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STOCK-BASED COMPENSATION
 6 Months Ended
Jun. 30, 2013
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, 2013 includes approximately $361,000 of noncash compensation expense related to the Company’s stock options.  The Company’s net income for the three and six months ended June 30, 2012 includes approximately $383,000 of noncash compensation expense related to the Company’s stock options.  The noncash 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, 2013 and 2012:
 
2013
2012
Risk-free interest rate
0.72%
 
0.9%
 
     
Expected volatility
106%
 
102%
 
     
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, 2013 and changes during the six months ended June 30, 2013 are as follows:

 
Weighted
average
 Exercise
 Price
Weighted
 average
 remaining
contractual
 term (in years)
Aggregate
 Intrinsic
 Value
 
Options
Outstanding
       
at beginning of period
495,517
$9.33
   
Granted
44,217
10.62
   
Exercised
(20,000)
8.20
   
Forfeited
(35,000)
8.20
   
Outstanding and vested
       
at end of period
484,734
$9.58
2.78
$993,916


Options to acquire 44,217 shares of common stock were granted on January 1, 2013 to members of our board of directors as part of their normal compensation.

During the six months ended June 30, 2013, no stock options were exercised for cash.  During the same period, 20,000 options were exercised, pursuant to provisions of the stock option plan, where the Company received no cash and 17,355 shares of its common stock in exchange for the 20,000 shares issued in the exercise.  The 17,355 shares that the Company received were valued at $164,000, the fair market value of the shares on the dates of exercise.

The intrinsic value of all options exercised during the six months ended June 30, 2013 and 2012 was approximately $26,300 and $1,252,950, respectively.