Stockholders' Equity

3 Months Ended

Mar. 31, 2013

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

4. Stockholders’ Equity

Service-Based Stock Options

Service-based options issued by the Company to various employees and consultants amounted to 10,205,000 at March 31, 2013.

Stock based compensation expense amounted to $27,000 and $0 for the three months ended March 31 2013 and 2012, respectively. Such amounts are included in compensation and related expenses in the accompanying statement of operations

In February 2013 the Company issued 250,000 options to a consultant (see note 6).

The fair market value of these options amounted to $15,000 and is being amortized over three months from February 1, 2013 to April 30, 2013. The fair value of the options was computed using the following black scholes model attributes: fair value of the stock at issue date - $0.16, expected life - 5 years , volatility - 50% and risk free interest rate - 2%

Options exercisable at March 31, 2013 amounted to 9,305,000. All outstanding options have a cashless exercise provision, and certain options provide for accelerated vesting provisions and modifications, as defined, if the Company is sold or acquired. The intrinsic value of options outstanding and exercisable at March 31, 2013 amounted to $110,650.

The following is a summary of outstanding service-based options at March 31, 2013:

Exercise Price	Number of Options		Weighted Average Remaining Contractual Life
$0.07 - $0.10	$	1,500,000	4 years
$0.13 - $0.20		7,705,000	10 years
$0.40		1,000,000	10 years
Total	$	10,205,000

The remaining unearned compensation on unvested service-based options at March 31 ,2013 amounted to $32,500 and will be amortized over the next 15 months

Performance-Based Stock Options

As of March 31, 2013 the Company granted performance-based options to purchase 5,375,000 shares of common stock at exercise prices of $0.40 and $0.80. The options expire at various dates between 2021 and 2023 and are exercisable upon the Company achieving annual sales revenue of $5,000,000 and $10,000,000. The fair value of these performance-based options aggregated $188,000 and will be expensed over the implicit service period commencing once management believes the performance criteria will be met. Accordingly, at March 31, 2013, the unearned compensation for performance based options is $188,000.

Warrants

Warrants outstanding and exercisable amounted to 3,637,720 at March 31, 2013. The weighted average exercise price of warrants outstanding at March 31, 2013 is $0.28. The warrants expire between 2013 and 2015.