Note 10 - Stock Based Compensation

12 Months Ended

Dec. 31, 2011

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

10. STOCK BASED COMPENSATION

At December 31, 2011, we have a stock incentive plan, administered by the Board of Directors, which provides for the granting of options and restricted shares to employees, officers, directors and other service providers. This Plan is described in more detail below. The compensation cost that has been charged against income for this Plan was $0.7 million, $1.6 million, and $1.1 million for the years ended 2011, 2010 and 2009, respectively. Of this amount, $228,000, $283,000 and $221,000 was recognized in connection with restricted stock and options granted to non-employees for the years ended 2011, 2010 and 2009, respectively.

Stock Options

The total number of shares authorized to be granted under the Plan was increased from 750,000 to an aggregate of 2,250,000 based on the proposal approved at the annual and special meeting of shareholders on May 30, 2007. On June 23, 2011, we held an annual and special meeting of shareholders. The proposal to increase the number of authorized shares under the Plan from 2,250,000 to 7,250,000 shares was approved at this meeting. The additional 5,000,000 shares approved by the stockholders are not available for stock option issuance at this time, as the Board of Directors has not authorized the filing of the related Registration Statement on Form S-8. Prior stock option plans, under which we may not make future grants, authorized a total of 1,650,000 shares, of which options for 1,028,725 common shares were granted (net of expirations) and options for 15,375 common shares are outstanding and unexercised at December 31, 2011. Options granted under the plans are granted with an exercise price equal to the fair value of a common share at the date of grant, have five-year or ten-year terms and typically vest over periods ranging from immediately to four years from the date of grant.  The estimated fair value of equity-based awards, less expected forfeitures, is amortized over the awards’ vesting period utilizing the graded vesting method.  Under this method, unvested amounts begin amortizing at the beginning of the month in which the options are granted.

In calculating compensation recorded related to stock option grants for the years ended December 31, 2011, 2010 and 2009, the fair value of each stock option is estimated on the date of grant using the Black-Scholes-Merton option-pricing model and the following weighted average assumptions:

	2011		2010		2009
Dividend yield	None		None		None
Expected volatility		94%		84%		82%
Risk-free interest rate		1.02%		1.83%		1.50%
Expected life (years)		7.10		5.75		5.72

The computation of expected volatility used in the Black-Scholes Merton option-pricing model is based on the historical volatility of our share price. The expected term is estimated based on a review of historical and future expectations of employee exercise behavior. The risk-free interest rates are based on a yield curve of interest rates at the time of the grant based on the contractual life of the option.

A summary of option activity under our equity-based compensation plans as of December 31, 2011, 2010 and 2009, and changes during the year then ended is presented below:

	2011									2010									'2009
						Weighted									Weighted									Weighted
				Weighted		Average							Weighted		Average							Weighted		Average
				Average		Remaining		Aggregate					Average		Remaining		Aggregate					Average		Remaining		Aggregate
				Exercise		Contractual		Intrinsic					Exercise		Contractual		Intrinsic					Exercise		Contractual		Intrinsic
	Shares			Price		Term		Value		Shares			Price		Term		Value		Shares			Price		Term		Value
Outstanding at January 1,		1,514,025		$	7.93		7.5	$	-		1,230,034		$	9.60		7.8	$	2,000		989,108		$	12.12		7.4	$	11,000
Granted		600,000		$	1.34						444,312		$	3.94						401,188		$	4.64
Exercised		-			-						-			-						-			-
Forfeited/expired		(549,201	)	$	7.41						(160,321	)	$	9.57						(160,262	)	$	12.80
Outstanding at December 31,		1,564,824		$	5.58		7.7		-		1,514,025		$	7.93		7.5		-		1,230,034		$	9.60		7.8	$	2,000
Exercisable at December 31,		807,360		$	8.91		6.2		-		669,872		$	10.96		6.3		-		554,854		$	12.12		6.6		-

As of December 31, 2011, 2010, and 2009 there was $479,000, $1.2 million, and $902,000, respectively, of total unrecognized compensation cost related to non-vested options granted under the plans. That cost is expected to be recognized over a weighted average period of four years for 2011, and one year for 2010, and 2009.  The total fair value of options vested during the years ended December 31, 2011, 2010, and 2009 was $2.2 million, $1.1 million, and $1.5 million, respectively.

