Stock Options

3 Months Ended

Mar. 31, 2012

Notes to Financial Statements

Stock Options

4. Stock Options

During the three-month periods ending March 31, 2012 and 2011, the Company recorded no direct stock-based compensation expense.

On March 30, 2012 an aggregate amount of 905,000 incentive stock options were awarded to certain employees as partial payment for their services to the Company.

For the three months ended March 31, 2012 and March 31, 2011, respectively, the Company recorded stock-based compensation expense of $45,915 and $43,902, relating to unvested employee stock options.  

Stock options and warrants issued to consultants and other non-employees as compensation for services provided to the Company are accounted for based on the fair value of the services provided or the estimated fair market value of the option or warrant, whichever is more reliably measurable in accordance with FASB ASC 505, Equity, and FASB ASC 718, Compensation – Stock Compensation. The related expense is recognized over the period the services are provided. Unrecognized expense remaining at March 31, 2012 and 2011 for the options is $308,812 and $354,750, respectively, and will be recognized through March 30, 2015.

A summary of the Company’s stock option plans as of March 31, 2012, and changes during the three month period then ended is presented below:

	Three Months Ended March 31, 2012
	Number of Options		Weighted Average Exercise Price
Options outstanding at December 31, 2011		2,993,972	$	.37
Options granted		905,000		.14
Options exercised		—		—
Options cancelled		—		—
Options expired		10,000		.37
Options at end of period		3,888,972		.32
Options exercisable at March 31, 2012		1,720,528		.46

Changes in the Company’s unvested options for the three months ended March 31, 2012 are summarized as follows:

	Three Months Ended March 31, 2012
	Number of Options		Weighted Average Exercise Price
Nonvested options at December 31, 2011		1,561,699	$	.25
Options granted		905,000		.14
Options vested		298,255		.26
Options forfeited		—		—
Nonvested options  at March 31, 2012		2,168,444	$	.14

		Options Outstanding						Options Exercisable
Range of Exercise Price		Number Outstanding		Remaining Average Contractual Life (In Years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$	0.11 – $1.70		3,844,972		4.07	$	.30		1,676,528	$	.26
$	1.99 – $2.60		44,000		1.08		2.31		44,000		2.31
Totals			3,888,972		5.87	$	.32		1,720,528	$	.46

A summary of the Company’s warrant activity as of March 31, 2012 and changed during the three month period then ended is presented below:

	Three months ended March 31, 2012
	Weighted Average Exercise
	Options		Price
Warrants outstanding at December 31, 2011		4,096,476	$	.97
Granted
Exercised		196,718		.20
Expired
Warrants outstanding at March 31, 2012		3,899,758	$	.77

		Warrants Outstanding
Range of Exercise Price		Number Outstanding		Remaining Average Contractual Life (In Years)		Weighted Average Exercise Price
$	0.16 – $0.75		2,446,483		2.74	$	.48
$	1.25		1,453,275		1.20		1.25
Totals			3,899,758		2.32	$	.77