CAPITAL STOCK

9 Months Ended

Sep. 30, 2011

Notes to Financial Statements

CAPITAL STOCK

3. CAPITAL STOCK

The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model, with the following weighted average assumptions for options granted in the three and nine months ended September 30, 2010 and 2011.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2010		2011		2010	2011
Risk-free interest rate		N/A		0.85%	1.44%		0.99%
Expected lives		N/A		3.2 years	2.9 years		3.0 years
Expected volatility		N/A		75%	68%		82%
Expected dividend yield		N/A		0%	0%		0%

A summary of the Company's stock option plans, excluding options to purchase fractional shares resulting from the Company's December 2010 1-for-10 reverse stock split is as follows:

		Year Ended December 31, 2010					Nine Months Ended September 30, 2011
		Options		Weighted Average Exercise Price			Options	Weighted Average Exercise Price
Outstanding at beginning of period			1,291,634		$	11.846	1,341,876		$	11.003
	Granted at market		104,900		$	5.945	80,750		$	7.045
	Cancelled		(53,459	)	$	21.572	(73,613	)	$	12.706
	Exercised		(1,199	)	$	5.834	(3,330	)	$	4.748
Outstanding at end of period			1,341,876		$	11.003	1,345,683		$	10.688
Exercisable at end of period			1,142,209		$	11.871	1,152,925		$	11.497

The estimated fair value of stock options granted during the nine months ended September 30, 2011 and 2010 was computed to be approximately $298 thousand and $112 thousand, respectively. The amount is amortized ratably over the vesting period of the options. The per share weighted average estimated fair value of options granted during the nine months ended September 30, 2011 and 2010 was computed to be approximately $3.69 and $3.76, respectively. The total intrinsic value of options exercised during the nine months ended September 30, 2011 and 2010 was approximately $2 thousand and $2 thousand, respectively. The cash proceeds from options exercised during the nine months ended September 30, 2011 and 2010 were approximately $16 thousand and $7 thousand, respectively.

The following table summarizes information about stock options outstanding and exercisable at September 30, 2011, excluding outstanding options to purchase an aggregate of 121.9 fractional shares resulting from the Company's December 2010 1-for-10 reverse stock split with a weighted average remaining contractual life of 2.92 years, a weighted average exercise price of $13.19 and exercise prices ranging from $3.40 to $31.50. The Company intends to issue whole shares only from option exercises.

	Options Outstanding						Options Exercisable
Exercise Prices	Number of Options Outstanding at September 30, 2011		Weighted Average Remaining Contractual Life in Years		Weighted Average Exercise Price		Number of Options Exercisable at September 30, 2011		Weighted Average Exercise Price
$2.70 - $4.96		304,907		7.18	$	4.473		177,679		$	4.314
$4.97 - $8.70		249,472		4.77	$	7.193		196,015		$	7.282
$8.71 - $12.00		270,866		2.72	$	9.558		264,366		$	9.557
$12.01 - $15.90		269,457		3.34	$	13.543		269,019		$	13.542
$15.91 - $31.50		250,981		4.27	$	19.866		245,846		$	19.899
$2.70 - $31.50		1,345,683		4.52	$	10.688		1,152,925		$	11.497

As of September 30, 2011, there was approximately $518 thousand of total unrecognized compensation cost related to outstanding stock options. That cost is expected to be recognized over a weighted average period of 1.5 years, with approximately $102 thousand to be recognized in the three months ending December 31, 2011 and all the cost to be recognized as of September 2015, assuming all options vest according to the vesting schedules in place at September 30, 2011. As of September 30, 2011, the aggregate intrinsic value of outstanding options was approximately $1.6 million and the aggregate intrinsic value of exercisable options was approximately $1.0 million.