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Stock Based Compensation
 6 Months Ended
Jun. 30, 2012
Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]  
Stock Based Compensation
 
Note 6 – Stock Based Compensation
 
The Company has established the 2008 Equity Incentive Plan, which is a shareholder-approved plan that permits the granting of stock options and restricted stock to employees, directors and consultants. The 2008 Equity Incentive Plan provides for the issuance of up to 800,000 shares of common stock of which 50,000 shares are available for grant as Incentive Stock Options.  The exercise price for options awarded is no less than 100% of the fair market value of the common stock on the day of grant.  The options generally vest either immediately on the date of grant or 1 to 3 years from the date of grant. In March 2012, the Board of Directors approved an amendment to increase the number of shares available for award under the plan to 1,550,000.  This amendment was approved by shareholders at the Annual Meeting of Shareholders held on May 9, 2012.
 
For the six months ended June 30, 2012, the Company recorded compensation costs for options and shares granted under the plan of $428,826, as compared to $934,753 for the six months ended June 30, 2011.
 
Management has valued the options at their date of grant utilizing the BlackScholes option pricing model.  Prior to the fourth quarter of 2009, there was not a public market for the Company shares.  Accordingly, the fair value of the underlying shares was determined based on recent transactions by the Company to sell shares to third parties and other factors determined by management to be relevant to the valuation of such shares.  Beginning in the fourth quarter of 2009, the quoted price for the Company’s shares on the OTCBB was used to value the underlying shares.  Expected volatility is based upon a weighted average historical volatility of peer companies operating in a similar industry.  The risk-free interest rate is based on the implied yield available on U.S. Treasury issues with an equivalent term approximating the expected life of the options depending on the date of the grant and expected life of the options.  The expected life of options used was based on the contractual life of the option granted.  The Company determined the expected dividend rate based on the assumption and expectation that earnings generated from operations are not expected to be adequate to allow for the payment of dividends in the near future.  The following weighted-average assumptions were utilized in the fair value calculations for options granted:
  
   
Six Months Ended
    
Six Months Ended
  
   
June 30,
2012
    
June 30,
2011
  
             
Expected dividend yield
    
0
%
    
0
%
Expected stock price volatility
    
96-97
%
    
97-98
%
Risk-free interest rate
    
2.59-2.70
%
    
3.91-4.20
%
Expected life of options
  
2.0-9.9 Years
    
3.0-9.9 Years
  
 
The following table summarizes the status of the Company’s aggregate stock options granted:
 
   
Number of Shares
Remaining
Options
    
Weighted
Average
Exercise Price
    
Weighted-Average
Remaining
Contractual Term
    
Aggregate
Intrinsic Value
  
                         
Outstanding at January 1, 2012
    
364,400
    
$
5.20
              
Options granted during 2012
    
175,000
    
$
2.04
              
Options cancelled/expired during 2012
    
(22,000)
      
5.76
                  
Outstanding at June 30, 2012
    
517,400
    
$
4.11
      
8.32
    
$
144,678
  
Exercisable at June 30, 2012
    
368,000
    
$
4.20
      
8.29
    
$
78,878
  
 
All share and per share data have been adjusted to give effect to the one-for-twenty reverse stock split in December 2011,
as described in Note 5 to these unaudited financial statements.
   
For the six months ended June 30, 2012, the Company recorded compensation costs for options granted under the plan of $426,730 as compared to $409,011 for the six months ended June 30, 2011. Stock option grants amounted to175,000 for the six months ended June 30, 2012 (60,400 for the six months ended June 30, 2011) while 140,400 options vested during that period, and 22,000 options were cancelled or terminated for the six months ended June 30, 2012 (20,250 options were cancelled for the six months ended June 30, 2011). No options were exercised for the six months ended June 30, 2012 or 2011.
 
The weighted average fair value of options granted during the six months ended June 30, 2012 was approximately $2.04 ($4.40 for the six months ended June 30, 2011). 
 
On December 13, 2010, the Board of Directors approved a restricted stock grant award to certain employees in lieu of future salary cash payments.  The employees forfeited salary over a twelve-week period to purchase common shares, which were valued at fair market value as of the date of grant.  The Compensation Committee of the Company’s Board of Directors approved a change in the vesting date for restricted stock held by certain employees from April 1, 2011 to August 1, 2011. The Compensation Committee of the Company’s Board of Directors subsequently approved amendments to change the vesting date of these restricted shares to November 15, 2012.  A total of 55,969 shares vested on April 1, 2011, and the remaining 169,368 shares are scheduled to vest on November 15, 2012.
  
The following table summarizes the status of the Company’s restricted share awards:
 
 
Restricted Shares
  
Number of
Restricted Shares
    
Weighted Average
Fair Value at
Grant Date
  
Non-vested at  June 30, 2012
    
169,368
    
$
2.80
  
 
All share and per share data have been adjusted to give effect to the one-for-twenty reverse stock split in December 2011,
as described in Note 5 to these financial statements.
 
The aggregate expense associated with the restricted stock awards is $698,690, of which $594,498 was expensed in 2011($525,636 for the six months ended June 30, 2011) and $104,192 was expensed in 2010.