(14) STOCK COMPENSATION PLANS

We implemented a stock option plan in September 1998, which expired in September 2008, and provided for the granting of stock options to officers, key employees and consultants. The objectives of this plan included attracting and retaining the best personnel, providing for additional performance incentives, and promoting our success by providing employees the opportunity to acquire common stock. Options outstanding under this plan were granted at prices either equal to or above the market value of the stock on the date of grant, typically vest over a four-year or five-year period and expire six or ten years after the grant date. Under this plan, we were authorized to grant options to purchase up to 900,000 common shares, and as of December 31, 2012 and 2011 we had outstanding exercisable options to purchase 78,500 shares and 89,750 shares, respectively.

In 2002, we implemented the 2002 Stock Option Plan, which expired in April 2012. The purpose of this plan was to advance our interests by providing an additional incentive to attract, retain and motivate highly qualified and competent persons who are key to the Company, including employees, consultants, independent contractors, officers and directors. Our success is largely dependent upon their efforts and judgment; therefore, by authorizing the grant of options to purchase common stock, we encourage stock ownership. Options outstanding under the plan were granted at prices either equal to or above the market value of the stock on the date of grant, expire six or ten years after the grant date and have vesting periods determined by the Compensation Committee of our Board of Directors. Under this plan, we were authorized to grant options to purchase up to 1,800,000 common shares, and as of December 31, 2012 and 2011 we had outstanding exercisable options to purchase 702,597 and 624,700 shares, respectively.

In April 2012, our Board of Directors adopted, and in September 2012 our shareholders approved, the Company's 2012 Stock Incentive Plan (the "2012 Plan"). The 2012 Plan permits the issuance of up to 1,000,000 shares of our common stock, subject to adjustment as provided for in the 2012 Plan, in connection with the grant of a variety of equity incentive awards, such as incentive stock options, non-qualified stock options, stock appreciation rights, dividend equivalent rights, restricted stock, restricted stock units, and performance shares. Officers, directors and executive, managerial, administrative and professional employees of the Company and its subsidiaries are eligible to participate in the 2012 Plan. Awards may be granted singly, in combination, or in tandem. As of December 31, 2012, no awards had been granted under the 2012 Plan. The 2012 Plan was amended and restated in March 2013 to clarify the plan administrator's authority to permit the vesting of unvested restricted shares in the event of the death of the grantee. The 2012 Plan will expire on April 5, 2022. Please see Footnote 22 of the Notes to Consolidated Financial Statements for additional discussions regarding the granting of shares from the 2012 Plan.

Activity in our stock option plans for the period from January 1, 2009 to December 31, 2012 is summarized below.

	1998 Plan					2002 Plan					2012 Plan
	Number of Shares			Weighted Average Option Exercise Price		Number of Shares			Weighted Average Option Exercise Price		Number of Shares		Weighted Average Option Exercise Price
Outstanding at January 1, 2010		124,599		$	15.88		736,951		$	12.03		-	$	-
Granted		-		$	-		109,500		$	3.59		-	$	-
Exercised		-		$	-		-		$	-		-	$	-
Cancelled		(34,849	)	$	23.74		(271,651	)	$	14.78		-	$	-
Outstanding at January 1, 2011		89,750		$	12.83		574,800		$	9.12		-	$	-
Granted		-		$	-		179,000		$	2.45		-	$	-
Exercised		-		$	-		-		$	-		-	$	-
Cancelled		-		$	-		(129,100	)	$	14.29		-	$	-
Outstanding at January 1, 2012		89,750		$	12.83		624,700		$	6.15		-	$	-
Granted		-		$	-		181,500		$	4.40		-	$	-
Exercised		-		$	-		(33,104	)	$	3.86		-	$	-
Cancelled		(11,250	)	$	13.54		(70,499	)	$	12.45		-	$	-
Outstanding at December 31, 2012		78,500		$	12.73		702,597		$	5.17		-	$	-

Options outstanding as of December 31, 2012 are exercisable as follows.

