Note 3 - Share-Based Compensation

9 Months Ended

Sep. 30, 2013

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

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

3.             Share-Based Compensation

The Company maintains a stock option plan under which the Company may grant incentive stock options and non-qualified stock options to key employees and non-employee directors. Stock options have been granted with exercise prices at or above the current market price of the underlying shares of common stock on the grant date. Options vest and expire according to terms established at the grant date.

During the first nine months of 2013, there were 120,000 stock options granted under the stock option plan, compared to no stock options granted for the same period of 2012. The Company recognized $141,000 and $171,000 in share-based compensation expense in its condensed consolidated statements of income and comprehensive income for the nine months ended September 30, 2013 and 2012, respectively, related to previously issued options.

Stock options to purchase 1,415,000 and 1,796,669 shares of common stock were outstanding as of September 30, 2013 and 2012, respectively.

The Company uses the Black-Scholes-Merton option-pricing model to value the options. The Company uses historical data to estimate the life of the options. The risk-free interest rate for periods within the contractual life of the award is based on the U.S. Treasury yield curve in effect at the time of grant. The estimated volatility is based on historical volatility. The Company uses an estimated dividend payout of zero, as the Company has not paid dividends in the past and, at this time, does not expect to do so in the future.

The following table summarizes stock option activity during the nine months ended September 30, 2013:

	Options			Weighted Average Exercise  Price		Weighted Average Remaining Contractual Life (in years)
Options outstanding as of December 31, 2012		1,790,002		$	1.49		2.64
Granted at fair value		120,000			1.51		-
Exercised		(420,002	)		1.22		-
Canceled/expired/forfeited		(75,000	)		1.48		-
Options outstanding as of September 30, 2013		1,415,000			1.58		2.00
Options exercisable as of September 30, 2013		1,266,667			1.59		1.70

As of September 30, 2013, $80,000 of total unrecognized compensation cost related to stock options was expected to be recognized over a weighted average period of 2.7 years.