STOCK OPTION PLAN AND WARRANTS (Tables)

9 Months Ended

Sep. 30, 2012

STOCK OPTION PLAN AND WARRANTS [Abstract]

Summary of the status of stock options

A summary of the status of stock options as of September 30, 2012 and December 31, 2011 is as follows:

	9/30/2012					12/31/2011
				Weighted					Weighted
	Number			Average		Number			Average
	of			Exercise		of			Exercise
	Shares			Price		Shares			Price
Outstanding at beginning of year		5,645,202		$	1.10		3,484,833		$	0.66
Granted		2,196,775		$	0.66		2,298,702		$	1.21
Exercised		(44,600	)	$	1.19		-		$	-
Expired and Cancelled		(40,000	)	$	0.86		(138,333	)	$	2.18
Outstanding at end of period		7,757,377		$	0.98		5,645,202		$	1.10
Exercisable at end of period		6,999,953		$	1.02		5,317,003		$	1.13

Stock option valuation assumptions

The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes option valuation model.  This model uses the assumptions listed in the table below.  Expected volatilities are based on the historical volatility of the Company's stock.  The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

	9/30/2012
Weighted average fair value per option granted	$	0.38
Risk-free interest rate		0.34- .42	%
Expected dividend yield		0.00	%
Expected lives		2.5996
Expected volatility		98-103	%

Summary of stock options outstanding

Stock options outstanding at September 30, 2012 are as follows:

				Remaining		Average
		Options		Contractual		Exercise		Options
Range of Exercise Prices		Outstanding		Life		Price		Exercisable
$	0.01-$1.50		7,547,377		3.3	$	1.17		6,789,953
$	1.51-$3.00		210,000		2.4	$	1.49		210,000
			7,757,377		3.5		0.99		6,999,953

Summary of warrant activity

As of September 30, 2012, the Company has warrants outstanding to purchase 23,604,781, shares of the Company's common stock, at prices ranging from $0.01 to $1.50 per share.  These warrants expire at various dates through February 2017.    There were 650,000 warrants issued in

the nine month period ended September 30, 2012.  The summary of the status of the warrants issued by the Company as of September 30, 2012 and December 31, 2011 are as follows:

	9/30/2012					12/31/2011
	Number of Shares			Weighted Average Exercise Price		Number of Shares			Weighted Average Exercise Price
Outstanding at beginning of year		23,736,108		$	1.55		18,779,753		$	1.59
Granted		650,000		$	0.83		5,130,046		$	1.66
Exercised		(390,923	)	$	0.42		(56,489	)	$	0.06
Cashless Exercises		(206,511	)	$	0.86		-
Expired and Cancelled		(183,893	)	$	14.73		(117,202	)	$	13.72
		23,604,781					23,736,108
Outstanding, end of period		23,604,781		$	1.45		23,736,108		$	1.55
Exercisable at end of period		23,604,781		$	1.45		23,736,108		$	1.55