STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2012

STOCK-BASED COMPENSATION [Abstract]

STOCK-BASED COMPENSATION

2.  STOCK-BASED COMPENSATION

The Company accounts for compensation expense associated with stock options based on the fair value of the options on the date of grant.

The Company's net income for the three months ended March 31, 2012 includes approximately $382,657 of non-cash compensation expense related to the Company's stock options.  The Company's net income for the three months ended March 31, 2011 includes approximately $287,000 of non-cash compensation expense related to the Company's stock options.  The non-cash compensation expense related to all of the Company's stock-based compensation arrangements is recorded as a component of selling, general and administrative expenses.

The estimated fair value of each option award granted was determined on the date of grant using the Black-Scholes option valuation model.  The following weighted-average assumptions were used for the options granted during the three months ended March 31, 2012 and 2011:

	2012	2011
Risk-free interest rate	0.9%	2.0%
Expected volatility	102%	101%
Dividend yield	0%	0%
Expected option term	5 years	5 years

A summary of the status of the Company's stock option plans as of March 31, 2012 and changes during the three months ended March 31, 2012 is as follows:

		Weighted average Exercise Price	Weighted average remaining contractual term (in years)	Aggregate Intrinsic Value
Fixed Options	Options
Outstanding
at beginning of period	695,000	$6.68
Granted	40,517	11.87
Exercised	(55,000)	6.91
Outstanding and expected to vest,
at end of period	680,517	$8.65	2.74	$4,252,993
Vested
at end of period	665,517	$8.70	2.49	$4,128,943

As of March 31, 2012, all compensation cost related to non-vested stock option awards have been recognized.

Options to acquire 40,517 shares of common stock were granted on January 1, 2012 to members of our board of directors as part of their normal compensation.

During the three months ended March 31, 2012, 20,000 stock options were exercised for cash resulting in proceeds to the Company of $138,200.  During the same period an additional 10,000 options were exercised, pursuant to provisions of the stock option plan, where the Company received no cash and 4,589 shares of its common stock in exchange for the 10,000 shares issued in the exercise.  The 4,589 shares that the Company received were valued at $69,095, the fair market value of the shares on the date of exercise.  Lastly, an additional 25,000 options were exercised, pursuant to provisions of the stock option plan, for a combination of cash and common shares.  The Company received $102,815 in cash and 4,333 shares in exchange for the 25,000 shares issued in this exercise.  The 4,333 shares that the Company received were valued at $69,930, the fair market value of the shares on the date of exercise.

The intrinsic value of all options exercised during the three months ended March 31, 2012 and 2011 was approximately $451,450 and $208,700, respectively.