Common Stock Options

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements

Note 15. Common Stock Options

In 2007, the Company adopted the 2007 Incentive and Non-Qualified Stock Option Plan (hereinafter “the Plan”), which replaced the 1997 Incentive and Non-Qualified Stock Option Plan, as amended in 2001, and under which 8,000,000 shares of common stock are reserved for issuance under qualified options, nonqualified options, stock appreciation rights and other awards as set forth in the Plan.

Under the Plan, qualified options are available for issuance to employees of the Company and non-qualified options are available for issuance to consultants and advisors. The Plan provides that the exercise price of a qualified option cannot be less than the fair market value on the date of grant and the exercise price of a nonqualified option must be determined on the date of grant. Options granted under the Plan generally vest three to five years from the date of grant and generally expire ten years from the date of grant.

During the year ended December 31, 2012, no stock options were granted by the Company.

The following is a summary of all common stock option activity during the two years ended December 31, 2012:

	Shares Under Options Outstanding			Weighted Average Exercise Price
Outstanding at December 31, 2010		570,500		$	0.72
Options granted		-		$	-
Options forfeited		(266,000)	)	$	0.50
Options exercised		-			-
Outstanding at December 31, 2011		304,500		$	0.91
Options granted		-		$	-
Options forfeited		-		$	-
Options exercised		-		$	-
Outstanding at December 31, 2012		304,500		$	0.91

	Options Exercisable		Weighted Average Exercise Price Per Share
Exercisable at December 31, 2011		142,000	$	0.60
Exercisable at December 31, 2012		142,000	$	0.60

The following represents additional information related to common stock options outstanding and exercisable at December 31, 2012:

		Outstanding						Exercisable
Exercise Price		Number of Shares		Weighted Average Remaining Contract Life in Years		Weighted Average Exercise Price		Number of Shares		Weighted Average Exercise Price
$	0.31		15,000		1.04	$	0.31		15,000	$	0.31
$	0.38		12,500		2.00	$	0.38		12,500	$	0.38
$	0.50		125,000		1.58	$	0.50		62,500	$	0.50
$	0.80		1,000		5.16	$	0.80		1,000	$	0.80
$	0.85		51,000		4.77	$	0.85		51,000	$	0.85
$	1.60		100,000		3.26	$	1.60		-	$	1.60
			304,750		2.97	$	0.91		142,000	$	0.60

The weighted average remaining contractual term for both fully vested share options (exercisable, above) and options expected to vest (outstanding, above) is 3.0 years.

A summary of the status of the Company’s nonvested stock options as of December 31, 2012 and changes during the year ended December 31, 2012 is presented below:

Nonvested Stock Options	Shares		Weighted Average Grant Date Fair Value
Nonvested at December 31, 2011		162,500	$	1.09
Options granted		-		-
Options vested		-	$	-
Options forfeited		-		-
Nonvested at December 31, 2012		162,500	$	1.09

The Company used the Black-Scholes option price calculation to value the options granted in 2012 and 2011 using the following assumptions: an average risk-free rate of 3.08% and 3.22%; volatility of 2.6 and 3.0; actual term and exercise price of options granted. See Note 3, Summary of Significant Accounting Policies, “Accounting for Share-Based Payments.”