12. CAPITAL STOCK AND STOCK BASED COMPENSATION

12 Months Ended

Dec. 31, 2012

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

12. CAPITAL STOCK AND STOCK BASED COMPENSATION

The Company has authorized 250,000 shares of voting preferred stock without par value. No shares are issued or outstanding. Also, the Company has authorized 250,000 shares of non-voting preferred stock without par value. Of these, 125,000 shares have been designated Series A non-voting convertible preferred stock with a stated value of $.06 per share, of which no shares are issued or outstanding at December 31, 2012 and 2011, respectively.

In June 2009, our Board of Directors adopted a Rights Agreement, which provides for one preferred share purchase right to be associated with each share of our outstanding common stock. Shareholders exercising these rights would become entitled to purchase shares of Series B Junior Participating Cumulative Preferred Stock. The rights are exercisable after the time when a person or group of persons without the approval of the Board of Directors acquire beneficial ownership of 20 percent or more of our common stock or announce the initiation of a tender or exchange offer which if successful would cause such person or group to beneficially own 20 percent or more of the common stock. Such exercise would ultimately entitle the holders of the rights to purchase at the exercise price, shares of common stock of the surviving corporation or purchaser, respectively, with an aggregate market value equal to two times the exercise price. The person or groups effecting such 20 percent acquisition or undertaking such tender offer would not be entitled to exercise any rights. The Rights Agreement was renewed in June 2012 and expires in June 2017.

F-19

On October 11, 1995, we adopted the 1995 Stock Option Plan which provides for the issuance of options to purchase up to 400,000 common shares. In May 1998, we adopted the Amended and Restated 1995 Stock Option Plan which provides for the issuance of options to purchase up to an additional 500,000 common shares. In addition in May 2002, our shareholders approved the issuance of a total of 400,000 additional common shares of our stock under the 1995 Stock Option Plan. All employees, officers, directors, consultants and advisors providing services to us are eligible to receive options under the Plans. On May 11, 2004 our shareholders approved the 2004 Stock Incentive Plan. The 2004 Stock Incentive Plan includes 750,000 of our common shares that may be granted for stock options and restricted stock awards. As of December 31, 2012, the Company is authorized to issue 334,250 options under the 2004 Stock Incentive Plan; no options can be granted under the amended and restated 1995 Stock Option Plan.

The plans generally provide for grants with the exercise price equal to fair value on the date of grant, graduated vesting periods of up to 5 years, and lives not exceeding 10 years.

The following summarizes stock option transactions from January 1, 2011 through December 31, 2012:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Actual Term		Aggregate Intrinsic Value
Outstanding at December 31, 2010		232,000		$	19.95
Issued		-		$	-
Exercised		(51,000	)	$	7.28
Forfeited		(81,000	)	$	26.25
Outstanding at December 31, 2011		100,000		$	21.31		0.4	$	-
Options exercisable at December 31, 2011		100,000		$	21.31		0.4	$	-
Unvested options at December 31, 2011		-		$	-		-	$	-
Outstanding at December 31, 2011		100,000		$	21.31
Issued		-		$	-
Exercised		-		$	-
Forfeited		(90,000	)	$	20.97
Outstanding at December 31, 2012		10,000		$	24.36		1.0	$	-
Options exercisable at December 31, 2012		10,000		$	24.36		1.0	$	-
Unvested options at December 31, 2012		-		$	-		-	$	-

There were no options granted during the years 2012, 2011 or 2010.

During the years ended December 31, 2012, 2011 and 2010, a total of zero, 51,000 and 34,250 options were exercised with an intrinsic value of approximately zero, $0.1 million and $0.2 million, respectively. During the years ended December 31, 2012, 2011 and 2010, there were no options issued. During the year ended December 31, 2012, a total of 90,000 options were forfeited with a fair value of approximately $0.8 million. No options vested during the years ended December 31, 2012, 2011 and 2010. At December 31, 2012 and 2011, there were no options unvested. For the years ended December 31, 2012 and 2011, there was no compensation expense related to stock option grants.

F-20

During the year ended December 31, 2012, we issued 13,573 shares of common stock to members of our Board of Directors. We recorded compensation expense of $122,500, which was the fair market value of the shares on the grant date. The shares are fully vested but cannot be sold for one year.