>Net operating loss carry forwards</p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $   6,511,000</p> </td> <td width="11" valign="top" style='width:8.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $   8,105,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:8.75pt;text-autospace:ideograph-numeric ideograph-other'>Research and development credits</p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>        686,000 </p> </td> <td width="11" valign="bottom" style='width:8.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>        806,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:8.75pt;text-autospace:ideograph-numeric ideograph-other'>Allowance for doubtful accounts</p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>            8,000 </p> </td> <td width="11" valign="bottom" style='width:8.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>            8,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:8.75pt;text-autospace:ideograph-numeric ideograph-other'>Accrued expenses</p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          51,000 </p> </td> <td width="11" valign="bottom" style='width:8.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          40,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:8.75pt;text-autospace:ideograph-numeric ideograph-other'>Deferred income</p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>        132,000 </p> </td> <td width="11" valign="bottom" style='width:8.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          29,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:8.75pt;text-autospace:ideograph-numeric ideograph-other'>Depreciation</p> </td> <td width="92" valign="bottom" style='width:69.3pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>        298,000 </p> </td> <td width="11" valign="bottom" style='width:8.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>        217,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:11.0pt;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>      7,686,000 </p> </td> <td width="11" valign="bottom" style='width:8.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>      9,205,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:8.75pt;text-autospace:ideograph-numeric ideograph-other'>Less valuation allowance</p> </td> <td width="92" valign="bottom" style='width:69.3pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>    (7,686,000)</p> </td> <td width="11" valign="bottom" style='width:8.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>    (9,205,000)</p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:8.75pt;text-autospace:ideograph-numeric ideograph-other'>Net deferred tax assets</p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>                -   </p> </td> <td width="11" valign="bottom" style='width:8.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>                -   </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:11.0pt;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="11" valign="bottom" style='width:8.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'><b>Deferred tax liabilities</b></p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="11" valign="bottom" style='width:8.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:8.75pt;text-autospace:ideograph-numeric ideograph-other'>Depreciation</p> </td> <td width="92" valign="bottom" style='width:69.3pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>                -   </p> </td> <td width="11" valign="bottom" style='width:8.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>                -   </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:11.0pt;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="11" valign="bottom" style='width:8.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.75pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'><b>Net deferred taxes</b></p> </td> <td width="92" valign="bottom" style='width:69.3pt;border:none;border-bottom:double windowtext 2.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $              -   </p> </td> <td width="11" valign="bottom" style='width:8.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;border:none;border-bottom:double windowtext 2.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $              -   </p> </td> </tr> <tr style='height:6.6pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:6.6pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:6.6pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="11" valign="bottom" style='width:8.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:6.6pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:6.6pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'>At December 31, 2012, the Company has a net operating loss carry forward available to offset future taxable income of approximately $16,695,000, that may be offset against future taxable income from the year 2012 through 2033. If substantial changes in the Company’s ownership should occur, there would also be an annual limitation of the amount of the net operating loss carry forward which could be utilized.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'>The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. The Company had no unrecognized tax benefit which would affect the effective tax rate, if recognized. There has been no significant change in the unrecognized tax benefit through the year ended December 31, 2012.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'>The Company classifies interest and penalties arising from the underpayment of income taxes in the  consolidated statements of income under general and administrative expenses. As of December 31, 2012, the Company had no accrued interest or penalties related to uncertain tax positions.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'>The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. U.S. federal net operating loss carry forwards from the year ended December 31, 2008 through the year ended December 31, 2012 are subject to examination. </p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'><b>Note 9: Major Customers</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>            During 2012, no one customer accounted for more than 10% of the Company’s total revenues. During 2011, two customers accounted for 23% (11% and 12%, respectively) of the Company’s total revenues. </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>            Export sales to unaffiliated customers were approximately $1,942,000 and $2,793,000 in 2012 and 2011, respectively.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>            During 2012, export sales to Japan were 12% of total revenues. During 2011, export sales to Germany were 14% of total revenues.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Note 10: Employee Benefit Plan</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'><b>                </b>The Company has a defined contribution retirement savings plan, which is qualified under Section 401(K) of the Internal Revenue Code. The plan provides retirement benefits for employees meeting minimum age and service requirements. Participants may contribute up to the maximum amounts allowed under the Internal Revenue Code.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>            In January, 2011, the Company amended its Employee Benefit Plan to elect the safe harbor contribution method. Under the safe harbor plan, the Company matches 100% of the employees’ contribution on the first 3% of pay, plus 50% of the next 2% of pay. Participants vest in the employer’s contribution under the safe harbor plan immediately. All employer contributions made prior to January 1, 2011 vest over a five-year period. For the years ended December 31, 2012 and 2011, the Company contributed approximately $109,000 and $96,000, respectively, to the plan. </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>            The Company maintains Executive Incentive Plan agreements with each of its executives.  The plans are intended to motivate key executives to achieve both long-term and short-term corporate objectives.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'><b>Note 11: Fair Value of Financial Instruments</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>            The Company’s financial instruments consist of cash, receivables,  and payables. The carrying amount of cash, receivables and payables approximates fair value because of the short-term nature of these items. </p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'><b>Note 12: Commitments and Contingencies</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in'><b>Lease Obligations</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'>The Company leases certain office space and equipment from time to time under non-cancelable operating lease agreements. Future minimum lease payments required under operating leases are as follows:</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" width="354" style='width:265.5pt;margin-left:5.4pt;border-collapse:collapse'> <tr style='height:15.0pt'> <td width="214" valign="bottom" style='width:160.8pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'><b>Year Ending December 31, </b></p> </td> <td width="140" valign="bottom" style='width:104.7pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.0pt'> <td width="214" valign="bottom" style='width:160.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2013</b></p> </td> <td width="140" valign="bottom" style='width:104.7pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $     68,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="214" valign="bottom" style='width:160.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2014</b></p> </td> <td width="140" valign="bottom" style='width:104.7pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $     50,000 </p> </td> </tr> <tr style='height:15.75pt'> <td width="214" valign="bottom" style='width:160.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'><b> </b></p> </td> <td width="140" valign="bottom" style='width:104.7pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $   118,000 </p> </td> </tr> <tr style='height:5.25pt'> <td width="214" valign="bottom" style='width:160.