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Note 7 - Shareholders' Equity
 12 Months Ended
Dec. 31, 2012
Stockholders' Equity Note Disclosure [Text Block]
Note 7 - Shareholders' Equity

a.           Preferred Stock

We have authorized 1,000,000 shares of preferred stock, with a par value of $0.10 per share.  At December 31, 2012, no preferred shares were issued or outstanding.

b.  
Common Stock

We have authorized 40,000,000 shares of common stock, with a par value of $0.10 per share.

In February 2012, we issued 16,271 shares of our common stock to our non-employee directors, valued at $77.  In May 2012, we issued 17,473 shares of our common stock to our non-employee directors, valued at $77.  In August 2012, we issued 24,311 shares of our common stock to our non-employee directors, valued at $77.  In November 2012, we issued 25,758 shares of our common stock to our non-employee directors, valued at $77.

In February 2011, we issued 11,276 shares of our common stock to our non-employee directors, valued at $77.  In May 2011, we issued 17,036 shares of our common stock to our non-employee directors, valued at $76.  In August 2011, we issued 15,981 shares of our common stock to our non-employee directors, valued at $77.  In November 2011, we issued 17,350 shares of our common stock to our non-employee directors, valued at $76.

c.  
Treasury Stock

At December 31, 2012 and 2011, we had 1,372,757 shares of treasury stock outstanding, valued at $7,658.

d.           Stock Options

We have various stock-based employee compensation plans, for which we follow the provisions of FASB’s guidance on share-based payments, which requires that compensation cost relating to share-based payment transactions be recognized in the financial statements.  The cost is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity award).

Our shareholders have approved various equity-based plans that permit the grant of stock options, restricted stock and other equity-based awards. In addition, our shareholders have approved the grant of stock options outside of these plans.

In June 2004, shareholders adopted the 2004 Long-Term Incentive Plan (“LTIP”) pursuant to which we were authorized to issue up to 750,000 shares of common stock and grant stock options, restricted stock awards, stock appreciation rights and other stock-based awards.  Through shareholder approved amendments to the LTIP in 2006, 2008 and 2011, the total number of authorized under the LTIP increased to 2,900,000.

Stock options granted under the LTIP are either Incentive Stock Options (“ISOs”) or Non-Qualified Stock Options (“NQSOs”).  Key employees are eligible to receive ISOs and NQSOs; however, directors and consultants are eligible to receive only NQSOs. Most ISOs vest over a three- or five-year period and expire on the sixth or seventh anniversary of the grant date.  All NQSOs issued to non-employee directors vest immediately and expire on either the sixth or seventh anniversary of the grant date.  Some NQSOs issued to non-employees vest immediately and expire within three years; others have the same vesting characteristics as options given to employees. As of December 31, 2012, there were 2,113,488 stock options outstanding under the LTIP.

On December 19, 2005, we granted our former President and Chief Executive Officer, John, D. Kavazanjian, an option to purchase 48,000 shares of common stock at $12.96 per share outside of any of our equity-based compensation plans, subject to shareholder approval.  Shareholder approval was obtained on June 8, 2006.  The stock option is fully vested and expires on June 8, 2013.

On March 7, 2008, in connection with his becoming employed by us, we granted our Chief Financial Officer and Treasurer, Philip A. Fain, an option to purchase 50,000 shares of common stock at $12.74 per share outside of any of our equity-based compensation plans.  The option is fully vested and expires on March 7, 2015.

On December 30, 2010, pursuant to the terms of his employment agreement, we granted our President and Chief Executive Officer, Michael D. Popielec, options to purchase shares of common stock under the LTIP as follows: (i) 50,000 shares at $6.42, vesting in annual increments of 12,500 shares over a four-year period commencing December 30, 2011; (ii) 250,000 shares at $6.42, vesting in annual increments of 62,500 shares over a four-year period commencing December 30, 2011; (iii) 200,000 shares at $10.00, with vesting to begin on the date the stock reaches a closing price of $10.00 per share for 15 trading days within a 30-day trading period, with such vesting in annual increments of 50,000 shares over the four anniversary dates of that date; and (iv) 200,000 shares at $15.00, with vesting to begin on the date the stock reaches a closing price of $15.00 per share for 15 trading days within a 30-day trading period, with such vesting in annual increments of 50,000 shares over the four anniversary dates of that date.  All such options in items (i) and (ii) shall expire on December 30, 2017.  All such options in items (iii) and (iv) shall expire as of the later of December 30, 2017 and five years after the initial vesting commences, but in no event later than December 30, 2020.  The options set forth in items (ii), (iii) and (iv) were subject to shareholder approval of an amendment to the LTIP, which approval was obtained on June 7, 2011.

