Share-Based Compensation

6 Months Ended

Jun. 30, 2011

Share-Based Compensation

Share-Based Compensation

(7) Share-Based Compensation

The Company follows FASB ASC Topic 718, Share-Based Payments, in which compensation expense is recognized only for share-based payments expected to vest. The Company recognized compensation expense related to stock options of $112,638 and $203,063 for the three and six month periods ended June 30, 2011, respectively, compared to $117,552 and $204,061 for the same periods of 2010.

As of June 30, 2011, there was approximately $751,000 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Company's stock option plans. That cost is expected to be recognized over a remaining weighted-average period of 2.3 years.

Stock Options and Stock Grants

During the six months ended June 30, 2011 and 2010, no shares of common stock were issued pursuant to option exercises. For the six months ended June 30, 2011, stock options exercisable for 524,500 shares of common stock were granted compared to 309,300 for the same period in 2010. For the six months ended June 30, 2011, stock options exercisable for 82,567 shares of common stock were forfeited compared to 58,125 shares for the same period in 2010.

Stock Appreciation Rights

During 2010 and 2009, the Company granted its outside directors stock appreciation rights (SARs) totaling 106,750 shares, under the Company's Amended and Restated 2006 Stock Appreciation Rights Plan. For the three and six month periods ended June 30, 2011, the recovery in valuation of the awards previously granted was ($20,616) and ($1,933), respectively, and was included in stock-based compensation expense. The same values for 2010 were ($30,296) and $38,779, respectively. The fair value of awards granted during the three and six months ended June 30, 2010 were $9,103 and $20,941, respectively, and was included in stock-based compensation expense for those periods. The SARs granted vested immediately and are payable upon a director's removal or resignation from the position of director. These awards are accounted for as liability awards, included in accrued expenses as of June 30, 2011 and 2010, and adjusted to fair value each reporting period. The fair value of the liability on June 30, 2011 is $79,224, compared to $81,157 on December 31, 2010.

As of June 30, 2011, the Company does not have any unvested restricted stock or performance shares outstanding.

The following table illustrates the various assumptions used to calculate the Black-Scholes option pricing model for stock options granted during the periods presented:

For the three months ended	June 30, 2011			June 30, 2010
Weighted-average risk-free interest rates:		2.66	%		2.97	%
Dividend yield:		—			—
Weighted-average expected life of the option:		7 Years			7 Years
Weighted-average expected stock price volatility:		74.00	%		79.05	%
Weighted-average fair value of the options granted:	$	0.88		$	1.25

For the six months ended	June 30, 2011			June 30, 2010
Weighted-average risk-free interest rates:		2.51	%		2.97	%
Dividend yield:		—			—
Weighted-average expected life of the option:		7 Years			7 Years
Weighted-average expected stock price volatility:		74.21	%		79.01	%
Weighted-average fair value of the options granted:	$	0.89		$	1.23