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:5.25pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'><b> </b></p> </td> <td width="140" valign="bottom" style='width:104.7pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:5.25pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> </table> </div> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'>Rental expense for the years ended December 31, 2012 and 2011 under operating leases was $91,000 and $96,000, respectively. The lease for the Company headquarters building located in Salt Lake City, Utah expires September 30, 2014. </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in'><b>Product Warranties</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'>Cimetrix warrants that software products will conform to published specifications and not fail to execute the Company’s programming instructions due to defects in materials and workmanship. If the Company is unable to repair or replace any product to a condition warranted within a reasonable time, the Company will provide a refund to the customer. As of December 31, 2012 and 2011, no provision for warranty claims has been established since any amounts expended in connection with warranties has historically not been material. Management believes that any allowance for warranty would be immaterial to the financial condition of the Company.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'><b>Note 13: Related Party Transactions</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'>For the years ended December 31, 2012 and 2011, the Company had revenues totaling $414,000 and $477,000, respectively, from two customers that are also stockholders of the Company. The Company had accounts receivable from one of these two customers totaling $22,000 at December 31, 2012 and $58,000 for both of these two customers at December 31, 2011. </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>                During the year ended December 31, 2011, the Company paid interest expense of $20,000 to related parties on Senior Notes that were paid in full in 2011.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'><b>Note 14: Subsequent Events</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>            </b>Management has evaluated events through the date the consolidated financial statements were filed with the Securities and Exchange Commission and concluded there were no events to report.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>Organization</b> – Cimetrix Incorporated, a Nevada corporation, and its subsidiaries (Cimetrix or the Company) are primarily engaged in the development and sale of open architecture, standards-based, personal computer software for controlling machine tools, robots, electronic equipment, and communication products that allow communication between equipment on the factory floor and host systems, and semiconductor connectivity products that connect new semiconductor equipment to other equipment and to host systems.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'><b>Principles of Consolidation</b> – The consolidated financial statements include the accounts of Cimetrix Incorporated and its wholly owned subsidiaries, Cimetrix Japan K.K., Cimetrix Europe, Inc. and Cimetrix Data Management Solutions, Inc. All significant inter-company accounts and transactions have been eliminated in consolidation.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'><b>Use of Estimates</b> – The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.       </p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'><b>Cash </b>– The Company considers all investments purchased with original maturities of three months or less to be cash equivalents. As of December 31, 2012, the Company had $1,027,000 of cash. </p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'><b>Accounts Receivable</b> – Trade receivables are carried at original invoice amount less an estimate made for doubtful accounts. The Company offers credit terms on the sale of its products to a majority of its customers and requires no collateral from these customers. The Company performs ongoing credit evaluations of its customers’ financial condition and maintains an allowance for doubtful accounts based upon historical collection experience and expected collectability of all accounts receivable. Trade receivables are written off when deemed uncollectible. Recoveries of trade receivables previously written off are recorded as income when received.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'><b>Inventories – </b>Inventories, consisting of certain product licenses resold with the Company’s products, are stated at the lower of cost or market, with cost determined on a first-in, first out (FIFO) method.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Software Development Costs – </b>Software development costs associated with software to be sold, leased, or otherwise marketed are expensed as incurred until technological feasibility, defined as a working model or prototype, has been established. At that time, such costs are capitalized until the product is available for general release to customers. To date, costs incurred between the completion of a working model and the point at which the product is ready for general release have been insignificant. Accordingly, the Company has charged all such costs to research and development during the years ended December 31, 2012 and 2011.            </p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Research and Development - </b>Research and development expenses include direct costs for wages, benefits, materials, and education of technical personnel involved in new product development. </p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Patents and Copyrights - </b>The Company has obtained a patent related to certain technology. In addition, the Company has registered most of its software system products with the Copyright Office of the United States and will continue to timely register any updates to current products or any new products. Generally, other than the patent and the copyright registrations, the Company relies on confidentiality and nondisclosure agreements with its employees and customers, appropriate security measures, and the encoding of its software in order to protect the proprietary nature of its technology. No cost has been capitalized with respect to the patent.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'><b>Property and Equipment</b> – Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation expense is computed using the straight-line method over the estimated useful lives of the assets ranging from one to seven years. The cost of leasehold improvements is amortized using the straight-line method over the shorter of the estimated life of the asset or the expected term of the related lease. Depreciable lives by asset group are as follows:</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <table border="0" cellspacing="0" cellpadding="0" style='margin-left:41.4pt;border-collapse:collapse'> <tr align="left"> <td width="258" valign="top" style='width:193.3pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> </td> <td width="156" valign="top" style='width:117.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> </td> </tr> <tr align="left"> <td width="258" valign="top" style='width:193.3pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>Equipment</p> </td> <td width="156" valign="top" style='width:117.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>2 - 7 years</p> </td> </tr> <tr align="left"> <td width="258" valign="top" style='width:193.3pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>Office equipment and software</p> </td> <td width="156" valign="top" style='width:117.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>1 - 7 years</p> </td> </tr> <tr align="left"> <td width="258" valign="top" style='width:193.3pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>Furniture and fixtures</p> </td> <td width="156" valign="top" style='width:117.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>5 - 10 years</p> </td> </tr> <tr align="left"> <td width="258" valign="top" style='width:193.3pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>Leasehold improvements</p> </td> <td width="156" valign="top" style='width:117.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>7 years</p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>            Maintenance and repairs are expensed as incurred. The cost and accumulated depreciation of property and equipment sold or otherwise retired are removed from the accounts and any related gain or loss on disposition is reflected in net income or loss for the period.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Goodwill</b> – Goodwill is the excess of the purchase price over the fair value of the identifiable net assets acquired. The Company evaluates its goodwill for impairment annually in the fourth quarter or when indicators of impairment exist. Impairment is recognized when the carrying value of goodwill exceeds the fair value of the reporting unit. Since the Company has only one reporting unit, the goodwill carrying value is compared to the enterprise value as a whole. The annual evaluation of the Company’s goodwill resulted in no impairment loss for the years ended December 31, 2012 and 2011.