STOCK BASED COMPENSATION

6 Months Ended

Jun. 30, 2012

STOCK BASED COMPENSATION

STOCK BASED COMPENSATION

NOTE B—STOCK BASED COMPENSATION

Stock Options

Compensation expense related to stock options and restricted stock awards recognized in operating results (general and administrative expenses) was approximately $0.5 and $0.4 million for the three months ended June 30, 2012 and June 30, 2011, respectively, and approximately $0.8 and $0.7 million for the six months ending June 30, 2012 and June 30, 2011, respectively.

The following assumptions were used to value stock options calculated using the Black-Scholes options pricing model:

	Six months ended June 30,
	2012		2011
Dividend yield	0	%	0	%
Expected volatility	73.5	%	74.6	%
Risk-free interest rate	0.5	%	1.4	%
Expected life	3.5 years		3.5 years

			Weighted		Weighted
			Average		Average	Aggregate
	Number		Exercise		Remaining	Intrinsic Value
	of Options		Price		Term (in years)	(in thousands)
Outstanding at March 31, 2012	2,732,763		$	3.15
Granted	60,000		2.91
Exercised	—		—
Forfeited or expired	(81,501	)	11.09
Outstanding at June 30, 2012	2,711,262		$	2.90	2.10	$	2,089
Exercisable at June 30, 2012	2,217,968		$	2.93	1.86	$	2,089

The total intrinsic value of options exercised during the six months ended June 30, 2012 and 2011 were approximately $107,000 and $385,000 respectively.

As of June 30, 2012 total unrecognized stock-based compensation expense related to non-vested stock options was approximately $0.6 million, which we expect to recognize over a weighted average period of 1.3 years.

Restricted Shares

Restricted share activity as of June 30, 2012 was as follows:

	Shares		Weighted Average Fair Value
Outstanding at December 31, 2011	615,731		$	4.22
Granted	705,965		2.91
Vested	(207,878	)	10.79
Forfeited	(2,120	)	4.22
Outstanding at June 30, 2012	1,111,698		$	3.39

Restricted stock awards for executive officers and employees vest ratably over three years. Fair value of our restricted shares is based on our closing stock price on the date of grant.  As of June 30, 2012, total unrecognized stock-based compensation expense related to non-vested restricted shares was $3.4 million, which is expected to be recognized over a weighted average period of approximately 2.3 years.