12. CAPITAL STOCK AND STOCK BASED COMPENSATION

12 Months Ended

Dec. 31, 2011

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

12. CAPITAL STOCK AND STOCK BASED COMPENSATION

The Company has authorized 250,000 shares of voting preferred stock without par value. No shares are issued or outstanding. Also, the Company has authorized 250,000 shares of non-voting preferred stock without par value. Of these, 125,000 shares have been designated Series A non-voting convertible preferred stock with a stated value of $.06 per share, of which no shares are issued or outstanding at December 31, 2011 and 2010, respectively.

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In June 2009, our Board of Directors adopted a Rights Agreement, which provides for one preferred share purchase right to be associated with each share of our outstanding common stock. Shareholders exercising these rights would become entitled to purchase shares of Series B Junior Participating Cumulative Preferred Stock. The rights are exercisable after the time when a person or group of persons without the approval of the Board of Directors acquire beneficial ownership of 20 percent or more of our common stock or announce the initiation of a tender or exchange offer which if successful would cause such person or group to beneficially own 20 percent or more of the common stock. Such exercise would ultimately entitle the holders of the rights to purchase at the exercise price, shares of common stock of the surviving corporation or purchaser, respectively, with an aggregate market value equal to two times the exercise price. The person or groups effecting such 20 percent acquisition or undertaking such tender offer would not be entitled to exercise any rights. These rights expire during July 2012.

On October 11, 1995, we adopted the 1995 Stock Option Plan which provides for the issuance of options to purchase up to 400,000 common shares. In May 1998, we adopted the Amended and Restated 1995 Stock Option Plan which provides for the issuance of options to purchase up to an additional 500,000 common shares. In addition in May 2002, our shareholders approved the issuance of a total of 400,000 additional common shares of our stock under the 1995 Stock Option Plan. All employees, officers, directors, consultants and advisors providing services to us are eligible to receive options under the Plans. On May 11, 2004 our shareholders approved the 2004 Stock Incentive Plan. The 2004 Stock Incentive Plan includes 750,000 of our common shares that may be granted for stock options and restricted stock awards. As of December 31, 2011, the Company is authorized to issue 347,823 options under the 2004 Stock Incentive Plan; no options can be granted under the amended and restated 1995 Stock Option Plan.

The plans generally provide for grants with the exercise price equal to fair value on the date of grant, graduated vesting periods of up to 5 years, and lives not exceeding 10 years.

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The following summarizes stock option transactions from January 1, 2010 through December 31, 2011:

	Number of Options			Weighted Average Exercise  Price		Weighted Average Remaining Actual Term		Aggregate Intrinsic Value
Outstanding at December 31, 2009		335,250		$	18.25
Issued		-		$	-
Exercised		(34,250	)	$	5.57
Forfeited		(69,000	)	$	18.81
Outstanding at December 31, 2010		232,000		$	19.95		0.9	$	167,753
Options exercisable at December 31, 2010		232,000		$	19.95		0.9	$	167,753
Unvested options at December 31, 2010		-		$	-		-	$	-
Outstanding at December 31, 2010		232,000		$	19.95
Issued		-		$	-
Exercised		(51,000	)	$	7.28
Forfeited		(81,000	)	$	26.25
Outstanding at December 31, 2011		100,000		$	21.31		0.4	$	-
Options exercisable at December 31, 2011		100,000		$	21.31		0.4	$	-
Unvested options at December 31, 2011		-		$	-		-	$	-

There were no options granted during the years 2011, 2010 or 2009.

During the years ended December 31, 2011, 2010 and 2009, a total of 51,000, 34,250 and 29,250 options were exercised with an intrinsic value of approximately $0.1 million, $0.2 million and $0.1 million, respectively. During the years ended December 31, 2011, 2010 and 2009, there were no options issued. During the year ended December 31, 2011, a total of 81,000 options were forfeited with a fair value of approximately $0.9 million. A total of 5,000 options vested during the year ended December 31, 2009 with zero fair value. No options vested during the years ended December 31, 2011 and 2010. At December 31, 2011 and 2010, there were no options unvested. For the twelve-month periods ended December 31, 2011 and 2010, there was no compensation expense related to stock option grants.

During the year ended December 31, 2011, we issued 12,208 shares of common stock to members of our Board of Directors. We recorded compensation expense of $122,500, which was the fair market value of the shares on the grant date. The shares are fully vested but cannot be sold for one year.

In May 2010, the Company completed a public offering of 1.8 million shares of common stock at a price of $8.40 per share. We received net proceeds from the offering of $14.1 million after deducting $0.9 million in underwriting discounts and $0.1 million in expenses. The proceeds were used to prepay amounts due under term loans with Laminar Direct Capital L.P. and Whitebox Hedged High Yield Partners, L.P. After the prepayment, principal under the term loans totaled $26 million in the aggregate. The term loans have an interest rate of 11.5% payable semi-annually over the five year term of the notes. In connection with this transaction, $0.2 million of prepayment fees and $0.2 million of non-cash charges related to deferred financing fees were incurred and have been reflected as a component of interest expense.