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Impairment of Long-Lived Assets – </b>The Company periodically reviews its long-lived assets, including definite-lived intangible assets, for impairment when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The Company evaluates, at each balance sheet date, whether events and circumstances have occurred which indicate possible impairment. The carrying value of a long-lived asset is considered impaired when the anticipated cumulative expected undiscounted cash flows of the related asset or group of assets is less than the carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the estimated fair market value of the long-lived asset. No impairment loss was recognized in 2012 and 2011. </p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'><b>Revenue Recognition</b> – The Company derives revenues from two primary sources, software and professional services. Software revenues are reported in two categories, the sale of new software licenses and software license updates and product support. The Company has “off-the-shelf” software packages in the equipment control and factory connectivity product lines. Equipment Control products include items such as CIMControlFramework, CODE 6.0, CIMControl, and CIMulation. Factory Connectivity products include items such as CIM300, CIMConnect and CIMPortal. New software licenses include the sale of software development kits as well as the runtime license fees associated with deployment of the Company’s software products. Software license updates and product support are typically annual contracts with customers paid in advance, which provides the customer access to new software releases, maintenance releases, patches, and technical support personnel. Professional service sales are derived from services that provide customers with training and mentoring to assist them in using Cimetrix software products.  </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>            Before the Company recognizes revenue, the following criteria must be met:</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:.75in;text-align:justify;text-indent:-.25in'>1) Evidence of a financial arrangement or agreement must exist between the Company and its customer. Purchase orders and signed OEM contracts are two examples of items accepted by the Company to meet this criterion.   </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:.75in;text-align:justify;text-indent:-.25in'>2) Delivery of the products or services must have occurred. The Company treats either physical or electronic delivery as having met this requirement. It is the policy of the Company to provide its customers a 30-day right to return. However, because the amount of returns has historically been insignificant, the Company recognizes revenue immediately upon transfer of both title and risk of loss to the customer upon shipment of the product. If the number of returns were to increase, the Company would establish a reserve based on a percentage of sales to account for any such returns. </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:.5in;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:.75in;text-align:justify;text-indent:-.25in'>3) The price of the products or services is fixed and measurable.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:.5in;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:.75in;text-align:justify;text-indent:-.25in'>4) Collectability of the sale is reasonably assured and receipt is probable. Collectability of a sale is determined on a customer-by-customer basis. Typically, Cimetrix sells to large corporations which have demonstrated an ability to pay. If it is determined that a customer may not have the ability to pay, revenue is deferred until the payment is collected.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>            The software component of the Company’s products is an integral part of its functionality. As such, the Company applies the provisions of the ASC Topic 985-605, <i>Software - Revenue Recognition</i>.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>            The Company’s products are fully functional at the time of shipment. The software components of the Company’s products do not require significant production, modification, or customization. As such, revenue from product sales is recognized upon shipment provided that the criteria outlined above are met.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>            Revenue related to professional services is recognized as services are performed if there is not an extended contract related to such services. If the services are provided pursuant to a contract that extends over a period of time, the revenue from services is recorded ratably over the contract period, generally using the percentage of completion method. When the current estimates of total contract revenue and contract cost indicate a loss, a provision for the entire loss on the contract is made in the period in which the loss becomes evident.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>                For sales with a bundled package of new software licenses, software license updates, product support, and professional services, revenue is first allocated to software license updates and product support and professional service obligations at fair market value. The remaining amount is applied to new software license revenue. Assuming all of the above criteria have been met, revenue from the new software license portion of the package is recognized upon shipment. Revenue from material software license updates and product support contracts is recognized ratably over the term of the contract, which is generally 12 months. Revenue from professional services is recognized as services are performed. Standard payment terms for sales are net 30 days for sales in the United States and net 45 to 60 days for foreign customers. On occasion, extended payment terms will be offered. If the Company provides payment terms greater than 90 days and collection is not reasonably assured, then revenues are generally recognized as payments are received. </p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>Income Taxes</b> – As part of the process of preparing consolidated financial statements, Cimetrix is required to estimate income taxes in each of the jurisdictions in which it operates. This process involves estimating the Company’s actual current income tax exposure together with assessing temporary differences resulting from differing treatment of items for income tax and financial accounting purposes. These temporary differences result in deferred tax assets and liabilities. When appropriate, the Company records a valuation allowance to reduce its deferred tax assets to the amount that the Company believes is more likely than not to be realized. Key assumptions used in estimating a valuation allowance include potential future taxable income, projected income tax rates, expiration dates of net operating loss and tax credit carry forwards, and ongoing prudent and feasible tax planning strategies. Income tax expense did not increase significantly as a result of the Company’s net income for the year ended December 31, 2012 because of the net operating loss carry-forwards. At December 31, 2012, the Company had fully reduced its net deferred tax assets by recording a valuation allowance of $7,568,000. If the Company were to determine that it would be able to realize its deferred tax assets in the future in excess of the net recorded amount, an adjustment to reduce the valuation allowance would increase income in the period such determination was made.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'><b>Advertising Costs – </b>Advertising costs, including trade show participation, newsletters, press releases and sales literature, are expensed as incurred and totaled $39,000 and $42,000, for the years ended December 31, 2012 and 2011, respectively.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>Liquidity and Capital Resources </b>–As of December 31, 2012, the Company had an accumulated deficit of $32,303,000 and total stockholders’ equity of $1,335,000. At December 31, 2012, the Company had current assets of $1,787,000, including cash of $1,027,000, and current liabilities of $617,000, resulting in a working capital of $1,170,000. For 2012, the Company reported net income of $68,000 and net cash generated by operating activities of $180,000. Management believes that its existing cash and available borrowings under the line of credit will be sufficient to fund planned operations for the next twelve months. However, there can be no assurance that operations and operating cash flows will continue at the current levels. If the Company is unable to continue profitable operations and maintain positive operating cash flows, it may need to seek additional funding or be forced to scale back its development plans or to significantly reduce or terminate operations. </p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'><b>Earnings Per Common Share</b> – The computation of basic earnings per common share is based on the weighted average number of shares outstanding, including unissued but vested restricted stock shares deemed as participating securities, during the period. Diluted earnings per common share is computed by dividing the net income by the sum of the weighted-average number of common shares outstanding plus the weighted average common stock equivalents which would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding options and unvested restricted stock. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per common share by application of the treasury method.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>            The following table sets forth the computation of basic and diluted earnings per common share for 2012 and 2011:  </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" width="505" style='width:378.9pt;margin-left:5.4pt;border-collapse:collapse'> <tr style='height:15.0pt'> <td width="296" valign="bottom" style='width:221.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'></td> <td width="209" colspan="3" valign="bottom" style='width:157.1pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'></td> </tr> <tr style='height:15.75pt'> <td width="296" valign="bottom" style='width:221.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'></td> <td width="209" colspan="3" valign="bottom" style='width:157.1pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>December 31,</b></p> </td> </tr> <tr style='height:15.75pt'> <td width="296" valign="bottom" style='width:221.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'></td> <td width="96" valign="bottom" style='width:71.8pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2012</b></p> </td> <td width="18" valign="bottom" style='width:13.55pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'></td> <td width="96" valign="bottom" style='width:71.75pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2011</b></p> </td> </tr> <tr style='height:15.0pt'> <td width="296" valign="bottom" style='width:221.