4. Stock Options.

For the three months and six months ended June 30, 2012 the Company recorded stock-based compensation expense of $44,518 and $90,433, respectively For the three months and six months ended June 30, 2011 the Company recorded stock-based compensation expense of $36,106 and $80,009, respectively. These expenses were related to unvested employee stock options.

Stock options and warrants issued to consultants and other non-employees as compensation for services provided to the Company are accounted for based on the fair value of the services provided or the estimated fair market value of the option or warrant, whichever is more reliably measurable in accordance with FASB ASC 505, Equity, and FASB ASC 718, Compensation - Stock Compensation. The related expense is recognized over the period the services are provided. Unrecognized expense remaining at June 30, 2012 and 2011 for the employee stock options is $262,894 and $223,860, respectively and will be recognized through March 2015.

A summary of the Company's stock option plans as of June 30, 2012, and changes during the six-month period then ended is presented below:


	Six Months Ended June 30, 2012
	Number of Options		Weighted Average Exercise Price
Options outstanding at December 31, 2011		2,993,972	$	.37
Options granted		905,000		.14
Options exercised		-		-
Options cancelled		10,000		.14
Options expired		10,000		.37
Options at end of period		3,878,972		.32
Options exercisable at June 30, 2012		2,107,528		.42

A summary of the Company's stock option plans as of June 30, 2012, and changes during the three-month period then ended is presented below:


	Three Months Ended June 30, 2012
	Number of Options		Weighted Average Exercise Price
Options outstanding at March 31, 2012		3,888,972	$	.37
Options exercised		-		-
Options cancelled		-		-
Options expired		10,000		.37
Options at June 30, 2012		3,878,972		.32
Options exercisable at June 30, 2012		2,107,528		.42

Changes in the Company's unvested options for the six months ended June 30, 2012 are summarized as follows:


	Six Months Ended June 30, 2012
	Number of Options		Weighted Average Exercise Price
Non-Vested options at December 31, 2011		1,561,699	$	.25
Options granted		905,000		.14
Options vested		685,255		.35
Options cancelled		10,000		.14
Non-Vested options at June 30, 2012		1,771,444		.13

Changes in the Company's unvested options for the three months ended June 30, 2012 are summarized as follows:


	Three Months Ended June 30, 2012
	Number of Options		Weighted Average Exercise Price
Non-Vested options at March 31, 2012		2,168,444	$	.14
Options granted		-		-
Options vested		387,000		.29
Options cancelled		10,000		.14
Non-Vested options at June 30, 2012		1,771,444		.13


	Options Outstanding						Options Exercisable
Range of Exercise Price	Number Outstanding		Remaining Average Contractual Life (In Years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$ .14 - $1.70		3,834,972		3.88	$	.30		2,063,528	$	.25
$1.99 - $2.60		44,000		.83		2.31		44,000		2.31
Totals		3,878,972		6.15	$	.32		2,107,528	$	.42