Stockholders' Equity

12 Months Ended

Dec. 31, 2011

Stockholders Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

18. Stockholders’ Equity

Stock Options

The Company has adopted GAAP USA which requires all stock-based payments to employees, including grants of employee stock options, to be recognized in the consolidated financial statements based on their grant-date fair values.

The Compensation Committee administers the stock-based plans. The exercise price for Incentive Stock Options (“ISO”) cannot be less than the fair value of the stock subject to the option on the grant date (110% of such fair value in the case of ISOs granted to a stockholder who owns more than 10% of the Company’s Common Stock). The exercise price of a Non-Qualified Stock Options (“NQSO”) shall be fixed by the Compensation Committee at whatever price the Committee may determine in good faith. Unless the Committee determines otherwise, options beginning with the 2007 Plan generally have a 4-year term with a 3-year vesting schedule. Unless the Committee provides otherwise, options terminate upon the termination of a participant’s employment, except that the participant may exercise an option to the extent it was exercisable on the date of termination for a period of time after termination. Officers, directors and employees of, and consultants to the Company, or any parent or subsidiary corporation selected by the Committee, are eligible to receive options under the Plan. Subject to certain restrictions, the Committee is authorized to designate the number of shares to be covered by each award, the terms of the award, the date on which and the rates at which options or other awards may be exercised, the method of payment, vesting and other terms.

The Company has applied the Black-Scholes model to value stock-based awards. That model incorporates various assumptions in the valuation of stock-based awards relating to the risk-free rate of interest to be applied, the estimated dividend yield and expected volatility of the Company’s Common Stock. The risk-free rate of interest is the U.S. Treasury yield curve for periods within the expected term of the option at the time of grant. The expected volatility is based on historical volatility of the Company’s Common Stock.

The valuation assumptions we have applied to determine the value of stock-based awards were as follows:

Historical stock price volatility: The Company used the weekly closing price to calculate historical annual volatility.

Risk-free interest rate: The Company bases the risk-free interest rate on the rate payable on US treasury securities in effect at the time of the grant.

Expected life: The expected life of the option represents the period of time options are expected to be outstanding. The Company uses an expected life of 2.8 years.

Dividend yield: The dividend yield is estimated to be 1.14%, based on the stock price at December 31, 2011.

Estimated forfeitures: When estimating forfeitures, the Company considers historical terminations as well as anticipated retirements.

The Company, at the discretion of the board, may issue options in excess of the total available, if options related to that stock plan are cancelled. In some cases, not all shares that are available to a stock plan are issued, as the Company is unable to issue options to a previous plan when a new plan is in place.

The Company’s pre-tax income for the fiscal year ended December 31, 2011 and 2010 includes approximately $134,000 and $131,000, respectively, of compensation costs related to share-based payments. As of December 31, 2011, there is $197,000 of unrecognized compensation expense related to non-vested stock option grants. We expect approximately $88,000, $59,000, $41,000 and $9,000 to be recognized during 2012, 2013, 2014 and 2015, respectively.

On March 19, 1999, the Board of Directors approved for adoption, effective May 6, 1999, the 1999 Stock Option Plan (“1999 Plan”). The 1999 Plan authorizes the grant of options to purchase up to an aggregate of 158,733 shares of the Company’s Common Stock. As of December 31, 2010, 148,223 options have been granted under the 1999 Plan and were fully vested at the time of grant. During 2010, 25,786 options were exercised and no options remain outstanding as of December 31, 2010.

On April 12, 2001, the Board of Directors approved for adoption, effective December 27, 2001, the 2001 Stock Option Plan (“2001 Plan”). The 2001 Plan authorizes the grant of options to purchase up to an aggregate of 119,050 shares of the Company’s Common Stock. As of December 31, 2011, 139,958 options (including cancelled shares re-issued under the Plan) have been granted and were fully vested at the time of grant; 7,500 remain outstanding. No options were exercised during 2011.

On April 24, 2002, the Board of Directors approved for adoption, effective October 12, 2002, the 2002 Stock Option Plan (“2002 Plan”). The 2002 Plan authorizes the grant of options to purchase up to an aggregate of 142,860 shares of the Company’s Common Stock. As of December 31, 2011, 123,430 options have been granted and were fully vested at the time of grant; 27,500 remain outstanding. No options were exercised during 2011.

On June 22, 2007, the Board of Directors approved for adoption, effective October 1, 2007, the 2007 Stock Incentive Plan (“2007 Plan”). The 2007 Plan authorizes the grant of options to purchase up to an aggregate of 150,000 shares of the Company’s Common Stock. On October 1, 2007, the company issued 74,000 options under the 2007 Plan. During 2008, the company issued an additional 77,500 options under the 2007 Plan. Under this plan, 46,000 options remain outstanding all of which are fully vested. During 2011, 40,000 options expired, 3,750 options were cancelled and 4,000 options were exercised.