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Numerator:</p> </td> <td width="96" valign="bottom" style='width:71.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'></td> <td width="18" valign="bottom" style='width:13.55pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'></td> <td width="96" valign="bottom" style='width:71.75pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'></td> </tr> <tr style='height:15.75pt'> <td width="296" valign="bottom" style='width:221.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Net income </p> </td> <td width="96" valign="bottom" style='width:71.8pt;border:none;border-bottom:double windowtext 2.25pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $       68,000 </p> </td> <td width="18" valign="bottom" style='width:13.55pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'></td> <td width="96" valign="bottom" style='width:71.75pt;border:none;border-bottom:double windowtext 2.25pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $      539,000 </p> </td> </tr> <tr style='height:15.75pt'> <td width="296" valign="bottom" style='width:221.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Denominator:</p> </td> <td width="96" valign="bottom" style='width:71.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'></td> <td width="18" valign="bottom" style='width:13.55pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'></td> <td width="96" valign="bottom" style='width:71.75pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'></td> </tr> <tr style='height:15.0pt'> <td width="296" valign="bottom" style='width:221.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Basic weighted average shares outstanding</p> </td> <td width="96" valign="bottom" style='width:71.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>    45,718,000 </p> </td> <td width="18" valign="bottom" style='width:13.55pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'></td> <td width="96" valign="bottom" style='width:71.75pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>    45,243,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="296" valign="bottom" style='width:221.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Effect of dilutive securities:</p> </td> <td width="96" valign="bottom" style='width:71.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'></td> <td width="18" valign="bottom" style='width:13.55pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'></td> <td width="96" valign="bottom" style='width:71.75pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'></td> </tr> <tr style='height:15.0pt'> <td width="296" valign="bottom" style='width:221.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Stock options</p> </td> <td width="96" valign="bottom" style='width:71.8pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>        663,000 </p> </td> <td width="18" valign="bottom" style='width:13.55pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.75pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>      1,467,000 </p> </td> </tr> <tr style='height:15.75pt'> <td width="296" valign="bottom" style='width:221.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Diluted weighted average shares outstanding</p> </td> <td width="96" valign="bottom" style='width:71.8pt;border:none;border-bottom:double windowtext 2.25pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>    46,381,000 </p> </td> <td width="18" valign="bottom" style='width:13.55pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'></td> <td width="96" valign="bottom" style='width:71.75pt;border:none;border-bottom:double windowtext 2.25pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>    46,710,000 </p> </td> </tr> </table> </div> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='text-align:justify;text-indent:27.35pt'>   Potentially dilutive securities representing approximately 3,929,000 and 1,018,000 shares of common stock at December 31, 2012 and 2011 were excluded from the computation of diluted earnings per common share because their effect would have been anti-dilutive.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>Concentration of Credit Risk</b> – Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of trade receivables. In the normal course of business, Cimetrix provides credit terms to its customers. Accordingly, the Company performs ongoing credit evaluations of its customers and maintains allowances for possible losses which, when realized, have been within the range of management's expectations.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>            The Company maintains its cash in bank deposit accounts. At times, the bank deposits may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk in its cash deposits.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'><b>Recent Accounting Pronouncements</b> – Effective January 1, 2012, the Company adopted Financial Accounting Standards Board (“FASB”) accounting guidance which requires an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income, or in two separate but consecutive statements. The guidance eliminates the option to present components of other comprehensive income as part of the statement of equity. In addition, in December 2011, the FASB issued an amendment to the accounting standard which defers the requirement to present components of reclassifications of other comprehensive income on the face of the income statement. In accordance with the guidance, the Company has presented statements of income and comprehensive income as a single continuous statement.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" width="505" style='width:378.9pt;margin-left:5.4pt;border-collapse:collapse'> <tr style='height:15.0pt'> <td width="296" valign="bottom" style='width:221.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'></td> <td width="209" colspan="3" valign="bottom" style='width:157.1pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'></td> </tr> <tr style='height:15.75pt'> <td width="296" valign="bottom" style='width:221.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'></td> <td width="209" colspan="3" valign="bottom" style='width:157.1pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>December 31,</b></p> </td> </tr> <tr style='height:15.75pt'> <td width="296" valign="bottom" style='width:221.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'></td> <td width="96" valign="bottom" style='width:71.8pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2012</b></p> </td> <td width="18" valign="bottom" style='width:13.55pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'></td> <td width="96" valign="bottom" style='width:71.75pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2011</b></p> </td> </tr> <tr style='height:15.0pt'> <td width="296" valign="bottom" style='width:221.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Numerator:</p> </td> <td width="96" valign="bottom" style='width:71.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'></td> <td width="18" valign="bottom" style='width:13.55pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'></td> <td width="96" valign="bottom" style='width:71.75pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'></td> </tr> <tr style='height:15.75pt'> <td width="296" valign="bottom" style='width:221.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Net income </p> </td> <td width="96" valign="bottom" style='width:71.8pt;border:none;border-bottom:double windowtext 2.25pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $       68,000 </p> </td> <td width="18" valign="bottom" style='width:13.55pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'></td> <td width="96" valign="bottom" style='width:71.75pt;border:none;border-bottom:double windowtext 2.25pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $      539,000 </p> </td> </tr> <tr style='height:15.75pt'> <td width="296" valign="bottom" style='width:221.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Denominator:</p> </td> <td width="96" valign="bottom" style='width:71.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'></td> <td width="18" valign="bottom" style='width:13.55pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'></td> <td width="96" valign="bottom" style='width:71.75pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'></td> </tr> <tr style='height:15.0pt'> <td width="296" valign="bottom" style='width:221.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Basic weighted average shares outstanding</p> </td> <td width="96" valign="bottom" style='width:71.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>    45,718,000 </p> </td> <td width="18" valign="bottom" style='width:13.55pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'></td> <td width="96" valign="bottom" style='width:71.75pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>    45,243,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="296" valign="bottom" style='width:221.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Effect of dilutive securities:</p> </td> <td width="96" valign="bottom" style='width:71.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'></td> <td width="18" valign="bottom" style='width:13.55pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'></td> <td width="96" valign="bottom" style='width:71.75pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'></td> </tr> <tr style='height:15.0pt'> <td width="296" valign="bottom" style='width:221.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Stock options</p> </td> <td width="96" valign="bottom" style='width:71.8pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>        663,000 </p> </td> <td width="18" valign="bottom" style='width:13.55pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.75pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>      1,467,000 </p> </td> </tr> <tr style='height:15.75pt'> <td width="296" valign="bottom" style='width:221.8pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Diluted weighted average shares outstanding</p> </td> <td width="96" valign="bottom" style='width:71.8pt;border:none;border-bottom:double windowtext 2.25pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>    46,381,000 </p> </td> <td width="18" valign="bottom" style='width:13.55pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'></td> <td width="96" valign="bottom" style='width:71.75pt;border:none;border-bottom:double windowtext 2.25pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>    46,710,000 </p> </td> </tr> </table> </div>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" width="517" style='width:388.0pt;margin-left:5.4pt;border-collapse:collapse'> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="210" colspan="3" valign="bottom" style='width:157.