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STOCK-BASED COMPENSATION
 6 Months Ended
Jun. 30, 2011
STOCK-BASED COMPENSATION
NOTE 12 – STOCK-BASED COMPENSATION

Pursuant to the Amendment to the 2007 Equity Incentive Plan, the aggregate number of stock options available for grant and issuance is 4,341,989 shares.

In February 2011, the Company granted to the investor relations firm a warrant to purchase 50,000 shares of the Company’s common stock at an exercise price of $12.6 per share and the warrants vested immediately. The warrant was valued at $452,000 fair value, using the Black-Scholes option pricing model with assumed 193.42% volatility, a five-year expiration term, a risk free rate of 2.30% and no dividend yield. For the three-month and six-month periods ended June 30, 2011, $0 and $452,000 were recognized as general and administrative expenses, respectively.

In early March 2011, the Company granted to an independent director an option to purchase 12,500 shares of the Company’s common stock at an exercise price of $9.16 per share and the options vested immediately. The options were valued at $35,000 fair value, using the Black-Scholes option pricing model with assumed 64.5% volatility, a three-year expiration term with expected tenor of 1.49 years, a risk free rate of 0.46% and no dividend yield. For the three-month and six-month periods ended June 20, 2011, $0 and $35,000 were recognized as general and administrative expenses, respectively.

In late March 2011, the Company granted to 3 executive officers options to purchase 1,200,000 shares of the Company’s common stock at an exercise price of $4.97 per share and the options are exercisable in equal installments over periods of two years. The options were valued at $4,317,000 fair value, using the Black-Scholes option pricing model with assumed 77.22% to 94.36% volatility, a four-year expiration term with expected tenors of 2 to 2.49 years, risk free rates of 0.81% to 1.05% and no dividend yield. For the three-month and six-month periods ended June 30, 2011, $0 and $1,945,000 was recognized as general and administrative expenses, respectively.

In late March 2011, the Company also granted to 18 management staff options to purchase 654,000 shares of the Company’s common stock at an exercise price of $4.97 per share and the options are exercisable in equal installments over periods of three years. The options were valued at $2,632,000 fair value, using the Black-Scholes option pricing model with assumed 77.22% to 118.84% volatility, a four-year expiration term with expected tenors of 2 to 3 years, risk free rates of 0.81% to 1.29% and no dividend yield. For the three-month and six-month periods ended June 30, 2011, $0 and $706,000 were recognized as general and administrative expenses, respectively.

In early May 2011, the Company granted to an independent director an option to purchase 12,500 shares of the Company’s common stock at an exercise price of $2.93 per share and the option vested immediately. The option was valued at $15,800 fair value, using the Black-Scholes option pricing model with assumed 79.91% volatility, a four-year expiration term with expected tenor of 2 years, a risk free rate of 0.57% and no dividend yield. For the three-month and six-month periods ended June 30, 2011, $15,800 was recognized as general and administrative expenses.

In late June 2011, the Company granted to an independent director an option to purchase 12,500 shares of the Company’s common stock at an exercise price of $3.10 per share and the option vested immediately. The option was valued at $15,200 fair value, using the Black-Scholes option pricing model with assumed 86.36% volatility, a three-year expiration term with expected tenor of 1.49 years, a risk free rate of 0.32% and no dividend yield. For the three-month and six-month periods ended June 30, 2011, $15,200 was recognized as general and administrative expenses.

As of June 30, 2011, there was $4,298,000 of total unrecognized compensation cost related to non-vested stock options granted under the 2007 Equity Incentive Plan that is expected to be recognized in next 2 years.

 
The following table summarizes all Company stock option transactions between January 1, 2011 and June 30, 2011.
 
   
Number of
Option
and Warrants
Outstanding
    
Number of
Option
and Warrants
Non-vested
    
Number of
Option
and Warrants
Vested
    
Range of
Exercise Price
per Common
Share
  
Balance, January 1, 2011
     458,971       -       458,971     $0.84 - $12.00  
Granted during the six-month period ended June 30, 2011
     1,941,500       1,941,500       -     $2.93 - $12.60  
Vested during the six-month period ended June 30, 2011
     -       (905,500 )     905,500     $2.93 - $12.60  
Exercised during the six-month period ended June 30, 2011
     (12,500 )     -       (12,500 )   $0.84  
Forfeited or expired during the six- month period ended June 30, 2011
     (50,000 )     -       (50,000 )   $8.25 - $10.43  
Balance, June 30, 2011
     2,337,971       1,036,000       1,301,971     $2.93 - $12.60  
 
    
Stock and Warrants Options Outstanding
  
                     
Weighted Average
  
   
 
    
 
    
Weighted Average
    
Exercise Price of
  
   
Outstanding
at June 30, 2011
    
Range of
Exercise Prices
    
Remaining
Contractual Life
(Years)
    
Options
Currently
Outstanding
  
Exercisable
     1,301,971     $2.93 - $12.60       3.16     $ 6.49  
Non-exercisable
     1,036,000     $4.97       3.75     $ 4.97  
Total Outstanding
     2,337,971     $2.93 - $12.60       3.42     $ 5.82  

The weighted average grant-date fair values as at June 30, 2011 and December 31, 2010 were $7.01 and $8.83, respectively.

At June 30, 2011, the aggregate intrinsic value of the stock options and warrants was $3,097,667.