NOTE 8 - STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2011

Disclosure of Share-based Compensation Arrangements by Share-based Payment Award [Table Text Block]

NOTE 8 – STOCK-BASED COMPENSATION

Stock Incentive Plans

We have two long-term incentive plans that currently have outstanding stock options which we refer to as the 2000 Plan and the 2006 Plan. The 2000 Plan was terminated as to future grants when the 2006 Plan was approved by the stockholders in 2006.  As of June 30, 2011, we have reserved for issuance under the 2006 Plan 11,000,000 shares of common stock. Certain options granted under the 2006 Plan to employees are intended to qualify as incentive stock options under existing tax regulations. In addition, we may issue non-qualified stock options and warrants under the 2006 Plan from time to time to non-employees, in connection with acquisitions and for other purposes and we may also issue stock under the 2006 Plan. Stock options and warrants generally vest over two to five years and expire five to ten years from date of grant.

As of June 30, 2011, 4,449,917, or approximately 71.0%, of all the outstanding stock options and warrants under our option plans are fully vested.  During the six months ended June 30, 2011, we granted options and warrants to acquire 700,000 shares of common stock.

We have issued warrants outside the 2006 Plan under various types of arrangements to employees, and in exchange for outside services.  All warrants issued to employees or consultants after our February 2007 listing on the NASDAQ Global Market have been characterized as awards under the 2006 Plan.  All warrants outside the 2006 Plan have been issued with an exercise price equal to the fair value of the underlying common stock on the date of grant. The warrants expire from five to seven years from the date of grant.  Vesting terms are determined by the board of directors or the compensation committee of the board of directors at the date of grant.

As of June 30, 2011, 2,316,232, or approximately 92.5%, of all the outstanding warrants outside the 2006 Plan are fully vested.   During the six months ended June 30, 2011, we did not grant warrants outside of our 2006 Plan.

 The following summarizes all of our option and warrant transactions during the six months ended June 30, 2011:

Outstanding Options and Warrants Under the 2006 Plan and 2000 Plan	Shares			Weighted Average Exercise price Per Common Share		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value
Balance, December 31, 2010		5,661,000		$	3.65
Granted		700,000			3.05
Exercised		(51,250	)		1.38
Canceled or expired		(43,500	)		0.85
Balance, June 30, 2011		6,266,250			3.62	$	3.25	$	8,670,150
Exercisable at June 30, 2011		4,449,917			3.69	$	2.94		5,971,483

Non-Plan Outstanding Warrants	Shares			Weighted Average Exercise price Per Common Share		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value
Balance, December 31, 2010		2,717,898		$	2.24
Granted		-			-
Exercised		(215,000	)		2.24
Canceled or expired		-			-
Balance, June 30, 2011		2,502,898			2.58	$	1.53	$	4,822,905
Exercisable at June 30, 2011		2,316,232			2.43	$	1.58		4,780,373

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between our closing stock price on June 30, 2011 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holder had all option holders exercised their options on June 30, 2011. Total intrinsic value of options and warrants exercised during the six months ended June 30, 2011 and 2010 was approximately $605,650 and $923,000, respectively.  As of June 30, 2011, total unrecognized stock-based compensation expense related to non-vested employee awards was approximately $3.0 million, which is expected to be recognized over a weighted average period of approximately 1.6 years.

The fair value of each option granted is estimated on the grant date using the Black-Scholes option pricing model which takes into account as of the grant date the exercise price and expected life of the option, the current price of the underlying stock and its expected volatility, expected dividends on the stock and the risk-free interest rate for the term of the option. The following is the average of the data used to calculate the fair value:

	Risk-free	Expected	Expected	Expected
	Interest Rate	Life	Volatility	Dividends
June 30, 2011	2.03%	3.3 years	92.07%	-
June 30, 2010	2.26%	3.2 years	89.92%	-

Because we lack detailed information about exercise behavior at this time, we have determined the expected term assumption under the “Simplified Method” as defined in ASC Topic 718, originally issued as SAB No. 110. The expected stock price volatility is based on the historical volatility of our stock. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant with an equivalent remaining term. We have not paid dividends in the past and do not currently plan to pay any dividends in the near future.

The weighted-average grant date fair value of stock options and warrants granted during the six months ended June 30, 2011 and 2010 was $1.86 and $1.51, respectively.