Stockholders' Equity

3 Months Ended

Mar. 31, 2012

Stockholders' Equity [Abstract]

Stockholders' Equity

3.  Stockholders' Equity

Common Stock

Warrant and stock option exercises in the first three months of 2012 and 2011 resulted in proceeds of $582,940 and $5,079,851, respectively, and in the issuance of 323,883 and 3,424,634 shares of common stock, respectively.

Stock Options and Warrants

The Company records compensation expense associated with share based awards granted to employees at the fair value of the award on the date of grant.  The expense is recognized over the period during which an employee is required to provide services in exchange for the award.

The Company's 2008 Equity Compensation Plan (the "Plan") allows for the grants of options, restricted stock, stock units, stock appreciation rights and/or performance awards to officers, directors, consultants and employees.  Under the Plan, the maximum number of shares of stock that may be granted to any one participant during a calendar year is 1,000,000 shares.  Options to purchase shares of common stock are granted at exercise prices not less than 100% of the fair market value on the dates of grant.  The term of the options range from ten to eleven years and they vest in varying periods.  In May 2011, the shareholders approved an amendment to the Plan to increase the maximum number of shares authorized for issuance by 2,000,000 to 13,500,000 from 11,500,000.  As of March 31, 2012, the Plan had 1,635,397 shares available for grant.  The number of shares available for grant does not take into consideration potential stock awards that could result in the issuance of shares of common stock if certain performance conditions are met, discussed under "Stock Awards" below.  Stock option exercises are satisfied through the issuance of new shares.

A summary of stock option activity under the Plan as of March 31, 2012, and the changes during the three months then ended is as follows:

	Number of  Shares			Weighted Average Exercise  Price ($)		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value ($)
Outstanding at December 31, 2011		7,785,672			1.21
Granted		121,000			2.59
Exercised		(78,333	)		1.17
Cancelled		(109,039	)		4.56
Outstanding at March 31, 2012		7,719,300			1.18		6.6		13,866,313
Exercisable at March 31, 2012		6,480,096			1.09		6.2		14,706,589

During the first three months of 2012 and 2011 the Company granted options to purchase a total of 121,000 and 75,000 shares of its common stock, respectively.  The options were granted at weighted average exercise prices of $2.59 and $1.58 in 2012 and 2011, respectively.  All options were granted at exercise prices which equaled the fair value of the Company's common stock on the dates of the grants.

Total recognized compensation expense for stock options was approximately $238,000 and $230,000 for the first three months of 2012 and 2011, respectively.  As of March 31, 2012, there was approximately $874,000 of total unrecognized compensation cost related to nonvested outstanding stock options that is expected to be recognized over a weighted average period of approximately 1.7 years.

The per share weighted average fair value of options granted during the first three months of 2012 and 2011 were estimated as $1.33 and $0.82 on the date of grant using the Black-Scholes option pricing model based on the assumptions noted in the table below.  Expected volatilities are based on the historical volatility of the Company's stock price.  The weighted average expected life is based on both historical and anticipated employee behavior.

	March 31,
	2012			2011
Risk-free interest rate		0.8	%		2.2	%
Annualized volatility		61.0	%		59.0	%
Weighted average expected life, in years		5.0			5.0
Expected dividend yield		0.0	%		0.0	%

In the first quarter of 2012, 245,550 warrants with an exercise price of $2.00 were exercised resulting in proceeds to the Company of $491,100.  In the first quarter of 2011, 3,242,134 warrants with an exercise price of $1.50 were exercised resulting in proceeds to the Company of $4,863,201.  Warrants to purchase a total of 9,829,734 shares of common stock were outstanding at March 31, 2012.  The weighted average exercise price of the warrants was $1.65.

The weighted average exercise price of the stock options and warrants outstanding at March 31, 2012 and 2011 was $1.45 and $1.42, respectively.

