Accounting for Stock-Based Compensation

9 Months Ended

Sep. 30, 2011

Accounting for Stock-Based Compensation [Abstract]

Accounting for Stock-Based Compensation

5. Accounting for Stock-Based Compensation

We have one stock option plan under which we can issue both nonqualified and incentive stock options to employees, officers, consultants and scientific advisors of the Company. At September 30, 2011, the 2005 Stock Incentive Plan (the “2005 Plan”) provided for the issuance of options, restricted stock, restricted stock units, stock appreciation rights or other stock-based awards to purchase 3,450,000 shares of our common stock. The 2005 Plan contains a provision that allows for an annual increase in the number of shares available for issuance under the 2005 Plan on the first day of each of the Company’s fiscal years during the period beginning in fiscal year 2006 and ending on the second day of fiscal year 2014. The annual increase in the number of shares shall be equal to the lowest of 400,000 shares; 4% of the Company’s outstanding shares on the first day of the fiscal year; and an amount determined by the Board of Directors. There was no adjustment made in January 2011.

We also have outstanding stock options in three other stock option plans, the 1998 Omnibus Plan, the Amended and Restated Omnibus Stock Option Plan and the Amended and Restated 1990 Non-Employee Directors’ Non-Qualified Stock Option Plan. These plans have expired and no future issuance of awards is permissible.

Our Board of Directors determines the term, vesting provisions, price, and number of shares for each award that is granted. The term of each option cannot exceed ten years.

Stock-based employee compensation expense recorded during the three months ended September 30, 2011 and 2010 was $0 and $5,004, respectively. Stock based employee compensation expense recorded during the nine months ended September 30, 2011 and 2010 was $834 and $56,717, respectively. The $834 in expense recognized during the nine months ended September 30, 2011 represents the remaining compensation costs related to non-vested stock options.

We use the Black-Scholes option-pricing model to calculate the fair value of each option grant on the date of grant. No stock options were granted during the three and nine months ended September 30, 2011 and 2010.

A summary of our outstanding stock options for the nine months ended September 30, 2011 and 2010 is presented below.

	Nine months ended September 30,
	2011					2010
				Weighted-					Weighted-
				Average					Average
				Exercise					Exercise
	Shares			Price		Shares			Price
Outstanding at beginning of year		3,650,443		$	1.59		3,695,745		$	1.63
Granted		—			—		—			—
Exercised		—			—		—			—
Forfeited and expired		(7,963	)		14.23		(35,302	)		5.25
Outstanding at end of period		3,642,480		$	1.56		3,660,443		$	1.59
Options exercisable at end of period		3,642,480		$	1.56		3,562,111		$	1.59

The following table summarizes information about stock options outstanding and exercisable at September 30, 2011:

			Weighted-
			Average	Weighted-
			Remaining	Average
	Number		Contractual	Exercise
Range of Exercise Prices	Outstanding		Life	Price
$1.15 — $1.36		2,713,000	2.6 years	$	1.15
$2.00 — $3.00		639,980	3.9 years		2.33
$3.10 — $4.65		255,000	5.0 years		3.40
$4.99 — $6.96		28,500	2.3 years		5.47
$8.95 — $13.06		6,000	0.0 years		9.50
		3,642,480	3.0 years	$	1.56

There was no intrinsic value of outstanding options and exercisable options as of September 30, 2011. There was no intrinsic value of options vested during the nine months ended September 30, 2011. As of September 30, 2011, 384,172 shares were available for grant under the 2005 Plan.