Note 4 - Stock-based Compensation

9 Months Ended

Sep. 30, 2011

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

4. Stock-based Compensation – At September 30, 2011, we had two stock–based compensation plans in effect. We record compensation cost related to unvested stock option awards by recognizing the unamortized grant date fair value on a straight line basis over the service periods of each award. We have estimated forfeiture rates based on our historical experience.  Stock option compensation expense is recognized as a component of general and administrative expenses in the accompanying Consolidated Financial Statements.  We recorded $10,000 and $2,000 of stock-based compensation expense in the three months ended September 30, 2011 and 2010, respectively and $27,000 and $6,000 for the nine months ended September 30, 2011 and 2010, respectively. The estimated fair value of options granted is calculated using the Black-Scholes option pricing model with assumptions as previously disclosed in our 2010 Form 10-K.

As of September 30, 2011, there is $187,000 of unrecognized compensation cost related to stock options. During the quarter ended September 30, 2011, an aggregate of 72,500 options were granted to two executive officers pursuant to the 2003 Incentive Stock Plan.  In addition, during the nine month period ended September 30, 2011, an aggregate of 80,000 options were granted on March 1, 2011 under the terms of the 2003 Employee Stock Option Plan and 12,000 options were granted on May 26, 2011 to three independent members of our board pursuant to the 2011 Non-Employee Director Stock Option Plan.  All options were granted at fair market value on the date of grant.  No options were exercised during the three and nine month periods ended September 30, 2011.  A total of 16,000 options expired unexercised during the nine month period ended September 30, 2011.

The following table summarizes stock options as of September 30, 2011:

	# of Shares		Wgt Avg Exercise Price		Wgt Avg Remaining Contractual Life in Years		Aggregate Intrinsic Value
Outstanding at September 30, 2011		342,500	$	1.78		6.3	$	13,440
Vested at September 30, 2011		172,000	$	1.95		3.0	$	11,580

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the company’s closing stock price on the last trading day of the third quarter of 2011 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on September 30, 2011.  The amount of aggregate intrinsic value will change based on the fair market value of the company’s stock.