STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2011

STOCK-BASED COMPENSATION [Abstract]

STOCK-BASED COMPENSATION

2. STOCK-BASED COMPENSATION

The Company accounts for compensation expense associated with stock options based on the fair value of the options on the date of grant.

The Company's net income for the three and six months ended June 30, 2011 includes approximately $655,000 and $942,000, respectively, of non-cash compensation expense related to the Company's stock options.  The Company's net income for the three and six months ended June 30, 2010 includes approximately $357,000 and $497,000, respectively, of non-cash compensation expense related to the Company's stock options.  The non-cash compensation expense related to all of the Company's stock-based compensation arrangements is recorded as a component of selling, general and administrative expenses.

The estimated fair value of each option award granted was determined on the date of grant using the Black-Scholes option valuation model.  The following weighted-average assumptions were used for the options granted during the three and six months ended June 30, 2011 and 2010:

	2011	2010
Risk-free interest rate	2.1% and 2.1%, respectively	2.5% and 2.6%, respectively
Expected volatility	101% and 101%, respectively	97% and 97%, respectively
Dividend yield	0%	0%
Expected option term	5 years	5 years

A summary of the status of the Company's stock option plans as of June 30, 2011 and changes during the six months ended June 30, 2011 is as follows:

Fixed Options	Options			Weighted average Exercise  Price		Weighted average remaining contractual  term (in years)		Aggregate IntrinsicValue
Outstanding at beginning of period		780,333		$	6.68
Granted		80,000			14.90
Exercised		(137,000	)		3.00
Outstanding and expected to vest, at end of period		723,333		$	8.28		3.07	$	3,969,574
Vested at end of period		708,333		$	8.32		2.81	$	3,607,141

As of June 30, 2011, there was $65,061 of unrecognized compensation cost related to non-vested stock option awards which will be amortized through March 2012.

Options to acquire 25,000 shares and 55,000 shares of common stock were granted on January 1, 2011 and April 1, 2011, respectively, to members of our board of directors as part of their normal compensation.

During the six months ended June 30, 2011, 117,000 stock options were exercised for cash resulting in proceeds to the Company of $251,950.  During the same period an additional 20,000 options were exercised, pursuant to provisions of the stock option plan.  The Company received no cash and 11,423 shares of its common stock in exchange for the 20,000 shares issued in the exercise.  The 11,423 shares that the Company received were valued at $159,000, the fair market value of the shares on the date of exercise, and were added to treasury stock.

The intrinsic value of all options exercised during the six months ended June, 30, 2011 and 2010 was approximately $1,514,000 and $12,000, respectively.