SHARE-BASED COMPENSATION

6 Months Ended

Jun. 30, 2011

SHARE-BASED COMPENSATION

NOTE F – SHARE-BASED COMPENSATION

Stock Options

During the six months ended June 30, 2011, we granted 423,500 stock options (with a grant date fair value of $1.15 per share) to executive officers in connection with our long-term incentive compensation programs.  The stock options vest ratably over four years.  The exercise price of the stock options granted was $1.71 per share, which is equal to the market price of the underlying common stock on the date of grant.  The grant date fair value of the stock options was estimated using the Black-Scholes options-pricing model using the following assumptions:

Expected dividend yield	0.0%
Expected volatility	62.8%
Risk-free interest rate	3.0%
Expected life	8  years

Expected stock price volatility is based on the historical volatility of our stock price over the most recent period commensurate with the expected option life. Whendetermining the expected life of stock options, we classify options into groups for employees where relatively homogeneous exercise behavior is expected. The vesting period of the options, the length of time similar grants have remained outstanding in the past, and the expected volatility of the stock are also considered. These factors may cause the expected volatility and expected life of options granted to differ from period to period.

We recognize compensation expense for option awards with graded vesting on a straight-line basis over the requisite service period for each separately vesting portion of the award. Compensation cost related to stock options totaled $96,000 and $178,000 for the three and six months ended June 30, 2011, respectively, and $77,000 and $136,000 for the three and six months ended June 30, 2010, respectively.  As of June 30, 2011, there was approximately $392,000 of unrecognized compensation cost related to non-vested stock options granted in 2011, which is expected to be recognized over a weighted average period of approximately 2.3 years.  No stock options were exercised during the six months ended June 30, 2011 or 2010.

Restricted Stock

A summary of activity in non-vested restricted stock awards during the first six months of 2011 follows (shares in thousands):

	Shares			Weighted average grant date fair value
Non-vested at January 1, 2011		364		$	1.76
Granted		298			1.76
Vested		(131	)		2.20
Forfeited		--			--
Non-vested at June 30, 2011		531		$	1.65

Fair value of restricted shares granted to employees and directors is based on the fair value of the underlying common stock at the grant date.  Compensation expense related to restricted stock totaled approximately $91,000 and $178,000 for the three and six months ended June 30, 2011, respectively, and $67,000 and $125,000 for the three and six months ended June 30, 2010, respectively. As of June 30, 2011, there was approximately $573,000 of unrecognized compensation cost related to the restricted shares, which is expected to be recognized over a weighted average period of 2.1 years.  The total fair value of restricted stock vested was approximately $232,000 and $134,000 for the six months ended June 30, 2011 and 2010, respectively.