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>December 31, </b></p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.85pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2012</b></p> </td> <td width="18" valign="bottom" style='width:13.55pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b> </b></p> </td> <td width="96" valign="bottom" style='width:71.8pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2011</b></p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Trade receivables</p> </td> <td width="96" valign="bottom" style='width:71.85pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $      662,000 </p> </td> <td width="18" valign="bottom" style='width:13.55pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $      964,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Less allowance for doubtful accounts</p> </td> <td width="96" valign="bottom" style='width:71.85pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>         (20,000)</p> </td> <td width="18" valign="bottom" style='width:13.55pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>         (20,000)</p> </td> </tr> <tr style='height:15.75pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.85pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $      642,000 </p> </td> <td width="18" valign="bottom" style='width:13.55pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.8pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $      944,000 </p> </td> </tr> </table> </div>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" width="503" style='width:377.6pt;margin-left:5.4pt;border-collapse:collapse'> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="196" colspan="3" valign="bottom" style='width:146.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>December 31, </b></p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.8pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2012</b></p> </td> <td width="4" valign="bottom" style='width:3.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b> </b></p> </td> <td width="96" valign="bottom" style='width:71.75pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2011</b></p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Software development costs</p> </td> <td width="96" valign="bottom" style='width:71.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $      464,000 </p> </td> <td width="4" valign="bottom" style='width:3.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.75pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $      464,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Equipment</p> </td> <td width="96" valign="bottom" style='width:71.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>        350,000 </p> </td> <td width="4" valign="bottom" style='width:3.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.75pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>        344,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Office equipment and software</p> </td> <td width="96" valign="bottom" style='width:71.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>        121,000 </p> </td> <td width="4" valign="bottom" style='width:3.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.75pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>        103,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Furniture and fixtures</p> </td> <td width="96" valign="bottom" style='width:71.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          32,000 </p> </td> <td width="4" valign="bottom" style='width:3.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.75pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          32,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Leasehold improvements</p> </td> <td width="96" valign="bottom" style='width:71.8pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          85,000 </p> </td> <td width="4" valign="bottom" style='width:3.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.75pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          85,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>      1,052,000 </p> </td> <td width="4" valign="bottom" style='width:3.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.75pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>      1,028,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Less accumulated depreciation and amortization</p> </td> <td width="96" valign="bottom" style='width:71.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'>(971,000)</p> </td> <td width="4" valign="bottom" style='width:3.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.75pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'>(906,000)</p> </td> </tr> <tr style='height:15.75pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.8pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $       81,000 </p> </td> <td width="4" valign="bottom" style='width:3.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.75pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $      122,000 </p> </td> </tr> <tr style='height:5.45pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:5.45pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:5.45pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="4" valign="bottom" style='width:3.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:5.45pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.75pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:5.45pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> </table> </div>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" width="503" style='width:377.6pt;margin-left:5.4pt;border-collapse:collapse'> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="196" colspan="3" valign="bottom" style='width:146.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>December 31,</b></p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="93" valign="bottom" style='width:70.05pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2012</b></p> </td> <td width="4" valign="bottom" style='width:3.35pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b> </b></p> </td> <td width="98" valign="bottom" style='width:73.4pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2011</b></p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Trade</p> </td> <td width="93" valign="bottom" style='width:70.05pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $       49,000 </p> </td> <td width="4" valign="bottom" style='width:3.35pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="98" valign="bottom" style='width:73.4pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $      221,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Related parties</p> </td> <td width="93" valign="bottom" style='width:70.05pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>                -   </p> </td> <td width="4" valign="bottom" style='width:3.35pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="98" valign="bottom" style='width:73.4pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>            3,000 </p> </td> </tr> <tr style='height:15.75pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="93" valign="bottom" style='width:70.05pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $       49,000 </p> </td> <td width="4" valign="bottom" style='width:3.35pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="98" valign="bottom" style='width:73.4pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $      224,000 </p> </td> </tr> <tr style='height:6.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="93" valign="bottom" style='width:70.05pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="4" valign="bottom" style='width:3.35pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="98" valign="bottom" style='width:73.4pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:6.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> </table> </div>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" width="503" style='width:377.6pt;margin-left:5.4pt;border-collapse:collapse'> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="196" colspan="3" valign="bottom" style='width:146.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>December 31,</b></p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.8pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2012</b></p> </td> <td width="4" valign="bottom" style='width:3.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b> </b></p> </td> <td width="96" valign="bottom" style='width:71.75pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2011</b></p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Accrued salaries and wages</p> </td> <td width="96" valign="bottom" style='width:71.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $       39,000 </p> </td> <td width="4" valign="bottom" style='width:3.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.75pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $       95,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Accrued vacation</p> </td> <td width="96" valign="bottom" style='width:71.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          73,000 </p> </td> <td width="4" valign="bottom" style='width:3.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.75pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>        104,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Accrued profit sharing plan</p> </td> <td width="96" valign="bottom" style='width:71.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          58,000 </p> </td> <td width="4" valign="bottom" style='width:3.