Note 3 - Stock-Based Compensation

3 Months Ended

Mar. 31, 2014

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

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

3. Stock-Based Compensation

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

The Company accounts for stock-based awards in accordance with FASB ASC 718, Stock Compensation. ASC 718 requires companies to record compensation expense for the value of all outstanding and unvested share-based awards, including employee stock options.

For the three months ended March 31, 2014 and 2013, there were no stock options granted under the Company’s option plan. The Company recognized $8,000 and $55,000 in stock-based compensation expense for the three months ended March 31, 2014 and 2013, respectively, related to issued options.

Stock options to purchase 1,040,000 and 1,705,001 shares of common stock were outstanding as of March 31, 2014 and 2013, respectively.

The Company uses the Black-Scholes 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 three months ended March 31, 2014:

	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)
Options outstanding as of December 31, 2013		1,070,000	$	1.58		1.97
Granted		-		-		-
Exercised		30,000		1.60		-
Canceled/expired/forfeited		-		-		-
Options outstanding as of March 31, 2014		1,040,000		1.58		1.74
Options exercisable as of March 31, 2014		900,000		1.60		1.35

As of March 31, 2014, $64,000 of total unrecognized compensation cost related to stock options was expected to be recognized over a weighted average period of 2.5 years.