Note 5 - Stock Benefit Plans

9 Months Ended

Sep. 30, 2012

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

5.     Stock Benefit Plans

The Company grants stock options and other stock-based awards to employees, directors and consultants under two equity incentive plans, the 2004 Equity Incentive Plan and the 2006 Director Plan. As of September 30, 2012, the Company had an aggregate of 1.8 million shares of its common stock reserved for issuance under its 2004 Equity Incentive Plan, of which 104,500 shares were subject to outstanding options and other stock-based awards and 1.7 million shares were available for future grants of options and other stock-based awards. As of September 30, 2012, the Company had an aggregate of 0.4 million shares of its common stock reserved for issuance under its 2006 Director Plan, of which 64,924 shares were subject to outstanding options and other stock-based awards and 0.3 million shares were available for future grants of options and other stock-based awards.

Stock Benefit Plan Activities

Stock Options: A summary of option activity under all of the Company’s equity incentive plans as of September 30, 2012 and changes during the nine-month period then ended is as follows:

	Shares			Weighted Average Exercise Price		Weighted Average Contractual Term (Years)		Aggregate Instrinsic Value
Outstanding at December 31, 2011		94		$	31.89
Granted		3		$	-
Exercised		-		$	-
Forfeited		-		$	-
Expired		(32	)	$	37.80
Outstanding at September 30, 2012		65		$	30.54		7.51	$	-
Options vested and expected to vest at September 30, 2012		65		$	30.54		7.51	$	-
Options exercisable at September 30, 2012		42		$	31.70		6.82	$	-

The aggregate intrinsic value is calculated as the difference between the closing price of the Company’s common stock on the OTCQB Market and the exercise price of any underlying awards of shares subject to options that were in-the-money as of September 30, 2012. There were no options in-the-money as of September 30, 2012. As of September 30, 2012, the total unamortized stock-based compensation expense related to non-vested stock options, net of estimated forfeitures, was $0.2 million and this expense is expected to be recognized over a remaining weighted-average period of 1.6 years.

Restricted Stock: Restricted stock awards and restricted stock units (collectively, “restricted stock”) were granted under the Company’s 2004 Equity Incentive Plan and the 2006 Director Plan. As of September 30, 2012, there were 86,177 shares of service-based restricted stock awards and 18,250 shares of restricted stock units outstanding. The cost of restricted stock, determined to be the fair market value of the shares at the date of grant, is expensed ratably over the period the restrictions lapse or as specified in the grant agreements.

A summary of activity for restricted stock units as of September 30, 2012 and changes during the nine-month period then ended is as follows:

	Shares			Weighted Average Grant-Date Fair Value
Non-vested restricted stock units at December 31, 20111		17		$	0.010
Awarded		14		$	0.001
Vested		(13	)	$	0.010
Forfeited		-		$	-
Non-vested restricted stock units at September 30, 20121		18		$	0.010

(1) Non-vested restricted stock units at each period included shares to certain non-employee directors in which vesting will occur immediately if the relationship between the Company and the non-employee director ceases for any reason, subject in the case of a voluntary resignation to the consent of the Compensation Committee to the immediate vesting. These non-vested shares were recognized and fully expensed as stock-based compensation in the Condensed Statements of Income at the date of grant or the date of modification.

All restricted stock units issued prior to December 31, 2011 were awarded at the par value of $0.001 per share (adjusted to $0.01 per share to reflect the Reverse/Forward Split). As of September 30, 2012, the total unamortized stock-based compensation expense related to non-vested restricted stock units that is expected to vest, net of estimated forfeitures, was immaterial.

Stock-Based Compensation

The Company measures and recognizes stock-based compensation expense for all stock-based awards made to its employees, directors and consultants based on estimated fair values using a straight-line amortization method over the respective requisite service period of the awards and adjusted it for estimated forfeitures. In addition, the Company applies the simplified method to establish the beginning balance of the additional paid-in capital pool related to the tax effects of employee stock-based compensation, which is available to absorb tax shortfall.

Stock-based compensation expenses included in the Condensed Statements of Income for the three-month and nine-month periods ended September 30, 2012 and September 30, 2011 were as follows:

	Three-month Period Ended:				Nine-month Period Ended:
	September 30,				September 30,
	2012		2011		2012		2011
	(in thousands)				(in thousands)
Stock-based compensation expense by caption:
Selling, marketing and administrative	$	421	$	30	$	857	$	490
Stock-based compensation expense by award type:
Stock options	$	26	$	26	$	68	$	43
Retricted stock		395		4		789		447
Total	$	421	$	30	$	857	$	490

The stock-based compensation expense in the above table does not reflect any significant tax expense, which is consistent with the Company’s treatment of income or loss from its United States operations. For the three-month and nine-month periods ended September 30, 2012 and September 30, 2011, there were no income tax benefits realized for the tax deductions from option exercises of the stock-based payment arrangements. In addition, there were no stock-based compensation costs capitalized as part of an asset in the three-month and nine-month periods ended September 30, 2012 and September 30, 2011.

Valuation Assumptions

The Company uses the Black-Scholes option pricing model for determining the estimated fair value for all stock-based awards. No grants were made in the three-month period ended September 30, 2011. The fair value applied to the stock-based awards granted in the three-month and nine-month periods ended September 30, 2012 and 2011 were estimated using the following weighted average assumptions:

	Three-month Period Ended:					Nine-month Period Ended:
	September 30,					September 30,
	2012			2011		2012			2011
Expected life (in years)		1			-		1			4
Risk-free interest rates		0.2	%		-		0.2	%		1.5	%
Expected volatility		58	%		-		58	%		44	%
Dividend yield		-			-		-			-
Weighted average fair value of restricted stock	$	27.40			-	$	26.90		$	10.90