Stock Options

6 Months Ended

Jun. 30, 2011

Stock Options [Abstract]

Stock Options

(6) Stock Options

We adopted the 2000 Stock Incentive Plan effective April 14, 2000, following approval by our stockholders. An amendment to the plan was approved by our stockholders in 2007. Under the plan, as amended (the “2000 Plan”), we are able to make awards of stock-based compensation. The 2000 Plan has expired and currently no shares may be issued under the plan. Options granted under the 2000 Plan have contractual terms from six to ten years. The exercise price of ISOs cannot be less than 100% of the fair market value of a share of our common stock determined on the grant date. Although the 2000 Plan provides for the granting of other incentive awards, only ISOs and non-statutory stock options have been issued under the 2000 Plan. The 2000 Plan is administered by the Compensation Committee of the Board.

Pursuant to FASB guidance on accounting for stock based compensation, we estimate the fair value of stock options granted on the date of grant using the Black-Scholes-Merton option-pricing model. There were no stock options granted in the three months ended June 30, 2011, and the year ended December 31, 2010.

Expected volatility used in the model was based on the historical volatility of our common stock and was weighted 50% for the historical volatility over a past period equal to the expected term and 50% for the historical volatility over the past two years prior to the grant date. This weighting method was chosen to account for the significant changes in our financial condition beginning approximately three years ago. These changes include changes in our working capital, changes in pipeline throughput and a reduction and ultimate elimination of our outstanding debt.

The expected term of options granted used in our models represent the period of time that options granted are expected to be outstanding. The method used to estimate the expected term is the “simplified” method as allowed under the provisions of the SEC’s Staff Accounting Bulletin No. 107. This number is calculated by taking the average of the sum of the vesting period and the original contract term. The risk-free interest rate for periods within the contractual life of the option was based on the U.S. Treasury yield curve in effect at the date of the grant. As we have not declared dividends on common stock since we became a public company, no dividend yields are used. No forfeiture rate is assumed due to the lack of forfeiture history for these types of awards. Actual value realized, if any, is dependent on the future performance of our common stock and overall stock market conditions. There is no assurance that the value realized by an optionee will be at or near the value estimated by the Black-Scholes-Merton option-pricing model.

At June 30, 2011, there were a total of 30,390 shares of common stock reserved for issuance upon exercise of outstanding options under the 2000 Plan. A summary of the status of stock options granted to key employees, officers and directors, for the purchase of shares of common stock for the periods indicated, is as follows:

					Weighted
			Weighted		Average		Aggregate
			Average		Remaining		Intrinsic
	Shares		Exercise Price		Contractual Life		Value
Options outstanding at December 31, 2010		30,390	$	13.29
Options granted		—	$	—
Options exercised		—	$	—
Options expired or cancelled		—	$	—
Options outstanding at June 30, 2011		30,390	$	13.29		2.3	$	4,571
Options exercisable at June 30, 2011		30,390	$	13.29		2.3	$	4,571

The following table summarizes additional information about stock options outstanding at June 30, 2011:

	Options Outstanding						Options Exercisable
			Weighted Average						Weighted
			Remaining		Weighted				Average
Range of Exercise	Number		Contractual Life		Average Exercise		Number		Exercise
Prices	Outstanding		(Years)		Price		Exercisable		Price
$2.45 to $5.60		10,118		1.8	$	3.06		10,118	$	3.06
$10.85 to $13.30		3,346		0.6	$	11.95		3,346	$	11.95
$19.67		16,926		2.9	$	19.67		16,926	$	19.67
		30,390						30,390

We recognized no compensation expense for vested stock options for the three and six months ended June 30, 2011, compared to $13,440 and $53,760 for the three and six months ended June 30, 2010, respectively. As of June 30, 2011, there was no unrecognized compensation cost related to non-vested stock options granted under the 2000 Plan.

We recognized $20,000 and $40,000 of expense related to the fair value issuance of restricted common stock to our independent directors for the three and six months ended June 30, 2011, respectively.