Also under the 2007 Plan, in January 2010, the Company granted 14,250 restricted shares. During 2010, 7,125 shares had their restriction expire and the remaining 7,125 shares will have their restriction expire during 2011, the value of these shares were determined using the market value of the Company’s shares on the day the shares were issued.

On April 10, 2009, the Board of Directors approved for adoption, and on June 5, 2009, the shareholders of the Company approved the 2009 Stock Incentive Plan (“2009 Plan”). The 2009 Plan authorizes the issuance of up to 250,000 shares of stock or options to purchase stock of the Company. As of December 31, 2011, 82,000 options have been granted; 81,500 remain outstanding of which 5,625 are vested and 75,875 are not vested. During 2011, 500 options were cancelled and 8,000 options were granted. Of the total outstanding options, 22,500 have vesting schedule A, 29,000 have vesting schedule B, and 30,000 have vesting schedule C. Vesting schedules for the 2009 Plan are as follows:

Vesting Schedule A		Vesting Schedule B		Vesting Schedule C
25%	12 months	33%	24 months	50%	48 months
50%	24 months	67%	36 months	100%	57 months
75%	36 months	100%	48 months
100%	48 months

The following is a summary of options exercised during the years ended December 31:

	2011		2010
		Intrinsic		Intrinsic
	Shares	Value	Shares	Value
1999 Plan Options	-	$                -	25,786	$    15,333
2001 Plan Options	-	$                -	11,953	$     56,448
2002 Plan Options	-	$                -	1,000	$       2,630
2007 Plan Options	4,000	$        9,750	38,250	$   108,215

The following is a summary of the activity in the Company’s stock option plans and other options for the years ended December 31, 2011 and 2010, respectively:

	December 31, 2011		December 31, 2010
		Weighted Avg		Weighted Avg
	Shares	Exercise Price	Shares	Exercise Price
Exercisable, beginning of period	110,625	$3.36	180,269	$3.03
Granted	-	-	-	-
Vested	22,250	2.97	33,000	3.42
Exercised	(4,000)	2.49	(76,989)	2.80
Cancelled	(42,250)	4.78	(25,655)	2.78
Exercisable at the end of period	86,625	$2.61	110,625	$3.36

	December 31, 2011		December 31, 2010
		Weighted Avg		Weighted Avg
	Shares	Exercise Price	Shares	Exercise Price
Outstanding, beginning of period	202,750	$4.28	232,644	$3.04
Granted	8,000	5.96	74,000	6.19
Exercised	(4,000)	2.49	(76,989)	2.80
Cancelled	(44,250)	4.84	(26,905)	2.87
Outstanding at the end of period	162,500	$4.25	202,750	$4.61

At December 31, 2011, available options to grant were 87,500 under the 2009 Plan.

Significant option groups remained outstanding at December 31, 2011 and related weighted average grant date fair value, remaining life and intrinsic value information are as follows:

Options by	Options Outstanding							Options Vested
Grant Date		Shares	Wtd Avg	Remain. Life		Intrinsic Val	Shares		Wtd Avg	Remain. Life		Intrinsic Val
Dec 2005		35,000	$2.88	4.0	$	52,500	35,000	$	2.88	4.0	$	52,500
Oct 2008		2,500	$4.97	0.8	$	-	2,500	$	4.97	0.8	$	-
Nov 2008		43,500	$1.83	0.9	$	111,066	43,500	$	1.83	0.9	$	111,066
Dec 2010		73,500	$6.13	4.0	$	-	5,625	$	5.97	4.0	$	-
Jan 2011		8,000	$5.96	4.0	$	-	-	$	-	-	$	-
TOTAL		162,500	$4.25	3.1	$	163,566	86,625	$	2.61	2.3	$	163,566

Warrants

In February 2006, certain members of company management were issued warrants, which fully vested immediately, to purchase 303,030 shares of the Company’s Common Stock at an exercise price of $3.30 per share in consideration of their loaning the company $1,000,000. The fair value of the warrants granted on February 1, 2006, was $443,000 which was estimated at the date of grant using the Black-Scholes pricing model. On May 28, 2010, all of these warrants were exercised in exchange for note indebtedness.

On October 1, 2008, the Company issued warrants to purchase 20,000 shares of common stock of the Company to both John Schwan and Stephen M. Merrick exercisable at the price of $4.80 per share (the market price of the stock on the date of the warrants) in consideration for the personal guarantees by each of up to $2 million in principal amount of the bank debt of the Company. On May 28, 2010, Mssrs. Schwan and Merrick exercised these warrants in exchange for outstanding indebtedness of the Company to them.

The following is a summary of the activity of the Company’s warrants for the years ended December 2011 and 2010:

			Weighted			Weighted
			Avg			Avg
	Dec. 31,		Exercise	Dec. 31,		Exercise
	2011		Price	2010		Price
Outstanding and Exercisable, beginning of period	-	$	-	343,030	$	3.47
Granted	-		-	-		-
Exercised	-		-	(343,030)		3.47
Cancelled	-		-	-		-
Outstanding and Exercisable at the end of period	-	$	-	-	$	-