SHAREHOLDERS EQUITY

12 Months Ended

Dec. 31, 2011

Shareholders' Equity [Abstract]

SHAREHOLDERS EQUITY

Note 6 – Stockholders' Equity

Preferred Stock

The Company has 2,000,000 authorized preferred shares of which none were issued and outstanding at December 31, 2011 and 2010, respectively.

Series C Redeemable Preferred Stock

The Company had issued 2,000 shares of its non-voting Series C Redeemable Preferred Stock (“Series C”).  The holders of Preferred Stock - C were entitled to dividends at the rate of 9-½% per annum, payable quarterly in arrears beginning October 1, 2005.  The Company had the option to redeem issued shares of Series C, in whole or in part, at any time, with the redemption price equal to the purchase price plus accrued and unpaid dividends.  For each share of Series C purchased, each investor received a warrant to purchase the number of shares of the Company's common stock equal to the exchange ratio of $1,000 price per share (“Price Per Share”) divided by 123% of the closing price per share of the Company's common stock on the trading day immediately prior to the date of issuance of the warrant.  Certain officers, directors and affiliates held 1,470 shares of the Series C.  As of December 31, 2011 and 2010 no warrants issued in connection with the Series C were outstanding.

During the year ended December 31, 2010, the Company paid dividends of $62,000 to holders of the Series C and redeemed the remaining 1,000 shares of the series C for $1,000,000.  At December 31, 2011 and 2010, no shares of the Series C remained outstanding.

Series D Redeemable Preferred Stock

The Board of Directors authorized the issuance of up to 1,500 shares of Series D Redeemable Preferred Stock (“Series D Preferred”) at $1,000 per share.  The holders of Series D Preferred were entitled to dividends, on a cumulative basis, at the rate of 9-1/2% per year, compounded and payable quarterly beginning on April 1, 2006.  The holders of Series D Preferred had preference in the payment of dividends and, in the event of liquidation, to all classes of capital stock of the Company except for the Series A, B and C Preferred Stock.  The Company sold 100 shares of Series D Preferred and received proceeds of $100,000.  The buyer was issued warrants to purchase 90,909 common shares at an exercise price of $2.03 per share in conjunction with the sale.  These warrants expired unexercised.  During the year ended December 31, 2010 the Company paid $6,000, of dividends to the holder of the Series D Preferred Stock.  During the year end December 31, 2010, the Company redeemed all of the 100 shares of Series D preferred Stock for $100,000.  At December 31, 2011 and 2010, no shares of Series D remained outstanding.

Common Stock, Options and Stock Grants

Year Ended December 31, 2011

During the year ended December 31, 2011, 73,000 restricted common shares with a fair value of approximately $60,000 based on the closing share price on the date of the grant vested and was recorded as stock-based compensation.  During the year ended December 31, 2011, the Company issued 17,000 common shares with a fair value of approximately $11,000 to a director in lieu of cash for director fees.  The Company also issued 350,000 shares to the former Chief Executive Officer on exercise of 350,000 options for $217,000.

Year Ended December 31, 2010

During the year ended December 31, 2010, the Company issued 270,000 restricted common shares with a fair value of $567,600 based on the closing share price on the date of the grant to certain officers under employment agreements.  The Company recorded stock based compensation of approximately $489,000 in 2010 related to these common shares.  The Company also issued 151,283 shares on exercise of 345,000 options on a cashless basis.  In addition, the Company considers 87,369 common shares held in deferred compensation accounts for directors issued and outstanding.

Common Stock Purchase

In September 2009, the Board of Directors adopted a plan to purchase a certain number of shares from options holders on the exercise of options to encourage the option holders to exercise their options and to provide the option holder with a method to have cash for the tax on the exercise.  The plan provides that the price to be paid for any shares purchased shall be the closing price of the common stock on the date of exercise.  Further the Company will only provide up to $300,000 for all such purchases for all option exercises in the aggregate in any twelve month period.  During the year ended December 31, 2011, the Company purchased no shares under the plan.  During the year ended December 31, 2010, the Company purchased 7,500 shares for a total of $8,000 from one of the Company's officers.

Stock Option Plans

The Company grants options under multiple stock-based compensation plans that do not differ substantially in the characteristics of the awards.  Nonqualified and incentive stock options have been granted to directors, officers and employees of the Company under the Company's Stock Option Plans.  Options generally vest over 3 years and expire five years from the date of the grant.  At December 31, 2011, 2,659,477 shares were authorized for issuance under the stock option plans.  Awards that expire or are cancelled without delivery of shares generally become available for issuance under the plans.  The Company issues new shares to satisfy stock option exercises.

The following is a summary of stock option activity for 2011 and 2010, relating to all of the Company's common stock plans (shares are in thousands):

				Weighted		Weighted Average		Aggregate
				Average		Remaining		Intrinsic
	Shares			Exercise		Contractual Term		Value
	(in thousands)			Price		(in years)		(in thousands)
Outstanding at January 1, 2010		770		$	0.68		2.0	$	250
Exercised		(345	)	$	0.56			$	41
Outstanding at December 31, 2010		425		$	0.78		2.0	$	60
Granted		78		$	1.19
Exercised		(350	)	$	0.62			$	28
Forfeited		(25	)	$	1.50
Outstanding at December 31, 2011		128		$	1.31		3.2	$	--
Exercisable at December 31, 2011		128		$	1.31		3.2	$	--

During the year ended December 31, 2011, the Company granted approximately 78,000 stock options with a weighted average grant date fair value of $0.72 per share.  There were no stock options granted during the year ended December 31, 2010.  The fair values of the stock options granted were estimated on the date of grant using the Black-Scholes option-pricing model that uses the following weighted-average assumptions for the year ended December 31, 2011:

Expected term	2.56 years
Expected volatility		105	%
Expected dividend yield		--
Risk-free interest rate		0.54	%

The following table summarizes stock option information as of December 31, 2011:

Outstanding Options
			Weighted Average
		Number Outstanding	Remaining	Options Exercisable
Exercise Prices		(in thousands)	Contractual Life	(in thousands)
$	1.50	50	1.2 years	50
$	1.20	55	4.5 years	55
$	1.15	23	4.6 years	23
Total		128	3.2 years	128

A total of approximately 2,660,000 shares of the Company's common stock are reserved for options, warrants and contingencies at December 31, 2011.  The total fair value of options vested during the years ended December 31, 2011 and 2010 was $55,000 and $0, respectively.  At December 31, 2011, there were no unrecognized compensation costs related to stock options outstanding.

Restricted Stock Grants

A summary of the status of the Company's non-vested stock grants as of December 31, 2011 and 2010 and changes during the year ended December 31, 2011 is presented below:

Non-Vested Shares	Shares (in thousands)			Weighted-Average Grant Date Fair Value
Non-vested at December 31, 2010		26		$	0.95
Granted		111		$	0.78
Vested		(73	)	$	0.83
Forfeited		(29	)	$	0.62
Non-Vested at December 31, 2011		35		$	0.93

The future expected expense for non-vested shares is $33,000 and will be recognized on a straight-line basis over the period January 1, 2012 through December 31, 2012.

Warrants

There were no warrants outstanding at December 31, 2011 and 2010, respectively.