Note 8 - Share Based Payments

6 Months Ended

Jun. 30, 2011

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

(8) Share Based Payments

We maintain stock compensation plans for our employees and directors, which are described in Note 11, Share Based Payments, in the Notes to Consolidated Financial Statements in our 2010 Annual Report on Form 10-K filed with the SEC on May 27, 2011.  We adopted Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment, as codified in FASB ASC topic 718, Compensation — Stock Compensation (“ASC 718”), effective January 1, 2006.  ASC 718 requires that we recognize the fair value of stock compensation, including stock options, in our statement of operations.  We recognize the stock compensation expense over the requisite service period of the individual grantees, which is generally the same as the vesting period of the grant.  All of our stock compensation is accounted for as an equity instrument.

We did not grant any options to employees or members of our Board of Directors during the first or second quarters of 2011 or 2010. Under the provisions of ASC 718, we have recorded approximately ($2,000) of stock based employee compensation expense in our condensed consolidated statement of operations for the six months ended June 30, 2011.  We have assumed an annual pre-vesting forfeiture rate of 7.75% in determining our stock compensation expense. In determining the inputs to the Black-Scholes option valuation model, we have assumed a dividend yield of zero since we have never paid cash dividends and have no present intention to do so.  We estimate volatility based upon the historical volatility of our common stock over a period generally commensurate with the expected life of the options.  We determine the risk-free interest rate based on the quoted U.S. Treasury Constant Maturity Rate for a security having a comparable term at the time of the grant.  To date, we have calculated the expected term of option grants using the simplified method prescribed by SEC Staff Accounting Bulletin 107 for “plain vanilla” options.  We have historically granted options having a ten year contractual term to our employees and directors.

The following table summarizes option activity for all of our stock option plans from December 31, 2010 through June 30, 2011:

	Options		Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value at Date Indicated
Options outstanding at December 31, 2010		3,050,000	$	0.112		6.37	$	0
Options granted		-		-
Options exercised		-		-
Options forfeited		-		-
Options expired		-		-
Options outstanding at June 30, 2011		3,050,000	$	0.112		6.37	$	0
Options vested and exercisable at December 31, 2010		3,050,000	$	0.112		6.37	$	0
Options vested and exercisable at June 30, 2011		3,050,000	$	0.112		6.37	$	0

The aggregate intrinsic value is the sum of the amounts by which the quoted market price of our common stock at the date indicated exceeded the exercise price of the options (“in-the-money-options”).  At June 30, 2011, the market price of our stock was $0.022 per share, and none of our options were in-the-money.  No options were exercised in the six month period ending June 30, 2011.

The following table summarizes information about stock options outstanding under all of our option plans at June 30, 2011:

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Number Outstanding		Weighted Average Remaining Years to Expiration		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$0.11		3,000,000		6.41	$	0.110		3,000,000	$	0.110
$0.23		50,000		3.82	$	0.230		50,000	$	0.230
		3,050,000		6.37	$	0.112		3,050,000	$	0.112

We did not record any income tax benefits for stock-based compensation arrangements for the six month periods ended June 30, 2011 and 2010, as we have cumulative operating losses and have established full valuation allowances for our income tax benefits.