	1998 Plan				2002 Plan				2012 Plan
Options Exercisable at:	Number of Shares		Weighted Average Option Exercise Price		Number of Shares		Weighted Average Option Exercise Price		Number of Shares		Weighted Average Option Exercise Price

December 31, 2012		77,800	$	12.73		314,825	$	5.17		-	$	-
December 31, 2013		700	$	12.73		164,458	$	5.17		-	$	-
December 31, 2014		-	$	12.73		145,114	$	5.17		-	$	-
December 31, 2015		-	$	12.73		78,200	$	5.17		-	$	-
December 31, 2016		-	$	12.73		-	$	5.17		-	$	-
Thereafter		-	$	12.73		-	$	5.17		-	$	-
Total options exercisable		78,500				702,597				-

Prior to January 1, 2006, we accounted for the plans under the recognition and measurement provisions of stock-based compensation using the intrinsic value method prescribed by the APB and related Interpretation, as permitted by FASB issued guidance. Under these provisions, no stock-based employee compensation cost was recognized in the Statement of Operations as all options granted under those plans had an exercise price equal to or less than the market value of the underlying common stock on the date of grant.

Upon the exercise of options, the Company issues authorized shares.

Effective January 1, 2006, the Company adopted the fair value recognition provisions of FASB issued guidance using the modified-prospective-transition method. Under that transition method, compensation costs recognized during 2012 and 2011 include the following.

·	Compensation cost for all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of FASB issued guidance, and

·	Compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant-date fair-value estimated in accordance with the provisions of FASB issued guidance. Results for prior periods have not been restated, as they are not required to be by the pronouncement.

As a result of adopting FASB issued guidance on January 1, 2006, the Company's income from continuing operations before provision for income tax expense and net income for 2012 are lower by approximately $265,900 and $165,700, respectively, than if it had continued to account for share-based compensation under APB guidance.

As a result of adopting FASB issued guidance on January 1, 2006, the Company's loss from continuing operations before provision for income tax benefit and net loss for 2011 are higher by approximately $240,000 and $150,000, respectively, than if it had continued to account for share-based compensation under APB guidance.

Basic and diluted income per share for 2012 would have been $0.55, if the Company had not adopted FASB issued guidance, compared with reported basic and diluted income per share of $0.53.

Basic and diluted loss per share for 2011 would have been $0.03, if the Company had not adopted FASB issued guidance, compared with reported basic and diluted loss per share of $.05.

Because the change in income taxes receivable includes the effect of excess tax benefits, those excess tax benefits also must be shown as a separate operating cash outflow so that operating cash flows exclude the effect of excess tax benefits. FASB issued guidance requires the cash flows resulting from the tax benefits resulting from tax deductions in excess of the compensation cost recognized for those options (excess tax benefits) to be classified as financing cash flows.

The weighted average fair value of options granted during 2012, 2011 and 2010 estimated on the date of grant using the Black-Scholes option-pricing model was $1.45, $0.72 to $0.78 and $1.54 to $1.81, respectively.

The fair value of options granted is estimated on the date of grant using the following assumptions.

	December 31, 2012		December 31, 2011		December 31, 2010
Dividend yield		N/A		N/A		1.78% - 5.80%
Expected volatility		39.79%		35.21% - 39.08%		73.13% - 82.36%
Risk-free interest rate		0.28%		0.20% - 0.25%		0.99% - 1.33%
Expected life (in years)		4.45		4.29 - 4.35		3.06 - 3.78

Summary information about the Company's stock options outstanding at December 31, 2012 follows.

					Weighted Average		Weighted
	Range of		Outstanding at		Contractual		Average		Exercisable at
	Exercise Price		December 31, 2012		Periods in Years		Exercise Price		December 31, 2012
1998 Plan	$	8.67 - $16.59		78,500		0.71	$	12.73		77,800
2002 Plan	$	2.45 - $13.24		702,597		5.90	$	5.17		314,825
2012 Plan		N/A		-		N/A		N/A		-