Note 10 - Stock-Based Compensation

9 Months Ended

Sep. 30, 2011

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

10.   Stock-Based Compensation

We maintain the 2002 Equity Incentive Plan (the "Plan") for employees, outside directors and consultants.  At September 30, 2011, 444,819 options were outstanding under the Plan with exercise prices ranging from $0.04 to $4.80 per share.  The requisite service periods for the options to vest vary from six months to four years and the options expire ten years from the date of grant.  At September 30, 2011, 71,673 shares remained available for grant under the Plan, including forfeitures.

During the nine months ended September 30, 2011 and 2010, no options were granted.  

Compensation expense associated with stock options and restricted stock grants for the three and nine months ended September 30, 2011 was $196,000 and $557,000, respectively, and for the three and nine months ended September 30, 2010 was $217,000 and $673,000, respectively.  

			Weighted		Aggregate
	Number of		Average		Intrinsic
	Options		Exercise Price		Value of Options
Options outstanding at December 31, 2010		514,169	$	0.88
Options granted during the period		--		--		--
Options forfeited / expired during the period		--		--		--
Options exercised during the period		69,350		0.04		370,356
Options outstanding at September 30, 2011		444,819		1.01		1,953,230
Options exercisable at September 30, 2011		394,819		0.75		1,834,230

The weighted average remaining contractual life of the options outstanding under the Plan at September 30, 2011 was 3.10 years and for those outstanding options that were exercisable at September 30, 2011 was 2.58 years.

As of September 30, 2011, compensation costs related to non-vested awards under the Plan totaled $1.4 million for non-vested restricted shares and $0.1 million for non-vested options, which are expected to be recognized over a weighted average period of 2.3 years.

The compensation costs of restricted stock awards under the Plan were determined based on the fair value of our common stock on the date of grant and expensed over each award's respective vesting period.  Restricted stock vesting periods vary from immediate to four years from the date of grant.  63,088 shares of restricted stock awards were granted during the nine months ended September 30, 2011. 50,000 of such shares of restricted stock were granted with a fair value of $5.57 per share; 5,241 of such shares of restricted stock were granted with a fair value of $4.77 per share; 4,505 of such shares of restricted stock were granted with a fair value of $5.55 per share; and 3,342 of such shares of restricted stock were granted with a fair value of $7.48 per share.  

Below is a summary of restricted stock grant and vesting activity:

				Weighted
	Number of			Average
	Shares			Grant Date Fair Value
Non-vested stock at December 31, 2010		479,759		$	3.81
Stock granted during the period		63,088			5.60
Stock vested during the period		(96,482	)		3.87
Non-vested stock at September 30, 2011		446,365			4.05

Due to the passage of The American Jobs Creation Act and the subsequent IRS Section 409A rules, stock options that were issued at a strike price less than market value at the date of grant will now be considered deferred compensation by the IRS and the individual who was granted the options will incur adverse tax consequences, including, but not limited to excise taxes, unless the individual designated a specific future exercise date of the unvested stock options at December 31, 2004 and made this election before December 31, 2005.  As a result of the compliance with The American Job Creation Act, a summary of these designated future exercise dates is as follows:

Period of Exercise	Total Options to be Exercised
2011		3,125
2012		15,709
2013		1,250
Beyond 2013		2,500
Total Options		22,584