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.75pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>        216,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Other</p> </td> <td width="96" valign="bottom" style='width:71.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          60,000 </p> </td> <td width="4" valign="bottom" style='width:3.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.75pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          70,000 </p> </td> </tr> <tr style='height:15.75pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.8pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $      230,000 </p> </td> <td width="4" valign="bottom" style='width:3.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.75pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $      485,000 </p> </td> </tr> <tr style='height:8.45pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:8.45pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:8.45pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="4" valign="bottom" style='width:3.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:8.45pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="96" valign="bottom" style='width:71.75pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:8.45pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> </table> </div>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" width="513" style='width:385.0pt;margin-left:5.4pt;border-collapse:collapse'> <tr style='height:14.25pt'> <td width="320" valign="bottom" style='width:239.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="194" colspan="3" valign="top" style='width:145.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Years Ended December 31,</b></p> </td> </tr> <tr style='height:15.0pt'> <td width="320" valign="top" style='width:239.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="89" valign="top" style='width:66.65pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2012</b></p> </td> <td width="16" valign="top" style='width:11.9pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b> </b></p> </td> <td width="89" valign="top" style='width:66.65pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2011</b></p> </td> </tr> <tr style='height:15.0pt'> <td width="320" valign="top" style='width:239.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Cost of revenues</p> </td> <td width="89" valign="top" style='width:66.65pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'> $       26,000 </p> </td> <td width="16" valign="top" style='width:11.9pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="89" valign="top" style='width:66.65pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'> $         5,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="320" valign="top" style='width:239.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Sales and marketing</p> </td> <td width="89" valign="top" style='width:66.65pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'>            9,000 </p> </td> <td width="16" valign="top" style='width:11.9pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="89" valign="top" style='width:66.65pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'>          11,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="320" valign="top" style='width:239.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Research and development</p> </td> <td width="89" valign="top" style='width:66.65pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'>          11,000 </p> </td> <td width="16" valign="top" style='width:11.9pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="89" valign="top" style='width:66.65pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'>          11,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="320" valign="top" style='width:239.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>General and administrative</p> </td> <td width="89" valign="top" style='width:66.65pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'>          36,000 </p> </td> <td width="16" valign="top" style='width:11.9pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="89" valign="top" style='width:66.65pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'>          41,000 </p> </td> </tr> <tr style='height:15.75pt'> <td width="320" valign="top" style='width:239.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Total stock-based compensation expense </p> </td> <td width="89" valign="top" style='width:66.65pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'> $       82,000 </p> </td> <td width="16" valign="top" style='width:11.9pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="89" valign="top" style='width:66.65pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'> $       68,000 </p> </td> </tr> <tr style='height:6.6pt'> <td width="320" valign="top" style='width:239.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:6.6pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="89" valign="top" style='width:66.65pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:6.6pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="16" valign="top" style='width:11.9pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:6.6pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="89" valign="top" style='width:66.65pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:6.6pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> </table> </div>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <table border="0" cellspacing="0" cellpadding="0" width="545" style='width:408.65pt;margin-left:18.9pt;border-collapse:collapse'> <tr style='height:12.6pt'> <td width="215" valign="top" style='width:161.55pt;padding:0in 5.4pt 0in 5.4pt;height:12.6pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:-18.9pt'> </p> </td> <td width="177" valign="top" style='width:133.05pt;padding:0in 5.4pt 0in 5.4pt;height:12.6pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b><u>2012</u></b></p> </td> <td width="152" valign="top" style='width:114.05pt;padding:0in 5.4pt 0in 5.4pt;height:12.6pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b><u>2011</u></b></p> </td> </tr> <tr style='height:13.2pt'> <td width="215" valign="top" style='width:161.55pt;padding:0in 5.4pt 0in 5.4pt;height:13.2pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>Expected dividend yield</p> </td> <td width="177" valign="top" style='width:133.05pt;padding:0in 5.4pt 0in 5.4pt;height:13.2pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>0.00%</p> </td> <td width="152" valign="top" style='width:114.05pt;padding:0in 5.4pt 0in 5.4pt;height:13.2pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>0.00%</p> </td> </tr> <tr style='height:12.6pt'> <td width="215" valign="top" style='width:161.55pt;padding:0in 5.4pt 0in 5.4pt;height:12.6pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>Expected stock price volatility</p> </td> <td width="177" valign="top" style='width:133.05pt;padding:0in 5.4pt 0in 5.4pt;height:12.6pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>76.31% to 77.87%</p> </td> <td width="152" valign="top" style='width:114.05pt;padding:0in 5.4pt 0in 5.4pt;height:12.6pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>75.42% to 77.86%</p> </td> </tr> <tr style='height:13.2pt'> <td width="215" valign="top" style='width:161.55pt;padding:0in 5.4pt 0in 5.4pt;height:13.2pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>Risk free interest rate</p> </td> <td width="177" valign="top" style='width:133.05pt;padding:0in 5.4pt 0in 5.4pt;height:13.2pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>1.02% to 1.60%</p> </td> <td width="152" valign="top" style='width:114.05pt;padding:0in 5.4pt 0in 5.4pt;height:13.2pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>0.93% to 2.84%</p> </td> </tr> <tr style='height:.35in'> <td width="215" valign="top" style='width:161.55pt;padding:0in 5.4pt 0in 5.4pt;height:.35in'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'>Expected life of options</p> </td> <td width="177" valign="top" style='width:133.05pt;padding:0in 5.4pt 0in 5.4pt;height:.35in'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>6.63 years to 7.10 years</p> </td> <td width="152" valign="top" style='width:114.05pt;padding:0in 5.4pt 0in 5.4pt;height:.35in'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>5.59 years to 6.61 years</p> </td> </tr> </table>
<!--egx--><div align="center"> <table border="0" cellspacing="0" cellpadding="0" width="670" style='width:502.3pt;border-collapse:collapse'> <tr style='height:15.0pt'> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Weighted </b></p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Weighted</b></p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.0pt'> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b> </b></p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Average</b></p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Average</b></p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Aggregate</b></p> </td> </tr> <tr style='height:15.0pt'> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b> </b></p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Exercise  </b></p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Remaining </b></p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Intrinsic   </b></p> </td> </tr> <tr style='height:15.0pt'> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Options</b></p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Price</b></p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Contract Term</b></p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Value</b></p> </td> </tr> <tr style='height:15.0pt'> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'><b>Outstanding at January 1, 2012</b></p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>           4,177,444 </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>$                 0.21 </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.0pt'> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.0pt'> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Granted</p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>              908,500 </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>$0.12</p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.0pt'> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.0pt'> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Exercised</p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>                       -   </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>                       -   </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.0pt'> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.0pt'> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Expired</p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>                       -   </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>                       -   </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.0pt'> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.0pt'> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Forfeited</p> </td> <td valign="bottom" style='border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>                       -   </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>                       -   </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.0pt'> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.75pt'> <td valign="top" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'><b>Outstanding at December 31, 2012</b></p> </td> <td valign="top" style='border:none;border-bottom:double windowtext 2.