Note 3 - Stockholders' Equity

3 Months Ended

Sep. 30, 2011

Stockholders' Equity Note Disclosure [Text Block]

Note 3. Stockholders’ Equity

 (a) Stock Compensation Plans

The Company’s 1999 Stock Incentive Plan (the “1999 Stock Incentive Plan”), as successor to the 1997 Stock Option Plan (the “1997 Stock Option Plan”), provided for options to purchase shares of the Company’s common stock to be granted to employees, independent contractors, officers, and directors. The plan expired in July 2009. Options were granted at an exercise price equivalent to the closing fair market value on the date of grant. All options were granted at the discretion of the Company’s Board of Directors and had a term not greater than 10 years from the date of grant. Options are immediately exercisable when vested and generally vest monthly over four years. On December 23, 2009, in connection with the Asset Sale, all stock options, except those held by non-employee Directors, were accelerated to be fully vested and exercisable. As a result of the termination of all employees on December 23, 2009, all unexercised stock options held by employees were cancelled on March 31, 2010 in accordance with the Asset Purchase Agreement. The only remaining outstanding options as of September 30, 2011 were those held by the Company’s directors.

The Company’s Board of Directors approved the 2010 Stock Incentive Plan (the “2010 Stock Incentive Plan”) in the fourth quarter of 2010. The 2010 Stock Incentive Plan provides for options, restricted stock, and other customary forms of equity to be granted to the Company’s directors, officers, employees, and independent contractors. All forms of equity incentive compensation are granted at the discretion of the Company’s Board of Directors and have a term not greater than 10 years from the date of grant.

The following table summarizes activities under the equity incentive plans for the indicated periods:

	Options Outstanding
	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Balances, December 31, 2010		229,000		$	2.52		5.2	$	4
Options cancelled and forfeited		-			-
Options exercised		-			-
Options granted		-			-
Balances, March 31, 2011		229,000			2.52		4.9	$	4
Options cancelled and forfeited		-			-
Options exercised		-			-
Options granted		-			-
Balances, June 30, 2011		229,000			2.52		4.7	$	4
Options cancelled and forfeited		(49,000	)		2.52
Options exercised		-
Options granted		-
Balances, September 30, 2011		180,000		$	2.52		5.7	$	3
Options vested and exercisable and expected to be vested and exercisable at September 30, 2011		180,000		$	2.52		5.7	$	3
Options vested and exercisable at September 30, 2011		180,000		$	2.52		5.7	$	3

At September 30, 2011, there were no options available for grant under the 1999 Stock Incentive Plan. On September 30, 2011, the Company had no unrecognized stock-based compensation expense under this Plan. There are 4.1 million shares reserved for equity awards under the 2010 Stock Incentive Plan, and the Company had no unrecognized stock option compensation expense under this Plan. At September 30, 2011, the Company had $94,000 of total unrecognized restricted stock compensation expense, net of estimated forfeitures, that will be recognized over the weighted average remaining period of 1.4 years.

The following table summarizes significant ranges of outstanding and exercisable options as of September 30, 2011:

		Options Outstanding, Vested and Exercisable
Exercise Prices		Number Outstanding, Vested and Exercisable		Weighted Average Remaining Contractual Life (in Years)		Weighted Average Exercise Price Per Share
$	0.70		20,000		7.8	$0.70
	1.24		20,000		6.8		1.24
	2.65		10,000		6.1		2.65
	2.67		20,000		5.8		2.67
	2.95		90,000		4.9		2.95
$	3.50		20,000		5.4		3.50
Total			180,000		5.7	$2.52

Employee stock-based compensation for the three and nine months ended September 30, 2011 and 2010 uses the Black-Scholes option pricing model for estimating fair value of options granted under the Company’s equity incentive plans. Risk-free interest rates for the options were taken from the Daily Federal Yield Curve Rates on the grant dates for the expected life of the options as published by the Federal Reserve. The expected volatility was based upon historical data and other relevant factors such as the Company’s changes in historical volatility and its capital structure, in addition to mean reversion. The expected forfeiture rate of employee stock options for 2011 and 2010 was calculated using the Company’s estimated terminations data.

In calculating the expected life of stock options, the Company determines the amount of time from grant date to exercise date for exercised options and adjusts this number for the expected time to exercise for unexercised options. The expected time to exercise for unexercised options is calculated from grant as the midpoint between the expiration date of the option and the later of the measurement date or the vesting date. In developing the expected life assumption, all amounts of time are weighted by the number of underlying options.

No options were granted or exercised in the three or nine months ended September 30, 2011. In the three months ended September 30, 2010, there were no options granted or exercised. In the nine months ended September 30, 2010, there were no options granted and 21,733 options exercised.