On January 3, 2011, pursuant to the terms of his employment agreement, we granted our President and Chief Executive Officer, Michael D. Popielec, an option to purchase 50,000 shares of common stock at $6.58 under the LTIP.  The option vests in annual increments of 12,500 shares over a four-year period commencing December 30, 2011.  The option expires on December 30, 2017.

In conjunction with FASB’s guidance for share-based payments, we recorded compensation cost related to stock options of $1,073 and $946 for the years ended December 31, 2012 and 2011, respectively.  As of December 31, 2012, there was $817 of total unrecognized compensation costs related to outstanding stock options, which is expected to be recognized over a weighted average period of 1.88 years.

We use the Black-Scholes option-pricing model to estimate fair value of stock-based awards.  The following weighted average assumptions were used to value options granted during the years ended December 31, 2012 and 2011:

   
Years Ended December 31,
 
   
2012
   
2011
 
             
Risk-free interest rate
    0.56 %     0.97 %
Volatility factor
    63.53 %     61.62 %
Dividends
    0.00 %     0.00 %
Weighted average expected life (years)
    3.91       3.78  
Forfeiture rate
    15.00 %     15.00 %

We use a Monte Carlo simulation option-pricing model to estimate the fair value of market performance stock-based awards.  The following weighted average assumptions were used to value market performance stock options granted during the year ended December 31, 2011.  There were no market performance stock options granted during the years ended December 31, 2012.

   
Year Ended
 
   
December 31,
 
   
2011
 
       
Risk-free interest rate
    2.74 %
Volatility factor
    63.78 %
Dividends
    0.00 %
Weighted average expected life (years)
    5.51  
Forfeiture rate
    0.00 %

We calculate expected volatility for stock options by taking an average of historical volatility over the past five years and a computation of implied volatility.  The computation of expected term was determined based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards and vesting schedules.  The interest rate for periods within the contractual life of the award is based on the U.S. Treasury yield in effect at the time of grant.  Forfeiture rates are calculated by dividing unvested shares forfeited by beginning shares outstanding.  The pre-vesting forfeiture rate is calculated yearly and is determined using a historical twelve-quarter rolling average of the forfeiture rates.

The following table summarizes data for the stock options issued by us:

Year Ended December 31, 2012
 
   
 
 
Number
of Shares
   
Weighted
Average
Exercise
Price
Per Share
   
Weighted
Average
Remaining
Contractual
Term
   
 
Aggregate
Intrinsic
Value
 
                         
Shares under option at beginning of year
    2,356,228     $ 8.34              
Options granted
    303,150       3.63              
Options exercised
    (28,000 )     4.09              
Options cancelled
    (419,890 )     9.88              
Shares under option at end of year
    2,211,488     $ 7.47       4.85     $ 3  
Vested and expected to vest as end of year
    1,969,185     $ 7.78       4.74     $ 2  
Options exercisable at end of year
    1,013,098     $ 7.64       3.45     $ 0  

Year Ended December 31, 2011
 
   
 
 
Number
of Shares
   
Weighted
Average
Exercise
Price
Per Share
 
             
Shares under option at beginning of year
    1,794,694     $ 9.71  
Options granted
    1,113,900       7.96  
Options exercised
    (18,500 )     3.94  
Options cancelled
    (533,866 )     12.30  
Shares under option at end of year
    2,356,228     $ 8.34  
Options exercisable at end of year
    989,972     $ 9.62  

The following table represents additional information about stock options outstanding at December 31, 2012:

Options Outstanding
   
Options Exercisable
 
 
 
 
 
