4.	Stock options

The Company adopted, with stockholder approval, the Innodata Isogen, Inc. 2009 Stock Plan, as amended and restated (the “2009 Plan”). The maximum number of shares of common stock that may be delivered under the 2009 Plan is 2,270,118 shares, less one share for every share that becomes subject to an Option or Stock Appreciation Rights (SAR) granted after March 31, 2011 and two shares for every share that becomes subject to an Award other than an Option or SAR granted after March 31, 2011. If after March 31, 2011 (i) any shares subject to an award or portion of any award under the 2001 and 2002 Stock Option Plans (collectively, the “Prior Plans”) that expires or terminates unexercised, becomes unexercisable, or is forfeited, or is otherwise terminated, surrendered or canceled as to any shares without the delivery of shares of Stock or (ii) shares subject to any Award or portion of an Award under the Plan that expires or terminates unexercised, becomes unexercisable, or is forfeited, or is otherwise terminated, surrendered or canceled as to any shares without the delivery of shares of Stock, the applicable shares subject to such award under the Prior Plans or the Award shall thereafter be available for further Awards under the Plan. Shares that become available for Awards shall be added back as (i) one share for each such share subject to an option under the Prior Plans or an Option or SAR under the Plan, and (ii) as two shares for each such share subject to awards other than Options or SAR under the Plan.

A summary of option activity under the Company’s stock option plans as of September 30, 2011, and changes during the period then ended, are presented below:

	Number of Shares			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (years)		Aggregate Intrinsic Value

Outstanding at January 1, 2011		2,096,780		$	2.83
Granted		1,505,000		$	2.59
Exercised		—			—
Forfeited/Expired		(183,451	)	$	2.74
Outstanding at September 30, 2011		3,418,329		$	2.73		5.24	$	1,489,000

Exercisable at September 30, 2011		1,738,720		$	2.69		3.02	$	971,000

Vested and expected to vest at September 30, 2011		3,418,329		$	2.73		5.24	$	1,489,000

The fair value of stock options is estimated on the date of grant using the Black-Scholes option pricing model. The weighted average fair values of the options granted and weighted average assumptions are as follows:

	Nine months ended
	September 30,
	2011			2010

Weighted average fair value of options granted	$	1.61		$	3.04

Risk-free interest rate		0.95% - 2.83	%		2.5%-3.2	%
Expected life (years)		5-8			8
Expected volatility factor		68%-74	%		90	%
Expected dividends	None			None

No options were exercised during the nine months ended September 30, 2011 and 2010.

A summary of restricted shares under the Company’s stock option plans as of September 30, 2011, and changes during the period then ended, are presented below:

	Number of Shares			Weighted-Average Grant Date Fair Value

Unvested at January 1, 2011		40,000		$	4.39
Granted		30,000		$	2.59
Vested		(10,000	)	$	4.39
Forfeited/Expired		—		$	—
Unvested at September 30, 2011		60,000		$	3.49

The total compensation cost related to non-vested stock awards not yet recognized as of September 30, 2011, totaled approximately $2.7 million. The weighted-average period over which these costs will be recognized is thirty four months.

The stock-based compensation expense related to the Company’s various stock awards was allocated as follows (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	2011		2010		2011		2010

Direct operating costs	$	27	$	4	$	45	$	10
Selling and adminstrative expenses		245		79		489		165
Total stock-based compensation	$	272	$	83	$	534	$	175