Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation Plan

Stock-Based Compensation Plan

3 Months Ended

Mar. 31, 2013

Stock-Based Compensation Plan [Abstract]

NOTE 12. STOCK-BASED COMPENSATION PLAN

Under the Company’s 2005 Stock Incentive Plan (the “2005 Plan”), the Board of Directors has flexibility to determine the type and amount of awards to be granted to eligible participants, who must be employees, directors, officers or consultants of the Company or its subsidiaries. The 2005 Plan allows for grants of incentive stock options, nonqualified stock options, restricted stock awards, stock appreciation rights, and restricted units. The aggregate number of shares of common stock that may be granted through awards under the 2005 Plan to any employee in any calendar year may not exceed 500 shares. The 2005 Plan will continue in effect until June 2015 unless terminated sooner.

During the three months ended March 31, 2013, the Company issued 33 stock options, under the Company’s 2005 Plan, to employees of the Company, which options granted will vest in three installments as follows: 13 shall vest on December 31, 2015 and the remaining shares shall vest equally on December 31, 2016 and December 31, 2017.

For computing the fair value of the stock-based awards, the fair value of each option grant has been estimated as of the date of grant using the Black-Scholes option-pricing model with the following assumptions:


Options Granted During the Three Months Ended March 31, 2013

Number of options		33
Option vesting period		5 Years
Grant price		$8.02 - $8.20
Dividend yield		0.00%
Expected volatility (a)		54.8% - 55.2%
Risk-free interest rate		1.25% - 1.40%
Expected life (years) (b)		6.95
Weighted average fair value		$4.46 - $4.51

(a)

Since the Company’s historical volatility was not representative of the ongoing future business, the Company’s historical volatility was based on a combination of the Company’s volatility and the historical volatility of a peer group of companies within similar industries and similar size as the Company.

(b)	Because the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term for these grants, the Company utilized the simplified method in developing an estimate of the expected term of these options.

Using these assumptions, the fair value of the stock options granted during the three months ended March 31, 2013 was $146, which will be amortized over the vesting period of the options.

During the three months ended March 31, 2013, the Company awarded 3 shares of common stock to an employee. At the date the awards were issued the common stock was valued at $7.85 per share.

The total non-cash stock compensation expense related to restricted stock, stock options, and stock awards recorded by the Company during the three months ended March 31, 2013 and 2012, respectively, was as follows:


	Three Months Ended
	March 31, 2013		March 31, 2012

Restricted stock	$	-	$	203
Stock options		345		201
Stock awards		25		-
Total	$	370	$	404

The fair value of unvested restricted stock awards is determined based on the market price of our shares of common stock on the grant date. As of March 31, 2013, there were 1,198 unvested stock options and unrecognized compensation cost of $3,510 related to unvested stock options, as well as 750 unvested restricted stock awards for which the compensation cost has been fully recognized.

- Definition

Tabular disclosure of components of a stock option or other award plan under which equity-based compensation is awarded to employees, typically comprised of the amount of unearned compensation (deferred compensation cost), compensation expense, and changes in the quantity and fair value of the shares (or other type of equity) granted, exercised, forfeited, and issued and outstanding pertaining to that plan. Disclosure may also include nature and general terms of such arrangements that existed during the period and potential effects of those arrangements on shareholders, effect of compensation cost arising from equity-based payment arrangements on the income statement, method of estimating the fair value of the goods or services received, or the fair value of the equity instruments granted, during the period, cash flow effects resulting from equity-based payment arrangements and, for registrants that accelerate vesting of out of the money share options, reasons for the decision to accelerate.

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