Note 9: Stock Options and Warrants

(a) Acorn Stock Options

A summary of stock option activity for the nine months ended September 30, 2011 is as follows:

	Number of Options (in shares)			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
Outstanding at December 31, 2010		1,817,665		$	3.69
Granted		66,666		$	3.70
Exercised		(225,165	)	$	2.62
Forfeited or expired		(364,167	)	$	3.00
Outstanding at September 30, 2011		1,294,999		$	4.08	3.9 years	$	1,668
Exercisable at September 30, 2011		1,200,414		$	4.16	4.0 years	$	1,467

During 2011, 148,165 options were exercised and 304,167 options were forfeited in connection with the “net exercise” of 452,332 options. In a net exercise of an option, the Company does not require a payment of the exercise price of the option from the optionee, but reduces the number of shares of common stock issued upon the exercise of the option by the smallest number of whole shares that has an aggregate fair market value equal to or in excess of the aggregate exercise price for the option shares covered by the option exercised. The 452,332 options which were exercised under this method had a weighted average exercise price exercise price of $2.69.

The weighted average grant date fair value of the 66,666 stock options granted during the first nine months of 2011 was $1.86 per share. The fair value of the options granted was estimated on the grant date using the Black-Scholes option-pricing model with the following weighted average assumptions:

Volatility		61	%
Expected term (years)		4.5
Risk free interest rate		2.0	%
Expected dividend yield	None

(b) Stock-based compensation expense

Stock-based compensation expense included in the Company’s Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2010 and 2011, respectively, was:

	Nine months ended September 30,				Three months ended September 30,
	2010		2011		2010		2011
Total stock based compensation expense	$	461	$	315	$	163	$	50

All stock based compensation expense is included in selling, general and administrative expense. Stock compensation expense in 2011, includes $13 and $39 with respect to stock granted to a consultant for the three and nine months ended September 30, 2011, respectively.

A summary of stock warrants activity for the nine months ended September 30, 2011 is as follows:

	Number of Warrants (in shares)		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life
Outstanding at December 31, 2010		313,806	$	4.29	2.2 years
Granted		—
Exercised		—
Forfeited or expired		—
Outstanding and exercisable at September 30, 2011		313,806	$	4.29	1.5 years