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>           5,085,944 </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="top" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>$                 0.19 </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="top" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>5.35</p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="top" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $        120,481 </p> </td> </tr> <tr style='height:15.75pt'> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'><b>Options vested and exercisable at </b></p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.75pt'> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'><b>    December 31, 2012</b></p> </td> <td valign="bottom" style='border:none;border-bottom:double windowtext 2.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>           3,052,194 </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $                 0.21 </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>                 3.09 </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $          88,781 </p> </td> </tr> <tr style='height:13.5pt'> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td valign="bottom" style='background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> </table> </div>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" width="518" style='width:388.2pt;margin-left:5.4pt;border-collapse:collapse'> <tr style='height:15.0pt'> <td width="320" valign="bottom" style='width:239.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="90" valign="bottom" style='width:67.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="17" valign="bottom" style='width:12.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="90" valign="bottom" style='width:67.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Weighted  </b></p> </td> </tr> <tr style='height:15.0pt'> <td width="320" valign="bottom" style='width:239.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="90" valign="bottom" style='width:67.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Non-vested</b></p> </td> <td width="17" valign="bottom" style='width:12.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="90" valign="bottom" style='width:67.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Average</b></p> </td> </tr> <tr style='height:15.75pt'> <td width="320" valign="bottom" style='width:239.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="90" valign="bottom" style='width:67.8pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Stock Options</b></p> </td> <td width="17" valign="bottom" style='width:12.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="90" valign="bottom" style='width:67.8pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>Fair Value</b></p> </td> </tr> <tr style='height:15.0pt'> <td width="320" valign="bottom" style='width:239.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Unvested Options at December 31, 2011</p> </td> <td width="90" valign="bottom" style='width:67.8pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>      1,715,000</p> </td> <td width="17" valign="bottom" style='width:12.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="90" valign="bottom" style='width:67.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $           0.12 </p> </td> </tr> <tr style='height:15.0pt'> <td width="320" valign="bottom" style='width:239.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:11.0pt;text-autospace:ideograph-numeric ideograph-other'>Granted</p> </td> <td width="90" valign="bottom" style='width:67.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>        909,000 </p> </td> <td width="17" valign="bottom" style='width:12.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="90" valign="bottom" style='width:67.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>0.09</p> </td> </tr> <tr style='height:15.0pt'> <td width="320" valign="bottom" style='width:239.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:11.0pt;text-autospace:ideograph-numeric ideograph-other'>Vested</p> </td> <td width="90" valign="bottom" style='width:67.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>       (590,000)</p> </td> <td width="17" valign="bottom" style='width:12.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="90" valign="bottom" style='width:67.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $           0.11 </p> </td> </tr> <tr style='height:15.75pt'> <td width="320" valign="bottom" style='width:239.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Unvested Options at December 31, 2012</p> </td> <td width="90" valign="bottom" style='width:67.8pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>      2,034,000 </p> </td> <td width="17" valign="bottom" style='width:12.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="90" valign="bottom" style='width:67.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $           0.11 </p> </td> </tr> <tr style='height:13.5pt'> <td width="320" valign="bottom" style='width:239.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="90" valign="bottom" style='width:67.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="17" valign="bottom" style='width:12.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="90" valign="bottom" style='width:67.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> </table> </div>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <table border="0" cellspacing="0" cellpadding="0" width="511" style='width:383.0pt;margin-left:5.4pt;border-collapse:collapse'> <tr style='height:14.25pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="203" colspan="3" valign="bottom" style='width:152.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>December 31, </b></p> </td> </tr> <tr style='height:14.25pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2012</b></p> </td> <td width="18" valign="bottom" style='width:13.6pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b> </b></p> </td> <td width="92" valign="bottom" style='width:69.3pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2011</b></p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="18" valign="bottom" style='width:13.6pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Book income or income tax benefit at statutory rate</p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $       32,000 </p> </td> <td width="18" valign="top" style='width:13.6pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $      221,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Tax depreciation (over)/under book</p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>       (149,000)</p> </td> <td width="18" valign="bottom" style='width:13.6pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>       (180,000)</p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Meals and entertainment</p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>            4,000 </p> </td> <td width="18" valign="bottom" style='width:13.6pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          (5,000)</p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Stock-based compensation</p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          32,000 </p> </td> <td width="18" valign="bottom" style='width:13.6pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          26,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>NOL carryover</p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          27,000 </p> </td> <td width="18" valign="bottom" style='width:13.6pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          18,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Change in payroll accruals</p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          11,000 </p> </td> <td width="18" valign="bottom" style='width:13.6pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>            5,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Change in deferred revenues</p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          49,000 </p> </td> <td width="18" valign="bottom" style='width:13.6pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>         (48,000)</p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Valuation allowance</p> </td> <td width="92" valign="bottom" style='width:69.3pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>                -   </p> </td> <td width="18" valign="bottom" style='width:13.6pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>         (26,000)</p> </td> </tr> <tr style='height:15.75pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>Income tax expense</p> </td> <td width="92" valign="bottom" style='width:69.3pt;border:none;border-bottom:double windowtext 2.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $         6,000 </p> </td> <td width="18" valign="bottom" style='width:13.6pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;border:none;border-bottom:double windowtext 2.