Stock Awards

The employment agreements with the Chief Executive Officer, Chief Financial Officer and other members of executive management include stock-based incentives under which the executives could be awarded shares of common stock upon the occurrence of various triggering events.  As of March 31, 2012, potential future performance awards under these agreements totaled approximately 65,000 shares of common stock.  There were 35,000 and 72,727 shares awarded under these agreements in the first three months of 2012 and 2011, respectively.

At times, the Company makes discretionary grants of its common stock to members of management and other employees in lieu of cash bonus awards or in recognition of special achievements.   Discretionary grants of common stock totaled 60,000 and 136,267 shares in the first three months of 2012 and 2011, respectively.

Expense is recognized on a straight line basis over the vesting period and is based on the fair value of the stock on the grant date.  The fair value of each stock award is determined based on the number of shares granted and the market price of the Company's common stock on the date of grant.  Expense recognized in connection with performance and discretionary stock awards was approximately $262,000 and $241,000 in the first three months of 2012 and 2011, respectively.

A portion of the shares vested in the first three months of 2012 were net-share settled such that the Company withheld shares with value equivalent to the employees' minimum statutory obligation for the applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities. The total shares withheld were 11,165, and were based on the value of the shares on their vesting date as determined by the Company's closing stock price. Total payments for the employees' tax obligations to the taxing authorities were $28,916 and are reflected as a financing activity within the Consolidated Statements of Cash Flows. These net-share settlements had the effect of share repurchases by the Company as they reduced the number of shares that would have otherwise been issued as a result of the vesting and did not represent an expense to the Company.

In addition to the shares granted to members of management and employees, directors can elect to receive all or a portion of their annual compensation in shares of Company common stock in lieu of cash.  Expense is recognized on a straight line basis over the one year period that the compensation is earned.  Expense recognized for stock-based compensation to directors was $11,625 in each of the three month periods ended March 31, 2012 and 2011.

As of March 31, 2012, a total of 120,768 shares previously granted as performance or discretionary awards were unvested and 28,012 shares granted to directors were unvested.  As of March 31, 2012, there was approximately $52,000 of total unrecognized compensation cost related to nonvested stock awards that is expected to be recognized over a weighted average period of approximately 10 months.  The weighted average fair value of the shares granted in the first three months of 2012 and 2011 was $2.59 and $1.58 per share, respectively.

Long Term Incentive Program

On May 17, 2011, the Board of Directors of the Company approved a new long term incentive program for the benefit of its executive officers.  Pursuant to the long term incentive program, the Company's executive officers were awarded stock options and performance stock units with a value targeted at the median level of the Company's peer group as disclosed in its 2011 definitive proxy statement.  Two thirds of that value for each officer is delivered in the form of stock options and one third of that value is delivered in the form of performance stock units.  A total of 317,000 options were granted on May 17, 2011 under this program.  The stock options (i) have a ten-year term, (ii) have an exercise price equal to the closing price of the Company's common stock, as reported on AMEX, on the date of grant ($1.66), (iii) vest in quarterly installments over three years, and (iv) were otherwise granted on the same standard terms and conditions as other stock options granted pursuant to the Plan.  The performance stock unit awards made to the executive officers will be vested and convert into actual shares of the Company's common stock based on the Company's attainment of certain performance goals measured over the three-year period beginning January 1, 2011 and ending December 31, 2013 and the executive officer's continued employment with the Company through that period.  Each performance criterion has levels of achievement designated as threshold, target and maximum with 50% of the performance stock units vesting if the threshold level is achieved; 100% of the performance stock units vesting if the target level is achieved and 150% of the performance stock units vesting if the maximum level is achieved.  A total of 182,000 performance stock units were awarded at the target level.  In the event that the actual performance level achieved does not meet threshold performance (i.e., less than 50%) for an applicable performance measure, then no performance stock units will be earned and vested for that performance measure.  Threshold level performance may be achieved for one performance measure and not another based on the Company's actual performance during the three year performance period.  As of March 31, 2012, no expense has been recognized in connection with the performance stock units as the defined performance goals are not yet considered probable of achievement.