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2. STOCK BASED COMPENSATION

6 Months Ended

Jun. 30, 2012

Equity [Abstract]

NOTE 2. STOCK BASED COMPENSATION

The Company has two stock option plans, the 1992 Stock Incentive Plan (“1992 Plan”) and 2001 Stock Option Plan (“2001 Plan”). No additional grants may be made under the 1992 Plan. The 2001 Plan, which was approved by the shareholders, permits the grant of stock options and restricted stock awards for up to 900,000 shares. All stock options have an exercise price that is equal to the fair market value of the Company’s stock on the date the options were granted. Administration of the plan, including determination of the number, term, and type of options to be granted, lies with the Board of Directors or a duly authorized committee of the Board of Directors. Options are generally granted based on employee performance with vesting periods ranging from date of grant to seven years. The maximum term before expiration for all grants is ten years.

The following table presents information related to the value of outstanding stock options for the periods shown:

		Three months ended								Six months ended
		June 30, 2012								June 30, 2012
		Weighted Average Exercise								Weighted Average Exercise
		Shares				Price				Shares				Price

Outstanding at beginning of period			356,200			$	3.71				356,200			$	3.71
Granted			-				-				-				-
Exercised			-				-				-				-
Forfeited			-				-				-				-

Outstanding at end of period			356,200			$	3.71				356,200			$	3.71

In accordance with the current accounting guidance for share-based payments, the Company recognizes compensation expense for options awarded under its stock incentive plans. Current accounting guidance requires the grant-date fair value of all share-based payment awards, including employee stock options, to be recognized as employee compensation expense over the requisite service period. The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes stock option valuation model.

The Company expenses stock options on a straight-line basis over the options’ related vesting term. The following table presents information related to the pretax compensation expense related to stock options for the periods shown:

		Three months ended						Six months ended
		June 30,						June 30,
		2012			2011			2012			2011

Pretax compensation expense
related to stock options	$	4,500		$	-		$	9,802		$	-

During the six months ended June 30, 2012 and 2011, there were no transactions related to stock options exercise activity.