3. Stock Options

9 Months Ended

Sep. 30, 2012

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

3.Stock-Based Compensation

The Company’s Amended and Restated 1996, 1997 and 2002 Stock Option Plans (the “Stock Option Plans”) provide for the issuance of non-qualified stock options to employees, officers and directors. The Company’s 2010 Equity Incentive Plan provides for the grant of stock options, stock appreciation rights, restricted stock, stock units, unrestricted stock, dividend equivalent rights and cash awards.  All plans are currently administered by the Compensation Committee of the Board, composed of independent Directors, with regard to the selection of persons to receive awards and the determination of the number of shares subject to each award and the terms, conditions, performance measures and other provisions of the award.

The Company has granted stock options under the Stock Option Plans to key employees and directors for valuable services provided to the Company.  Under the 1996 Plan, the Company authorized 260,000 shares, 259,000 of which have been granted.   The Company authorized 60,000 shares under the 1997 Plan, all of which have been granted.  Under the 2002 Stock Option Plan, the Company authorized 650,000 shares, 597,059 of which have been granted.  The 1996, 1997 and 2002 Plans remain in effect until such time as no shares of Stock remain available for issuance under the Plans and the Company and the person awarded options have no further rights or obligations under the Plans.  Under the 2010 Equity Incentive Plan, the Company authorized 500,000 shares, 79,500 of which have been granted as restricted stock units.  The ability to make awards under the 2010 Plan will terminate in May 2020.  Shares under all of the plans may be granted at not less than 100 percent of the fair market value at the grant date.  All outstanding options have a ten-year term from the date of grant.  Cancelled or expired options can be reissued.

The Company measures and recognizes compensation expense for all stock-based payments at fair value. The Company recognizes stock-based compensation costs on a straight-line basis over the requisite service period of the award, which is generally the option or restricted stock unit (RSU) vesting term. There were no stock options granted during the nine months ended September 30, 2012.  There were 79,500 RSU’s granted during the nine months ended September 30, 2012.  Stock based compensation expense relating to stock option awards for the nine months ended September 30, 2012 and 2011 was $55,409 and $72,883, respectively. Stock based compensation expense relating to RSU’s for the nine months ended September 30, 2012 and 2011 was $54,227 and $0, respectively. These expenses were included in the cost of sales and selling, general and administrative lines of the Consolidated Statements of Operations. Unamortized stock compensation expense as of September 30, 2012 relating to stock options totaled approximately $30,139 and these costs will be expensed over a weighted average period of 2.5 years. Unamortized stock compensation expense as of September 30, 2012 relating to RSU’s totaled approximately $267,667 and these costs will be expensed over a weighted average period of 3.0 years.

The following table summarizes stock option activity under the Stock Option Plans for the nine months ended September 30, 2012:

	2012
	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding at January 1, 2012		492,978		$	2.61		2.93	$	1,925,176
Granted		-			-		-		-
Exercised		(175,000	)		1.00		-		753,531
Forfeited or expired		(2,000	)		4.45		-		-
Outstanding at end of period		315,978		$	3.50		2.95	$	790,799
Exercisable at end of period		294,978		$	3.29		2.61	$	790,799
Nonvested at end of period		21,000		$	6.47		7.64	$	-

The following table summarizes RSU activity under the Stock Option Plans for the nine months ended September 30, 2012:

	Number of Shares		Weighted Average Grant Date Fair Value
Unvested restricted stock units at January 1, 2012		-	$	-
Granted		79,500		4.21
Forfeited		-		-
Vested		-		-
Unvested restricted stock units at September 30, 2012		79,500	$	4.21