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $       11,000 </p> </td> </tr> <tr style='height:6.6pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:6.6pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:6.6pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="18" valign="bottom" style='width:13.6pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:6.6pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:6.6pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> </table>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:4.5pt'>           </p> <table border="0" cellspacing="0" cellpadding="0" width="503" style='width:377.6pt;margin-left:5.4pt;border-collapse:collapse'> <tr style='height:14.25pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="196" colspan="3" valign="bottom" style='width:146.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>December 31, </b></p> </td> </tr> <tr style='height:14.25pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2012</b></p> </td> <td width="11" valign="bottom" style='width:8.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b> </b></p> </td> <td width="92" valign="bottom" style='width:69.3pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2011</b></p> </td> </tr> <tr style='height:14.25pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'><b>Deferred tax assets:</b></p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="11" valign="bottom" style='width:8.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:14.25pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:8.75pt;text-autospace:ideograph-numeric ideograph-other'>Net operating loss carry forwards</p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $   6,511,000</p> </td> <td width="11" valign="top" style='width:8.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $   8,105,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:8.75pt;text-autospace:ideograph-numeric ideograph-other'>Research and development credits</p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>        686,000 </p> </td> <td width="11" valign="bottom" style='width:8.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>        806,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:8.75pt;text-autospace:ideograph-numeric ideograph-other'>Allowance for doubtful accounts</p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>            8,000 </p> </td> <td width="11" valign="bottom" style='width:8.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>            8,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:8.75pt;text-autospace:ideograph-numeric ideograph-other'>Accrued expenses</p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          51,000 </p> </td> <td width="11" valign="bottom" style='width:8.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          40,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:8.75pt;text-autospace:ideograph-numeric ideograph-other'>Deferred income</p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>        132,000 </p> </td> <td width="11" valign="bottom" style='width:8.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>          29,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:8.75pt;text-autospace:ideograph-numeric ideograph-other'>Depreciation</p> </td> <td width="92" valign="bottom" style='width:69.3pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>        298,000 </p> </td> <td width="11" valign="bottom" style='width:8.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>        217,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:11.0pt;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>      7,686,000 </p> </td> <td width="11" valign="bottom" style='width:8.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>      9,205,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:8.75pt;text-autospace:ideograph-numeric ideograph-other'>Less valuation allowance</p> </td> <td width="92" valign="bottom" style='width:69.3pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>    (7,686,000)</p> </td> <td width="11" valign="bottom" style='width:8.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>    (9,205,000)</p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:8.75pt;text-autospace:ideograph-numeric ideograph-other'>Net deferred tax assets</p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>                -   </p> </td> <td width="11" valign="bottom" style='width:8.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>                -   </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:11.0pt;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="11" valign="bottom" style='width:8.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'><b>Deferred tax liabilities</b></p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="11" valign="bottom" style='width:8.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:8.75pt;text-autospace:ideograph-numeric ideograph-other'>Depreciation</p> </td> <td width="92" valign="bottom" style='width:69.3pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>                -   </p> </td> <td width="11" valign="bottom" style='width:8.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>                -   </p> </td> </tr> <tr style='height:15.0pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:11.0pt;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="11" valign="bottom" style='width:8.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.75pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'><b>Net deferred taxes</b></p> </td> <td width="92" valign="bottom" style='width:69.3pt;border:none;border-bottom:double windowtext 2.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $              -   </p> </td> <td width="11" valign="bottom" style='width:8.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;border:none;border-bottom:double windowtext 2.25pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $              -   </p> </td> </tr> <tr style='height:6.6pt'> <td width="308" valign="bottom" style='width:230.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:6.6pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:6.6pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="11" valign="bottom" style='width:8.2pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:6.6pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> <td width="92" valign="bottom" style='width:69.3pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:6.6pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> </table>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify;text-indent:.5in'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" width="354" style='width:265.5pt;margin-left:5.4pt;border-collapse:collapse'> <tr style='height:15.0pt'> <td width="214" valign="bottom" style='width:160.8pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'><b>Year Ending December 31, </b></p> </td> <td width="140" valign="bottom" style='width:104.7pt;border:none;border-bottom:solid windowtext 1.0pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> <tr style='height:15.0pt'> <td width="214" valign="bottom" style='width:160.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2013</b></p> </td> <td width="140" valign="bottom" style='width:104.7pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $     68,000 </p> </td> </tr> <tr style='height:15.0pt'> <td width="214" valign="bottom" style='width:160.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center;text-autospace:ideograph-numeric ideograph-other'><b>2014</b></p> </td> <td width="140" valign="bottom" style='width:104.7pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $     50,000 </p> </td> </tr> <tr style='height:15.75pt'> <td width="214" valign="bottom" style='width:160.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'><b> </b></p> </td> <td width="140" valign="bottom" style='width:104.7pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;background:white;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> $   118,000 </p> </td> </tr> <tr style='height:5.25pt'> <td width="214" valign="bottom" style='width:160.8pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:5.25pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'><b> </b></p> </td> <td width="140" valign="bottom" style='width:104.7pt;background:white;padding:0in 5.4pt 0in 5.4pt;height:5.25pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> </td> </tr> </table> </div>
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2011-09-27
On September 26, 2012, the Company and the Bank entered into a First Amendment to Loan and Security Agreement. The First Amendment extended the maturity date of the Agreement to September 25, 2013
1000000
The line of credit bears interest at the prime rate plus 1.75%, payable monthly.
The line of credit is collateralized by substantially all operating assets of the Company.
0
Maintain a ratio of quick assets to current liabilities minus deferred revenue of at least: 1.50 to 1.00 Maintain a tangible net worth equal to or greater than the sum of (i) $500,000, plus (ii) for each successive quarter, commencing as of the quarter ending December 31, 2011, 50% of net proceeds received by Company in the preceding quarter from bona-fide issuances of new equity or bridge financing which constitutes “subordinated debt”.
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The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement.
During 2012, no one customer accounted for more than 10% of the Company’s total revenues.
During 2011, two customers accounted for 23% (11% and 12%, respectively) of the Company’s total revenues.
1942000
2793000
During 2012, export sales to Japan were 12% of total revenues. During 2011, export sales to Germany were 14% of total revenues.
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Cimetrix warrants that software products will conform to published specifications and not fail to execute the Company’s programming instructions due to defects in materials and workmanship. If the Company is unable to repair or replace any product to a condition warranted within a reasonable time, the Company will provide a refund to the customer.
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