Note 19 - Stock Option Plans

12 Months Ended

Dec. 31, 2011

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

19. Stock Option Plans

We have had various shareholder-approved stock option plans for employees and directors under which we have granted non-qualified and incentive stock options. Options granted under these plans must be at a price per share not less than the fair market value per share of common stock on the date the option is granted. The options generally vest over a one to four year period and typically expire ten years from the date of grant. Shares for option exercises are issued from authorized and unissued shares.

At our June 2006 Annual Meeting, the stockholders approved the adoption of the 2006 Stock Based Incentive Compensation Plan (as amended, the “2006 Plan”). All employees and directors, as well as certain consultants, are eligible to receive grants under the 2006 Plan. Allowable grants under the 2006 Plan include stock options, phantom stock, stock appreciation rights, restricted stock and deferred stock. Options granted under the 2006 Plan have a ten-year term and an exercise price equal to the market price of the common stock on the date of the grant. The 2006 Plan replaced our older stock option plans and, initially, had 3,426,000 shares authorized for issuance. At December 31, 2011, we had reserved approximately 3,065,000 shares for future grants under the 2006 Plan.

Compensation expense is calculated each quarter for consultants using the Black-Scholes option pricing model, until the option is fully vested. Based upon options issued to consultants, we recognized a compensation benefit of $1,400 in 2011, a compensation benefit of $6,000 in 2010, and compensation expense of $43,000 in 2009. These amounts are included in general and administrative and research and development expenses.

For 2011, we recognized share-based compensation cost of approximately $1,411,000, which consisted of $1,333,000 in general, and administrative expenses, and $78,000 in research and development expenses. For 2010 we recognized share-based compensation cost of approximately $689,000, which consisted of $601,000 in general, and administrative expenses and $88,000 in research and development expenses. For 2009, we recognized share-based compensation costs of $378,000, which consisted of $270,000 in general, and administrative expense and $108,000 in research and development expenses. We did not capitalize any share-based compensation cost.

As of December 31, 2011, there was $1,136,000 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the stock option plans. That cost is expected to be recognized over a weighted-average period of approximately 1 year.

For 2011, 2010 and 2009, we estimated the fair value of each option award on the date of grant using the Black-Scholes model. We utilized the risk-free interest rate for periods equal to the expected term of the option based upon U.S. Treasury securities in effect at the time of the grant. We have no present intention of declaring any dividends. We based expected volatility on historical volatility. Option forfeiture rates are based on our historical forfeiture rates. We estimated the expected term of stock options using historical exercise experience.

The following table shows the weighted average assumptions we used to develop the fair value estimates for employee and director stock options:

	2011			2010			2009
Expected volatility		60	%		59	%		52	%
Expected dividends		0			0			0
Expected term (in years)		7.0			6.0			6.0
Risk-free rate		1.8	%		1.9	%		1.9	%
Forfeiture rate - employees		25	%		20	%		20	%
Forfeiture rate – officers and directors		0	%		0	%		0	%

The total fair value of shares vested during 2011, 2010 and 2009 was approximately $758,000, $385,000 and $378,000, respectively. The weighted average grant-date fair value of the 1,774,417 options that vested during 2011 was $.43 per share. The total intrinsic value, which represents the difference between the underlying stock’s market price and the option’s exercise price, of options exercised during 2011, 2010 and 2009 was $479,000, $42,000 and $498,000, respectively. The aggregate intrinsic value for all fully vested shares at December 31, 2011 was $58,000.

The weighted average grant-date fair value per share of non-vested options as of December 31, 2011 and 2010 was $.43 and $.41, respectively. Total non-vested options as of December 31, 2011 and 2010 were 3,805,084 and 5,548,251, respectively. Of the total non-vested options at December 31, 2011, approximately 3,755,000 are expected to vest.

Cash received from option exercises under all share-based payment arrangements for 2011, 2010 and 2009 was approximately $420,000, $73,000, and $331,000, respectively. No tax benefit was realized from option exercises of the share-based payment arrangements for 2011, 2010 and 2009. During 2011, stock options were modified for certain former officers and directors, extending their exercise period. Total incremental expense associated with the modifications was $391,000, of which $350,000 represented options held by the Levys. During 2010, certain options were modified for former officers and/or directors whereby the period of time to exercise was extended from 3 months to 12 months. Total incremental expense associated with these modifications was $67,000 of which $48,000 represented options held by Jay Levy.

The following summarizes activity for options granted to directors, employees and consultants:

	Options			Weighted Average Exercise Price		Options Exercisable at End of Year		Weighted Average Exercise Price		Weighted Average Grant-date Fair Value
Outstanding January 1, 2009		4,864,315		$	1.37		3,475,285	$	1.34
Granted		731,000			0.63						$	0.31
Forfeited		(116,500	)		1.50
Exercised		(629,900	)		0.53
Expired		(66,000	)		0.81
Outstanding December 31, 2009		4,782,915		$	1.37		3,281,915	$	1.53
Granted		4,747,000		$	0.70						$	0.38
Forfeited		(98,000	)		1.85						$	1.29
Exercised		(158,600	)		0.46
Expired		(65,115	)		2.00
Outstanding December 31, 2010		9,208,200		$	1.03		3,659,949	$	1.48
Granted		875,000		$	0.90						$	0.50
Forfeited		(1,124,750	)		0.99						$	0.61
Exercised		(920,500	)		0.46
Expired		(10,000	)		0.40
Outstanding December 31, 2011		8,027,950		$	1.09		4,222,866	$	1.37

A summary of options outstanding and exercisable as of December 31, 2011, follows:

				Options Outstanding						Options Exercisable
Range of Exercise Price				Number Outstanding		Weighted Average Remaining Life (years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$	0.28	-	0.49		248,200		1.27	$	0.31		248,200	$	0.31
$	0.50	-	0.99		5,085,000		6.51		0.68		1,832,166		0.66
$	1.00	-	1.99		1,680,750		6.76		1.40		1,128,500		1.47
$	2.00	-	2.99		679,000		4.14		2.25		679,000		2.25
$	3.00	-	3.99		35,000		4.13		3.61		35,000		3.61
$	4.00	-	4.36		300,000		4.30		4.02		300,000		4.02
					8,027,950		6.11	$	1.09		4,222,866	$	1.37

Restricted Stock Awards

During 2009, 2010 and 2011, we granted restricted stock awards to certain officers and other employees, as well as directors, which vest six months to one year from their grant date. We recognized $69,000 of compensation expense during the year ended December 31, 2011 related to restricted stock awards. Stock compensation expense is recognized over the vesting period of the restricted stock. At December 31, 2011, we had $8,000 of total unrecognized compensation cost related to non-vested restricted stock, all of which will be recognized in 2012.

The following table summarizes restricted stock activity:

	Shares			Weighted Average Grant-Date Fair Value
Non-vested balance at January 1, 2009		178,961		$	1.28
Shares granted		60,000		$	0.80
Shares vested		(188,961	)		0.74
Shares forfeited		--			--
Non-vested balance at December 31, 2009		50,000		$	0.80
Shares granted		372,100		$	0.70
Shares vested		(231,450	)		0.72
Shares forfeited		(26,650	)		0.70
Non-vested Balance at December 31, 2010		164,000		$	0.70
Shares granted		40,000		$	1.24
Shares vested		(164,000	)		0.70
Shares forfeited		--			--
Non-vested Balance at December 31, 2011		40,000		$	1.24