No cash was received from stock option exercises for the years ended December 31, 2011, 2010 and 2009. The company issues shares from the registered stock incentive plan to satisfy the exercise of stock options and the conversion of stock awards.

A summary of the status of non-vested shares at December 31, 2011, 2010 and 2009 and changes during the year then ended, is presented below:

	2011					2010					2009
				Weighted					Weighted					Weighted
				Average					Average					Average
				Grant Date					Grant Date					Grant Date
	Shares			Fair Value		Shares			Fair Value		Shares			Fair Value
Non-vested shares at January 1,		844,153		$	5.17		675,180		$	7.52		512,707		$	11.68
Granted		600,000			1.34		444,312			3.94		401,188			4.64
Vested		(617,441	)		5.71		(201,660	)		8.52		(199,537	)		11.84
Forfeited/Expired		(69,265	)		5.72		(73,679	)		5.96		(39,177	)		10.60
Non-vested shares at December 31,		757,447		$	3.63		844,153		$	5.17		675,180		$	7.52

Non-vested shares relating to non-employees reflected in the table above include 17,187 shares outstanding at January 1, 2011, no shares granted, no shares exercised and 7,813 shares were vested during the year ended December 31, 2011, resulting in 3,124 non-vested shares outstanding at December 31, 2011. Non-vested shares relating to non-employees reflected in the table above include 29,583 shares outstanding at January 1, 2010, no shares granted, no shares exercised, and 40,000 shares vested during the year ended December 31, 2010, resulting in 17,187 non-vested shares outstanding at December 31, 2010. Non-vested shares relating to non-employees reflected in the table above include 49,875 shares outstanding at January 1, 2009, 6,250 shares granted, no shares exercised, and 26,542 shares vested during the year ended December 31, 2009, resulting in 29,584 non-vested shares outstanding at December 31, 2009. The intrinsic value of the options vested was $0 at December 31, 2011 and 2010.

Restricted Stock

Our stock incentive plan provides for the granting of other incentive awards in addition to stock options. During the year ended December 31, 2011 the Board of Directors did not approve the grant of any new restricted stock under the plan. However, due to the completion of the Share Subscription Agreement with Canon and the change in control, the vesting for the remaining 88,872 shares was accelerated.  Restricted shares have the same voting and dividend rights as our unrestricted common shares, vest over a two-year period and are subject to the employee’s or director’s continued service. Compensation cost for restricted stock is recognized in the financial statements on a pro rata basis over the vesting period.

A summary of the changes in restricted stock outstanding during the year ended December 31, 2011, 2010 and 2009, is presented below:

	2011					2010					2009
				Weighted					Weighted					Weighted
				Average					Average					Average
				Grant Date					Grant Date					Grant Date
	Shares			Fair Value		Shares			Fair Value		Shares			Fair Value
Non-vested shares at January 1,		210,996		$	2.16		76,624		$	4.64		41,077		$	9.08
Granted		-			-		177,744			1.80		95,529			4.16
Vested		(210,996	)		2.16		(43,372	)		5.10		(30,200	)		9.20
Forfeited/expired		-			-		-			-		(29,782	)		4.00
Non-vested shares at December 31,		-			-		210,996		$	2.16		76,624		$	4.64

As of December 31, 2011, there was no remaining unrecognized compensation expense because of the acceleration of vesting for the restricted stock. This was due to the change in control resulting from the completion of the Share Subscription Agreement with Canon.  As of December 31, 2010, and 2009 we had total unrecognized compensation expense of $228,000, and $225,000, respectively, net of estimated forfeitures, related to restricted stock.