Stockholders' Equity

12 Months Ended

Dec. 31, 2011

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

Shareholders' Equity and Share-based Payments [Text Block]

6. Stockholders’ Equity

Stock Options

2009 Incentive Stock Plan

The Company sponsors an incentive stock plan (the “2009 Plan”) allowing for a maximum of 1,000,000 shares to be granted in the form of either incentive stock options, non-qualified stock options, restricted stock awards, or unrestricted stock awards. Employees, directors, advisors, and consultants of the Company are eligible to receive the grants. The plan has been approved by the stockholders of the Company. The Compensation Committee of the Board of Directors administers the plan.

The 2009 Plan provides that options may be issued under the plan at an option price not less than fair market value of the stock at the time the option is granted. Under the 2009 Plan, restricted stock of the Company may be granted at no cost to the grantee. The grantees are entitled to dividends and voting rights for their respective shares. Restrictions limit the sale or transfer of these shares during the requisite service period. In addition, the committee may grant or sell unrestricted stock at a purchase price to be determined by the committee.

Vesting terms and restrictions, if applicable, under the plan, are set by the committee and will be 10 years or less. The 2009 Plan expires in 2019. As of December 31, 2011, there were no grants under the 2009 Plan.

In January 2012, the Company issued stock option grants totaling 775,000 shares. These option grants contain exercise prices ranging from $1.20 to $1.32 per share with a five-year term. One half of the options granted have time vesting provisions ranging from one to 4.8 years while the remainder have vesting provisions that are contingent upon the Company achieving certain financial performance measurements. The aggregate estimated compensation cost related to the time vesting stock option grant is approximately $185,000 which will be recognized on a straight-line basis over the weighted requisite service periods. The aggregate estimated compensation related to the performance based options is also approximately $185,000; however, recognition is contingent upon performance vesting.

2003 Stock Option Plan

The Company sponsors a stock option plan (the “2003 Plan”) allowing for incentive stock options and non-qualified stock options to be granted to employees and eligible directors. The plan has been approved by the stockholders of the Company. The 2003 Plan provided that a maximum of 1,000,000 shares may be issued under the plan at an option price not less than the fair market value of the stock at the time the option is granted. The options vest pursuant to the schedule set forth for the plan. With stockholder approval of the 2009 Incentive Stock Plan, the Board of Directors resolved not to award any additional stock option grants under the 2003 Plan.

In 2005, the Company issued grants of 543,000 shares under the 2003 Plan. The 2005 option grants were issued with an exercise price equal to the fair value of the shares at the time of grant and were fully vested in the year of grant. These option grants precede the Company’s 2006 adoption of FASB ASC Topic 718, “Compensation-Stock Compensation.” Accordingly, no stock-based compensation expense has been recognized relating to the 2005 option grants.

In August 2007, the Company granted options to purchase 216,000 shares of common stock under the 2003 Plan. The options were issued with an exercise price of $9.74 which was equal to the fair value of the shares at the time of grant.

The fair value of the options granted in 2007 were estimated at the date of grant using a Black-Scholes option pricing model with the following weighted average assumptions: risk-free interest rate of 5.01%; dividend yield of 1.00%; volatility factor of the expected price of the Company’s stock of 0.472; an expected life of 4.5 years and a grant date fair value of $4.07 per share. The options have a term of five years and vest in increments of 25% beginning August 7, 2009 and ending May 1, 2012. Expense for stock options granted in 2007 is recognized on a straight-line basis separately for each vesting portion of the stock option award.

During 2008, the Company granted options to purchase 16,500 and 25,000 shares of common stock with exercise prices of $5.28 per share and $5.50 per share, respectively, and a grant-date fair value of $1.84 per share and $1.91 per share, respectively. The options’ exercise prices were equal to the fair value of the shares at the time of the grant.

The fair value of the options granted in 2008 were estimated at the date of grant using a Black-Scholes option pricing model with the following weighted average assumptions: risk-free interest rate of approximately 3.0%; dividend yield of 1.9%; volatility factor of the expected price of the Company’s stock of 0.447; and an expected life of 4.5 years. The options have a term of five years and vest in various increments ranging from one year to 4.67 years.

Compensation cost for the stock option plans was approximately $174,000 ($112,000 net of tax) and $190,000 ($124,000 net of tax) for the years ended December 31, 2011 and 2010, respectively, and has been recorded in selling, general, and administrative expense. As of December 31, 2011, the total remaining unrecognized compensation cost related to non-vested stock options totaled $64,000 ($40,000 net of tax), which will be amortized over the weighted remaining requisite service period of 0.5 years.

