Stock-Based Compensation

6 Months Ended

Jun. 30, 2013

Stock-Based Compensation [Abstract]

STOCK-BASED COMPENSATION

NOTE 9 – STOCK-BASED COMPENSATION

The Company has three stock-based compensation plans (the Plans), as described below.  Total compensation cost that was charged to income for those Plans totaled $29 and $50, respectively, for the three and six months ended June 30, 2013 and $4 and $10, respectively, for three and six months ended June 30, 2012.  The total income tax (expense) benefit was not material for the three or six months ended June 30, 2013 and 2012.

The Plans, which are stockholder-approved, provide for stock option grants and restricted stock awards to directors, officers and employees. The 1999 Stock-Based Incentive Plan, which expired July 13, 2009, provided 38,778 shares for stock option grants and 15,511 shares for restricted stock awards.  The 2003 Equity Compensation Plan (2003 Plan), as amended and restated, provided an aggregate of 100,000 shares for stock option grants and restricted stock awards, of which up to 30,000 shares could be awarded in the form of restricted stock awards.  The 2009 Equity Compensation Plan, which was approved by stockholders on May 21, 2009, replaced the 2003 Plan and provides 200,000 shares, plus any remaining shares available to grant or that are later forfeited or expire under the 2003 Plan, that may be issued as stock option grants, stock appreciation rights or restricted stock awards.  On May 16, 2013, stockholders approved the First Amendment to the 2009 Equity Compensation Plan to increase the number of shares of common stock reserved for awards thereunder to 1,500,000.

Stock Options

The Plans permit the grant of stock options to directors, officers and employees for up to 1,638,778 shares of common stock.  Option awards are granted with an exercise price equal to the market price of the Company’s common stock on the date of grant, generally have vesting periods ranging from one to three years, and are exercisable for ten years from the date of grant.  Unvested stock options immediately vest upon a change in control.

The fair value of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model that uses the assumptions noted in the table below.  Expected volatilities are based on historical volatilities of the Company’s common stock.  The Company uses historical data to estimate option exercise and post-vesting termination behavior.  Employee and management options are tracked separately.  The expected term of options granted is based on historical data and represents the period of time that options granted are expected to be outstanding, which takes into account that the options are not transferable.  The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.

There were no options granted during the three months ended June 30, 2013 and the three and six months ended June 30, 2012.  The fair value of the 30,000 options granted during the six months ended June 30, 2013 was determined using the following weighted‑average assumptions as of the grant dates as listed in the table below. 

	Three months ended	Six months ended
	June 30, 2013	June 30, 2013
Risk-free interest rate	1.32%	1.32%
Expected term (years)	7	7
Expected stock price volatility	80%	80%
Dividend yield	0%	0%

A summary of stock option activity in the Plans for the six months ended June 30, 2013 follows:

	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Intrinsic Value
Outstanding at beginning of year	234,696	$	4.29
Granted	30,000		1.50
Exercised	-		-
Expired	-		-
Cancelled or Forfeited	(24,290)		18.21
Outstanding at end of period	240,406	$	2.53	9.2	$	-
Expected to vest	227,410	$	1.34	9.4	$	-
Exercisable at end of period	12,996	$	23.48	5.0	$	-

During the six months ended June 30, 2013, there were 24,290 stock options canceled or forfeited.  Previously recognized expense associated with nonvested forfeited shares is reversed.

	Six months ended June 30,
	2013		2012
Weighted average fair value of options granted	$	1.08	n/a

As of June 30, 2013, there was $122 of total unrecognized compensation cost related to nonvested stock options granted under the Plans.  The cost is expected to be recognized over a weighted-average period of 1.6 years.  Substantially all of the 227,410 nonvested stock options at June 30, 2013 are expected to vest.

Restricted Stock Awards

The Plans permit the grant of restricted stock awards to directors, officers and employees. Compensation is recognized over the vesting period of the awards based on the fair value of the stock at grant date.  The fair value of the stock is determined using the closing share price on the date of grant and shares generally have vesting periods of one to three years.  There were 1,334,632 shares available to be issued, net of option awards under the Plans at June 30, 2013.  There were no shares of restricted stock issued during the three or six months ended June 30, 2013 and 2012.

A summary of changes in the Company’s nonvested restricted shares for the six months ended June 30, 2013 follows:

Nonvested Shares	Shares	Weighted Average Grant-Date Fair Value
Nonvested at January 1, 2013	1,400	$	6.61
Granted	-		-
Vested	-		-
Forfeited	(1,000)		7.25
Nonvested at June 30, 2013	400	$	5.00

There were no shares forfeited during the three months ended June 30, 2013 and 1,000 shares forfeited during the six months ended June 30, 2013, which resulted in the reversal of previously recognized expense associated with the nonvested shares. As of June 30, 2013, the total unrecognized compensation cost related to nonvested restricted shares granted under the Plans was immaterial.  There were no shares vested during the three or six months ended, June 30, 2013 and 2012.