Range of
Exercise Prices
 
 
Number of
Outstanding
at December 31, 2012
   
Weighted-
Average
Remaining
Contractual
Life
   
 
 
Weighted-
Average
Exercise Price
   
 
Number
Exercisable
at December 31, 2012
   
 
 
Weighted-
Average
Exercise Price
 
$  3.22-$  3.91
    310,750       5.17     $ 3.59       170,000     $ 3.91  
$  3.92-$  4.41
    262,750       5.50     $ 4.18       70,502     $ 4.41  
$  4.42-$  4.42
    310,000       5.94     $ 4.42       103,336     $ 4.42  
$  4.43-$  6.37
    93,600       4.75     $ 5.24       44,203     $ 5.17  
$  6.38-$  6.42
    300,000       5.00     $ 6.42       150,000     $ 6.42  
$  6.43-$  9.70
    184,166       4.30     $ 7.29       124,835     $ 7.54  
$  9.71-$12.00
    419,722       3.63     $ 10.62       219,722     $ 11.19  
$12.85-$12.96
    69,000       0.38     $ 12.93       69,000     $ 12.93  
$12.97-$13.48
    61,500       2.15     $ 13.34       61,500     $ 13.34  
$13.49-$15.00
    200,000       7.04     $ 15.00       -     $ 0.00  
                                         
$  3.22-$15.00
    2,211,488       4.85     $ 7.47       1,013,098     $ 7.64  

The weighted average fair value of options granted during the years ended December 31, 2012 and 2011 was $1.67 and $2.04, respectively.  The total intrinsic value of options (which is the amount by which the stock price exceeded the exercise price of the options on the date of exercise) exercised during the years ended December 31, 2012 and 2011 was $29 and $45, respectively.

FASB’s guidance for share-based payments requires cash flows from excess tax benefits to be classified as a part of cash flows from financing activities.  Excess tax benefits are realized tax benefits from tax deductions for exercised options in excess of the deferred tax asset attributable to stock compensation costs for such options.  We did not record any excess tax benefits in 2012 or 2011.  Cash received from option exercises under our stock-based compensation plans for the years ended December 31, 2012 and 2011 was $114 and $73, respectively.

e.
Warrants

On May 19, 2006, in connection with our acquisition of ABLE New Energy Co., Ltd., we granted warrants to acquire 100,000 shares of common stock.  The exercise price of the warrants was $12.30 per share and the warrants had a five-year term.  In January 2008, 82,000 warrants were exercised, for total proceeds received of $1,009.  In January 2009, 10,000 warrants were exercised, for total proceeds received of $123. In May 2011, the remaining outstanding warrants to acquire 8,000 shares of common stock expired without being exercised.

f.           Restricted Stock Awards

No restricted stock was awarded during the years ended December 31, 2012 and 2011.

During 2009, we issued 16,286 time-vested restricted stock awards to our executive officers.  The restrictions lapsed over a three-year period in equal installments, commencing on the first anniversary of the grant date (January 14, 2009).  As of December 31, 2012, 8,582 of these shares had vested, and 7,704 of these shares were forfeited.

The activity of restricted stock grants of common stock for the years ended December 31, 2012 and 2011 is summarized as follows:

         
Weighted Average
 
   
Number of Shares
   
Grant Date Fair Value
 
             
Unvested at December 31, 2010
    9,048     $ 11.94  
     Granted
    -       0.00  
     Vested
    (4,925 )     12.01  
     Forfeited
    (2,905 )     12.07  
Unvested at December 31, 2011
    1,218     $ 11.33  
     Granted
    -       0.00  
     Vested
    (1,218 )     11.33  
     Forfeited
    -       0.00  
Unvested at December 31, 2012
    -     $ 0.00  

We recorded compensation cost related to restricted stock grants of $8 and $(27) for the years ended December 31, 2012 and 2011, respectively.  As of December 31, 2011, we had $0 of total unrecognized compensation expense related to restricted stock grants. The total fair value of these grants that vested during the years ended December 31, 2012 and 2011 was $5 and $32, respectively.

g.           Reserved Shares

We have reserved 2,911,723 and 2,939,723 shares of common stock under the various stock option plans, warrants and restricted stock awards as of December 31, 2012 and 2011, respectively.