A summary of the Company’s stock option activity and related information for the years ended December 31 follows:

	2011					2010
	Options			Weighted Avg. Exercise Price		Options			Weighted Avg. Exercise Price
Outstanding beginning of the year		753,000		$	8.29		754,000		$	8.29
Granted		-					-
Exercised		-					-
Forfeited		(13,500	)		8.39		(1,000	)		9.74
Outstanding at end of year		739,500		$	8.29		753,000		$	8.29
Exercisable at end of year		683,000		$	8.22		642,375		$	8.12

		As of December 31, 2011
		Options Outstanding						Options Exercisable
Range of Exercise Prices		Number Outstanding		Weighted Avg. Remaining Life		Weighted Avg. Exercise Price		Number Exercisable		Weighted Avg. Remaining Life		Weighted Avg. Exercise Price
$5.28 - $5.50			41,500		1.67	$	5.41		33,250		1.67	$	5.45
$7.92			475,000		3.00		7.92		475,000		3.00		7.92
$8.68			30,000		3.79		8.68		30,000		3.79		8.68
$9.74			193,000		0.58		9.74		144,750		0.58		9.74
	$5.28 - $9.74		739,500		2.33	$	8.29		683,000		2.46	$	8.22

The aggregate intrinsic value of stock options outstanding and currently exercisable at December 31, 2011 was $-0-. Intrinsic value for stock options is calculated based on the exercise price of the underlying awards as compared to the quoted price of the Company’s common stock as of the reporting date.

For the years ended December 31, 2011 and 2010, no stock options were exercised.

Distributor Stock Purchase Plan

In November 1998, the Company established a Distributor Stock Purchase Plan (1998 Plan). The plan allows distributors who have reached the “Ambassador” status the opportunity to allocate up to 10% of their monthly compensation into the plan to be used to purchase the Company’s common stock at the current market value. The plan also states that at the end of each year, the Company will grant warrants to purchase additional shares of the Company’s common stock based on the number of shares purchased by the distributors under the plan during the year. The warrant exercise price will equal the market price for the Company’s common stock at the date of issuance. The warrants issued shall be in the amount of 25% of the total shares purchased under the plan during the year and the warrants are fully vested upon grant. This 10-year plan began in January 1999. As of December 31, 2011, all warrants issued under the 1998 Plan have been exercised, forfeited, or expired.

In July 2009, the Company established a new Distributor Stock Purchase Plan (2009 Plan) to replace the expired 1998 Plan. The 2009 Plan, which is similar to the 1998 Plan, commenced in August 2009. Since inception, a total of 31,565 have been issued under the 2009 Plan. The warrants are fully vested upon grant.

The Company records expense under the fair value method for warrants granted to distributors. Total expense recorded for these warrants was $8,895 and $3,370 in 2011 and 2010, respectively.

The fair value of the warrants was estimated at the date of grant using a Black-Scholes option pricing model with the following assumptions:

	Year ended December 31
	2011			2010
Expected warrant life (years)		3.0			3.0
Risk-free weighted average interest rate		0.37	%		1.02	%
Stock price volatility		0.509			0.549
Dividend yield		1.6	%		2.1	%

A summary of the Company’s warrant activity and related information for the years ended December 31 follows:

	2011					2010
	Warrants			Weighted Avg. Exercise Price		Warrants			Weighted Avg. Exercise Price
Outstanding beginning of the year		41,482		$	3.62		53,689		$	6.25
Granted		14,702			1.23		13,684			1.94
Exercised		-					-
Expired and forfeited		(24,619	)		4.60		(25,891	)		8.19
Outstanding at end of year		31,565		$	1.74		41,482		$	3.62
Exercisable at end of year		31,565					41,482

		As of December 31, 2011
		Warrants Outstanding						Warrants Exercisable
Range of Exercise Prices		Number Outstanding		Weighted Avg. Remaining Life		Weighted Avg. Exercise Price		Number Exercisable		Weighted Avg. Exercise Price
$1.23			14,702		3.00	$	1.23		14,702	$	1.23
$1.94			13,684		2.00		1.94		13,684		1.94
$3.28			3,179		1.00		3.28		3,179		3.28
	$1.94 - $3.28		31,565		2.37	$	1.74		31,565	$	1.74

The intrinsic value for stock warrants outstanding at December 31, 2011 was $-0-. For the years ended December 31, 2011 and 2010, no stock warrants were exercised.