Stock Based Compensation

3 Months Ended

Mar. 31, 2012

Notes to Financial Statements

Stock Based Compensation

NOTE 7 – STOCK BASED COMPENSATION

The Company uses the Black-Scholes option pricing model to calculate the grant-date fair value of an award, with the following assumptions for 2012 and 2011: no dividend yield in both years, expected volatility, based on the Company’s historical volatility, 217% in 2012 and between 119% and 125% in 2011, risk-free interest rate 2.26% in 2012 and between 0.96% and 2.15% in 2011 and expected option life of five to ten years in 2012 and three to five years in 2011.

As of March 31, 2012, there was $850,547 of unrecognized compensation expense related to non-vested market-based share awards that is expected to be recognized through December 2014.

The following tables summarize all stock option and warrant activity of the Company since December 31, 2004:

	Non-Qualified Stock Options and Warrants Outstanding and Exercisable
	Number of	Exercise	Weighted Average
	Shares	Price	Exercise Price
Outstanding, December 31, 2004	-	$                           -	$                          -
Granted	680,000	$           0.25-$2.10	$                    0.99
Exercised	(300,000)	$                     0.25	$                    0.25
Outstanding, December 31, 2005	380,000	$           1.40-$2.10	$                    0.68
Granted	1,425,000	$           0.25-$1.00	$                    0.70
Cancelled	(260,000)	$           1.40-$2.10	$                   (0.48)
Expired	(70,000)	$           1.40-$2.00	$                   (0.12)
Outstanding, December 31, 2006	1,475,000	$           0.25-$2.00	$                    0.83
Granted	5,768,971	$           0.25-$0.72	$                    0.48
Rescinded	(200,000)	$                     0.50	$                    0.50
Forfeited	(125,019)	$                     1.00	$                    1.00
Expired	(574,981)	$                     1.00	$                    1.00
Outstanding, December 31, 2007	6,343,971	$           0.25-$2.00	$                    0.48
Granted	3,495,001	$         0.001-$1.75	$                    1.16
Expired	(115,000)	$           0.50-$2.00	$                    0.07
Forfeited	(750,000)	$                     0.72	$                    0.72
Exercised	(807,770)	$           0.25-$0.50	$                    0.53
Outstanding, December 31, 2008	8,166,202	$         0.001-$1.75	$                    0.79
Granted	939,000	$           0.25-$0.45	$                    0.30
Expired	(1,204,451)	$           0.25-$1.00	$                    0.61
Forfeited	-
Exercised	(1,488,384)	$         0.001-$1.00	$                    0.20
Outstanding, December 31, 2009	6,412,367	$           0.25-$1.75	$                    0.83
Granted	1,860,000	$           0.25-$1.51	$                    1.20
Expired	(16,667)	$                     1.00	$                    1.00
Forfeited	-	-	-
Exercised	(1,279,700)	$           0.25-$1.00	$                    0.42
Outstanding, December 31, 2010	6,976,000	$           0.25-$1.75	$                    1.00
Granted	2,085,000	$           0.63-$1.30	$                    1.09
Expired	-	-	-
Forfeited	(162,500)	$                     1.51	$                    1.51
Exercised	-	-	-
Outstanding, December 31, 2011	8,898,500	$           0.25-$1.75	$                    1.01
Granted	135,000	$                     1.69	$                    1.69
Expired	-	-	-
Forfeited	-	-	-
Exercised	(310,000)	$           0.34-$1.25	$                    0.71
Outstanding, March 31, 2012	8,723,500	$           0.25-$1.75	$                    1.03
Exercisable, March 31, 2012	7,779,750	$           0.25-$1.75	$                    1.03

Non-Qualified Stock Options and Warrants Outstanding
	Number Outstanding	Weighted Average	Weighted Average
Range of	Currently Exercisable	Remaining	Exercise Price of Options and
Exercise Prices	at March 31, 2012	Contractual Life	Warrants Currently Exercisable
$0.25 - $1.75	7,779,750	1.89 Years	$       1.03