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(7) STOCK-BASED COMPENSATION
 6 Months Ended
Jun. 30, 2011
Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]
(7)         STOCK-BASED COMPENSATION

The Company records stock-based compensation in accordance with ASC No. 718, Compensation – Stock Compensation.  The Company estimates the fair value of stock options using the Black-Scholes option pricing model. The fair value of stock options granted is recognized as expense over the requisite service period. Stock-based compensation expense for all share-based payment awards is recognized using the straight-line single-option method.

The Company uses the historical stock price volatility as an input to value its stock options under ASC No. 718. The expected term of stock options represents the period of time options are expected to be outstanding and is based on observed historical exercise patterns of the Company, which the Company believes are indicative of future exercise behavior. For the risk-free interest rate, the Company uses the observed interest rates appropriate for the term of time options are expected to be outstanding. The dividend yield assumption is based on the Company’s history and expectation of dividend payouts.

The following weighted-average assumptions were used for grants issued during the three and six months ended June 30, 2011 and 2010 under the ASC No. 718 requirements.

   
Three months ended June 30,
   
Six months ended June 30,
 
   
2011
   
2010
   
2011
   
2010
 
Weighted-average risk-free rate
    1.56%       1.70%       1.60%       1.70%  
Weighted-average volatility
    97.63%       93.66%       97.49%       93.66%  
Dividend yield
    0.00%       0.00%       0.00%       0.00%  
Expected life
 
5.41 years
   
6.55 years
   
5.09 years
   
6.55 years
 

ASC No. 718 requires forfeitures to be estimated at the time of grant and revised if necessary in subsequent periods if actual forfeiture rates differ from those estimates. Forfeitures were estimated based on historical activity for the Company. Stock-based compensation expense for employees for the three months ended June 30, 2011 and 2010 was $83,000 and $96,000, respectively, and $154,000 and $156,000 for the six months ended June 30, 2011 and 2010, respectively, and is expensed in selling, general and administrative expenses and credited to additional paid-in-capital. The Company granted 603,000 and 2,495,400 stock options during the three months ended June 30, 2011 and 2010, respectively, and 909,500 and 2,495,400 stock options during the six months ended June 30, 2011 and 2010, respectively.