Stock Options and Warrants

6 Months Ended

Jun. 30, 2013

Notes to Financial Statements

Note 6 - Stock Options and Warrants

Options

In June 2000 and November 2009, our Board of Directors adopted, and our shareholders approved, the 2000 Plan and 2009 Plan, respectively (together the “Plans”). The Plans provide for the granting of options to qualified employees of the Company, independent contractors, consultants, directors and other individuals. The Company’s Board of Directors approved and made available 11,093,886 and 15,000,000 shares of common stock to be issued pursuant to the 2000 Plan and the 2009 Plan. The Plans permit grants of options to purchase common shares authorized and approved by the Company’s Board of Directors.

The average fair value of options granted at market value during six months ended June 30, 2013 was $0.15 per option. There were no options awarded during the six months ended June 30, 2012. There were no options exercised during the six months ended June 30, 2013 and 2012.

The following summarizes the information relating to outstanding stock options activity with employees during 2013 and 2012:

	Common Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at December 31, 2012		18,647,332		$	0.29		6.06	$	26,345
Awarded		5,168,000		$	0.17
Expired/Forfeited		(703,333	)	$	0.11
Outstanding at June 30, 2013		23,111,999		$	0.26		6.68	$	477,116
Exercisable at June 30, 2013		21,801,997		$	0.27		6.40	$	376,145

Stock compensation expense was approximately $727,700 and $752,500 for the three and six months ended June 30, 2013, respectively, and $41,600 and $83,200 for the three and six months ended June 30, 2012, respectively. The total fair value of shares vested during the six months ended June 30, 2013 and 2012 was approximately $640,200 and $194,300, respectively.

As of June 30, 2013, there was approximately $248,400 of unrecognized employee stock-based compensation expense related to non vested stock options, of which $63,100, $84,600, $74,700 and $26,000 is expected to be recognized for the remainder of the fiscal year ending December 31, 2013, and for the fiscal years ending 2014, 2015 and 2016, respectively.

The following table represents our non vested share-based payment activity with employees for the six months ended June 30, 2013:

	Number of Options			Weighted Average Grant Date Fair Value
Nonvested options - December 31, 2012		1,235,555		$	0.16
Granted		5,168,000		$	0.15
Vested		(4,301,333	)	$	0.15
Forfeited		(360,970	)	$	—
Nonvested options – June 30, 2013		1,741,252		$	0.11

Warrants

At June 30, 2013, the Company had outstanding warrants to purchase the Company’s common stock which were issued in connection with multiple financing arrangements and consulting agreements. Information relating to these warrants is summarized as follows:

Warrants	Remaining Number Outstanding		Weighted Average Remaining Life (Years)		Weighted Average Exercise Price		Expiration Year
Warrants-Financing		7,000,000		3.49	$	0.34		2016 – 2017
Warrants-Ehrenberg		250,000		.10	$	0.30		2013
Warrants-Consulting Agreement		825,000		1.27	$	0.30		2014 – 2015
Warrants-Note Conversions		2,302,538		.92	$	0.39		2014 – 2015
Warrants-Stock Purchases		6,218,840		3.73	$	0.33		2014 – 2017
Warrants-Services		400,000		1.56	$	0.50		2015
		16,996,378