Note 8 - Long Term Incentive Plan

12 Months Ended

Dec. 31, 2012

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

8.           LONG-TERM INCENTIVE PLAN

Pursuant to the 2008 Long-term Incentive Plan (the "Plan"), the Company may grant stock options (non-qualified or incentive), stock appreciation rights, restricted stock and other share-based awards to employees, directors and other persons who serve the Company. The Plan is overseen by the Compensation Committee of the Board of Directors, which approves the timing and circumstances under which share-based awards may be granted. At December 31, 2012 there were 0.8 million shares available to be granted under the Plan. The Company issues new shares to satisfy the exercise or release of share-based awards. Under the provisions of Accounting Standards Codification Topic 718, Stock Compensation, all share-based payments are required to be recognized in the statement of operations based on their fair values at the date of grant.

The fair value of each option award is estimated using a Black-Scholes option valuation model. Expected volatility is based on the historical volatility of the price of the Company's stock. The risk-free interest rate is based on U.S. Treasury issues with a term equal to the expected life of the option. The Company uses historical data to estimate expected dividend yield, expected life and forfeiture rates. Options generally have a life of 10 years and have either time-based or performance-based vesting features. Time-based awards generally vest over a three year period, while the performance-based awards vest upon the achievement of specific performance targets. At December 31, 2012, there were 0.9 million options outstanding that will vest upon the achievement of certain financial conditions for 2013 or will expire if the performance criteria are not met. No expense was recognized for these awards. If in the future it is probable that these awards will be earned, the Company will commence recording an expense for them. The fair values of the options granted during the years ended December 31, 2012 and 2011, were estimated based on the following weighted average assumptions:

	2012			2011
Expected volatility		71.46	%		70.26	%
Risk-free interest rate		0.58	%		1.36	%
Expected dividend yield		0.00	%		0.00	%
Expected life (in years)		6.00			6.00
Estimated fair value per option granted	$	0.67		$	1.04

The following table presents a summary of the Company's stock options for the year ended December 31, 2012:

	Number of options			Weighted average exercise price		Weighted average remaining contractual life (years)		Aggregate intrinsic value
Outstanding at January 1, 2012		3,224,879		$	2.34
Granted		1,576,574			1.45
Exercised		(1,667	)		0.86
Forfeited and cancelled		(505,513	)		1.75
Outstanding at December 31, 2012		4,294,273			2.07		4.70	$	19,266
Exercisable at December 31, 2012		2,551,124			2.51		4.53	$	2,610

The aggregate intrinsic value of options exercised during the year ended December 31, 2012 and 2011 was approximately $1 thousand and $144 thousand, respectively.

The Company also grants restricted stock units, or RSUs, that entitle the holder to a share of Company common stock. The fair value of an RSU is equal to the market value of a share of common stock on the date of grant. All RSUs that are currently outstanding have time-based vesting features over a one to three year period.

The following table presents a summary of the Company's RSU activity for the year ended December 31, 2012:

	Shares			Weighted average grant date fair value
Nonvested at January 1, 2012		528,443		$	2.00
Granted		152,328			1.37
Vested		(327,216	)		1.96
Forfeited and cancelled		(10,394	)		2.21
Nonvested at December 31, 2012		343,161			1.76

In addition, the Company also has a Management Incentive Compensation Plan that entitles recipients to a combination of cash and equity awards based on achievement of certain performance and service conditions. During 2012 and 2011, there was no expense recognized because no amounts were earned under this plan.

The impact on the Company's results of operations of recording share-based compensation expense for the years ended December 31, 2012 and 2011 is as follows (in thousands):

	2012		2011
Cost of sales	$	75	$	101
Research and development		323		360
Selling, general and administrative		540		544
	$	938	$	1,005

As of December 31, 2012, there was approximately $0.7 million of total unrecognized share-based compensation cost related to stock options or RSUs granted under the Company's plans to employees or for services performed by non-employees that will be recognized over the next three years.