Note 7 - Stock Options

6 Months Ended

Jun. 30, 2011

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

Note 7 – Stock Options

On January 1, 2011, the Company entered into a nonqualified stock option agreement with an employee, granting the employee a 10-year option to purchase 1,350,000 shares of the Company’s common stock at a price of $0.59 per share, of which one-fourth of the option shares, i.e., 337,500 shares, vested as of the date of the nonqualified stock option agreement, and the balance vests in equal installments every six months thereafter until fully vested, provided that the employee is still employed by the Company at the time.

Note 7 – Stock Options (continued)

On June 15, 2011 the Company entered into nonqualified stock option agreements with three employees, granting the employees 10-year options to purchase a total of 600,000 shares of the Company’s common stock consisting of 300,000 shares of the Company’s common stock at a price of $1.23 per share and 300,000 shares of the Company’s common stock at a price of $2.00 per share. In each case, one-fourth of the option shares vested as of the date of each employee’s respective nonqualified stock option agreement, and the balance vests in equal installments every six months thereafter until fully vested, provided that the relevant employee is still employed by the Company at the time. See “Note 8 Commitments.”

The fair value of each stock option granted was determined using the Black-Scholes stock option pricing model and the following weighted average assumptions:

	June 30, 2011
Risk free interest rate	1.54	%
Expected life	5.75 years
Annualized volatility	131	%
Expected dividends	—

Stock option activity for the six months ended June 30, 2011, is summarized as follows:

	Shares		Weighted Average Exercise  Price		Weighted Average Remaining Contractual Life (Years)
Options outstanding at December 31, 2010		—	$	—
Granted		1,950,000	$	0.91
Expired or forfeited		—		—
Options outstanding at June 30, 2011		1,950,000	$	0.91		10.00
Options exercisable at June 30, 2011		412,500	$	0.85		10.00
Options vested or expected to vest at June 30, 2011		487,500	$	0.91		10.00

Total stock compensation for the six months ended June 30, 2011 and 2010 was $284,454 and $0, respectively. Remaining stock compensation of $853,362 will be recognized ratably over 18 months from the grant date.