SHARE-BASED COMPENSATION

9 Months Ended

Sep. 30, 2012

SHARE-BASED COMPENSATION [Abstract]

SHARE-BASED COMPENSATION

5. SHARE-BASED COMPENSATION

Share-Based Compensation – Employees and Directors

For the three months ended September 30, 2012 and 2011, share-based compensation expense totaled approximately $6,000 and $51,000, respectively. For the nine months ended September 30, 2012 and 2011, share-based compensation expense totaled approximately $53,000 and $237,000, respectively.

There was no related income tax benefit recognized because our deferred tax assets are fully offset by a valuation allowance.

As of September 30, 2012, $57,000 of total unrecognized compensation cost related to restricted stock and restricted stock units is expected to be recognized over a weighted average period of approximately 1.36 years.

We determine the fair value of share-based awards at their grant date, using a Black-Scholes-Merton Option-Pricing Model applying the assumptions in the following table:

	Nine Months Ended September 30,
	2012		2011
Expected life (years)		-		2.5 years
Dividend yield		-		0.0	%
Expected volatility		-		93.6	%
Risk free interest rates		-		0.85% - 1.12%
Weighted average fair value of options at grant date		-	$	0.40

During the nine months ended September 30, 2012, 72,305 shares of restricted stock units were vested, 79,811 shares of restricted stock units were forfeited, 6,835 shares of restricted stock awards were forfeited, no options to purchase shares were granted or exercised, and options to purchase 2,165,094 shares were forfeited. At September 30, 2012, 1,658,166 options with average exercises prices of $0.51 were outstanding.