STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2013

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Note 3 Stock-Based Compensation

The Company has a stock incentive plan, as amended (the “Plan”), under which stock options for 10,400,000 shares of the Company’s common stock may be granted. Grants under the Plan may be made to employees (including officers), directors, consultants, advisors or other independent contractors who provide services to the Company or its subsidiary.

The Company accounts for its stock options using a fair value based method of accounting for stock options or similar equity instruments and requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and non-employee directors based on estimated fair values determined using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s statements of operations.

During the three months ended March 31, 2013 and 2012, the Company granted stock options to employees and non-employee directors as follows:

	For the three months ended March 31,
	2013		2012
Options granted during period		785,500		1,309,000
Weighted average exercise price	$	0.93	$	4.60
Weighted average grant date fair value	$	0.71	$	3.09

The fair value of each option award made to employees and directors during the three months ended March 31, 2013 and 2012 was estimated on the date of grant using the Black-Scholes closed-form option valuation model utilizing the following assumptions. To determine the risk-free interest rate, the Company utilized the U.S. Treasury yield curve in effect at the time of grant with a term consistent with the expected term of the Company’s awards. The Company estimated the expected life of the options granted based on anticipated exercises in future periods. The expected dividends reflect the Company’s current and expected future policy for dividends on its common stock. The Company relies exclusively on the trading and price history of the Company’s stock in order to determine the expected volatility. The Company plans to continue to analyze the expected stock price volatility and expected term assumption at each grant date as more historical data for its common stock becomes available. Given the events of 2012 and the corporate restructuring that occurred in July 2012 that have negatively impacted the Company’s staffing levels, the estimated forfeiture rate was changed to 24% for the first six months of 2012 and the impact of this change in estimate was recognized as a cumulative catch-up and serves to reduce the stock-based compensation costs for the quarter ended June 30, 2012. In January 2013, the Company again reviewed its estimated forfeiture rate, based upon the adjusted staffing levels resulting from attrition in late 2012 and early 2013 and, effective at that date, modified its estimated forfeiture rate to 10%. Due to the limited amount of historical data available to the Company, particularly with respect to stock-price volatility, employee exercise patterns and forfeitures, actual results could differ from the Company’s assumptions. The table below summarizes the assumptions utilized in estimating the fair value of the stock options granted during the three months ended March 31, 2013 and 2012:

	For the three months ended March 31,
	2013			2012
Weighted average risk-free interest rate		0.81	%		0.78	%
Expected life of options		5 years			5 years
Expected dividend yield		0	%		0	%
Weighted average expected volatility		103.78	%		85.97	%

Each option granted to employees and non-employee directors during the three months ended March 31, 2013 and 2012 vests as to 25% of the shares on each of the first, second, third and fourth anniversary of the vesting commencement date. Following the vesting periods, options are exercisable by employees until the earlier of 90 days after the employee’s termination with the Company or the ten-year anniversary of the initial grant, subject to adjustment under certain conditions and at the discretion of the Board of Directors. Following the vesting periods, options are exercisable by non-employee directors until the earlier of 180 days after they cease to be a member of the Board of Directors or the ten-year anniversary of the initial grant, subject to adjustment under certain conditions and at the discretion of the Board of Directors. As of January 2012, options that are forfeited or cancelled are not returned to the option pool and are, accordingly, no longer eligible for grant under the Plan.

The table below summarizes the compensation expense recorded by the Company for the three months ended March 31, 2013 and 2012 in conjunction with option grants made to employees and non-employee directors:

	For the three months ended March 31,
	2013		2012
Stock-based compensation expense recorded during period	$	625,874	$	828,084
Total unrecognized compensation expense remaining	$	4,038,554	$	8,935,167
Remaining average recognition period (in years)		2.4		2.7

The table below summarizes options outstanding, options vested and aggregate intrinsic value as of March 31, 2013:

	As of
	March 31, 2013
Options outstanding under the plan:
Total options outstanding		7,821,570
Weighted average remaining contractual life (in years)		6.39
Weighted average exercise price per share	$	3.67
Total options outstanding and vested		5,230,695
Total in-the-money options outstanding		2,424,263
Aggregate intrinsic value of in-the-money options outstanding	$	1,965,209
Total in-the-money options outstanding and vested		851,763
Aggregate intrinsic value of in-the-money options outstanding and vested	$	391,284

The aggregate intrinsic value is calculated as the difference between the exercise prices of the underlying awards and the quoted closing price of the common stock of the Company as of March 31, 2013 and only include those awards that have an exercise price below the quoted closing price, or in-the-money options.

During the three months ended March 31, 2013 and 2012, no options were exercised. During the three months ended March 31, 2013, unvested options for 30,000 shares were forfeited by an employee that resigned during the period and vested options of former employees for 10,000 shares expired unexercised. During the three months ended March 31, 2012, unvested options for 20,000 shares were forfeited by an employee that resigned.