Note L - Employee Benefit Plans

12 Months Ended

Dec. 31, 2012

Notes

Note L - Employee Benefit Plans

NOTE L – EMPLOYEE BENEFIT PLANS

The Company offers a SIMPLE IRA plan for all eligible employees.  Employees meeting certain eligibility requirements can participate in the plan.  Under the plan, the Company matches employee contributions to the plan up to 3% of the employee’s salary.  

The Company made matching contributions of 1% totaling $3,513 and $3,374, respectively, during the years ended December 31, 2012 and 2011.

STOCK BASED COMPENSATION

The Company does not have a written employee stock option plan.  The Company has historically granted only employee stock options with an exercise price equal to the market price of the Company’s stock at the date of grant, a contractual term of ten years, and a vesting period of three years ratably on the first, second and third anniversaries of the date of grant (with limited exceptions).

All employee stock options granted during 2012 and 2011 were nonqualified stock options.  Stock-based compensation is measured at the grant date, based on the calculated fair value of the option, and is recognized as an expense on a straight-line basis over the requisite employee service period (generally the vesting period of the grant).    

The fair values of the granted options are estimated at the date of grant using the Black-Scholes option pricing model.  In addition to the exercise and grant date prices of the options, certain weighted average assumptions that were used to estimate the fair value of stock option grants in the respective periods are listed in the table below:

	2012			2011
Risk free interest rate		2.04	%		.71	%
Expected lives (in years)		5			5
Expected volatility		187	%		163	%
Dividend yield		0	%		0	%

The following table shows total stock-based compensation expense included in the Consolidated Statements of Operations and the effect on basic and diluted earnings per share for the years ended December 31:

	2012		2011
Stock-based compensation expense		$     3,411		$     2,558
Impact on income per share:
Basic		$              -		$              -
Assuming dilution		$              -		$              -

At December 31, 2012 there was $4,863 of unrecognized stock-based compensation that is expected to be recognized as an expense over a weighted-average period of 5.6 years.