STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2011

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

9.             STOCK-BASED COMPENSATION

The Company has, since incorporation, adopted two stock option plans. The first plan is dated February 15, 2001, amended on October 15, 2009, under which the Company is authorized to grant options to acquire up to a total of 6,000,000 shares of common stock. The second plan is dated February 15, 2005, under which the Company is authorized to grant options to acquire up to a total of 3,000,000 shares of common stock.  Pursuant to the stock option plans, options granted are subject to vesting terms which range from immediate vesting to various stages over a period of one year including monthly vesting, at the sole discretion of the Board of Directors.

During the year ended December 31, 2008, the Company adopted the 2008 Stock Compensation Plan and the 2008 Equity Incentive Plan, under which the Company is authorized to issue up to 500,000 and 2,000,000 shares, respectively, of the Company’s common stock, to be registered on Form S-8, to the Company’s employees, executives and consultants.  On May 14, 2010, the Company adopted the 2010 Share Incentive Plan on Form S-8 under which the Company is authorized to issue up to 10,000,000 registered shares of its common stock to qualified persons.

For the year ended December 31, 2011:

The Company did not grant any options during the year ended December 31, 2011.

For the year ended December 31, 2010:

On May 20, 2010, the Company granted options to purchase a total of 250,000 shares of the Company’s common stock to a consultant. The options carry an exercise price of $0.15 per share and vested immediately. The options expire May 20, 2012. The fair value for options granted was estimated at the date of grant using the Black-Scholes option-pricing model and the weighted average fair value of stock options granted was $0.07. During the year ended December 31, 2010, the Company recorded stock-based compensation of $16,492 as a general and administrative expense in connection with these options.

On March 26, 2010, the Company granted options to purchase a total of 500,000 shares of the Company’s common stock to a consultant. The options carry an exercise price of $0.15 per share and vested immediately. The options expire March 26, 2012. The fair value for options granted was estimated at the date of grant using the Black-Scholes option-pricing model and the weighted average fair value of stock options granted was $0.07. During the year ended December 31, 2010, the Company recorded stock-based compensation of $35,948 as a general and administrative expense in connection with these options.

On August 5, 2010, the Company granted options to purchase a total of 250,000 shares of the Company’s common stock to a consultant. The options carry an exercise price of $0.10 per share and vested immediately. The options expire August 5, 2013. The fair value for options granted was estimated at the date of grant using the Black-Scholes option-pricing model and the weighted average fair value of stock options granted was $0.05. During the year ended December 31, 2010, the Company recorded stock-based compensation of $13,265 as a general and administrative expense in connection with these options.

On October 13, 2010, the Company granted options to purchase a total of 2,000,000 shares of the Company’s common stock to a director and officer. The options carry an exercise price of $0.30 per share and vested immediately. The options expire October 13, 2013. The fair value for options granted was estimated at the date of grant using the Black-Scholes option-pricing model and the weighted average fair value of stock options granted was $0.33. During the year ended December 31, 2010, the Company recorded stock-based compensation of $669,263 as a general and administrative expense in connection with these options.

On November 1, 2010, the Company granted options to purchase a total of 1,000,000 shares of the Company’s common stock to a consultant. The options carry an exercise price of $0.30 per share and vested immediately. The options expire November 1, 2013. The fair value for options granted was estimated at the date of grant using the Black-Scholes option-pricing model and the weighted average fair value of stock options granted was $0.25. During the year ended December 31, 2010, the Company recorded stock-based compensation of $254,689 as a general and administrative expense in connection with these options.

Also on November 1, 2010, the Company granted options to purchase a total of 2,000,000 shares of the Company’s common stock to an officer. The options carry an exercise price of $0.30 per share and vested immediately. The options expire November 1, 2013. The fair value for options granted was estimated at the date of grant using the Black-Scholes option-pricing model and the weighted average fair value of stock options granted was $0.25. During the year ended December 31, 2010, the Company recorded stock-based compensation of $509,379 as a general and administrative expense in connection with these options.

On December 17, 2010, the Company granted options to purchase a total of 500,000 shares of the Company’s common stock to a consultant. The options carry an exercise price of $0.10 per share and vested immediately. The options expire December 17, 2012. The fair value for options granted was estimated at the date of grant using the Black-Scholes option-pricing model and the weighted average fair value of stock options granted was $0.23. During the year ended December 31, 2010, the Company recorded stock-based compensation of $115,076 as a general and administrative expense in connection with these options.

The fair value for stock options granted was estimated at the date of grant using the Black-Scholes option-pricing model and the weighted average fair value of stock options granted during the years ended December 31, 2011 and 2010 were $nil and $0.24 per share, respectively. The weighted average assumptions used are as follows:

	Years Ended
	December 31, 2011	December 31, 2010
Expected dividend yield	-	0%
Risk-free interest rate	-	0.59%
Expected volatility	-	154.37%
Expected option life (in years)	-	2.81

The total intrinsic value of stock options exercised during the years ended December 31, 2011 and 2010 were $nil and $nil respectively.

The following table summarizes the continuity of the Company’s stock options:

	Number of Options	Weighted Average Exercise Price	Weighted-Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Outstanding, December 31, 2010	16,496,517	$ 0.48
Granted	-	-
Exercised	(250,000)	$ 0.05
Expired/Cancelled	(11,706,517)	$ 0.41
Outstanding, December 31, 2011	4,540,000	$ 0.69	1.91	$nil
Exercisable, December 31, 2011	4,540,000	$ 0.69	1.91	$nil

A summary of the status of the Company’s nonvested shares as of December 31, 2011, and changes during the years ended December 31, 2011, is presented below:

Nonvested shares	Number of Shares	Weighted Average Grant Date Fair Value
Nonvested at January 1, 2011	420,000	$0.20
Granted	-	-
Vested	(420,000)	$0.20
Nonvested at December 31, 2011	-	-

As at December 31, 2011 there was $nil total unrecognized compensation cost related to nonvested share-based compensation arrangements.