EQUITY COMPENSATION AND EMPLOYEE BENEFIT PLANS

12 Months Ended

Dec. 31, 2012

EQUITY COMPENSATION AND EMPLOYEE BENEFIT PLANS [Abstract]

EQUITY COMPENSATION AND EMPLOYEE BENEFIT PLANS

NOTE 10 - EQUITY COMPENSATION AND EMPLOYEE BENEFIT PLANS

Stock Options

The Company has five Equity Compensation Plans: The 2008 Equity Compensation Plan (the "2008 Plan"), the 2007 Consultant Stock Plan (the "2007 Plan"), the 2006 Incentive Stock Plan (the "2006 Plan"), the 2004 Consultant Stock Plan, and the 2002 Incentive Stock Plan (the "2002 Plan"). These plans provide for the grant of incentive stock options and non-statutory options to employees, directors and consultants to the Company. The 2004 Consultant Stock Plan covers 1 million shares, none of which have been granted. The Company granted incentive stock options and non-statutory options at exercise price per share equal to the fair market value per of the common stock on the date of grant. The vesting term is generally, three years, and exercise provisions were determined by the Board of Directors, with a maximum life from five to ten years.

Option activity under the 2008 Plan, 2007 Plan, 2006 Plan and 2002 Plan are as follows (in thousands):

	2008 Plan					2007 Plan					2006 Plan					2002 Plan
	Number of Shares			Weighted Average Exercise Price		Number of Shares			Weighted Average Exercise Price		Number of Shares			Weighted Average Exercise Price		Number of Shares			Weighted Average Exercise Price
Outstanding at January 1, 2011		19,294		$	0.37		1,500		$	0.51		3,290		$	0.72		2,694		$	0.92
Granted		6,985			0.47		--			--		--			--		--
Exercised		(1,801	)		0.27		(116	)		0.41		(3	)		0.94		(100	)		0.25
Forfeited		(790	)		0.33		--			--		(1,295	)		0.44		(80	)		1.16
Outstanding at December 31, 2011		23,688		$	0.41		1,384		$	0.51		1,992		$	0.90		2,514		$	1.04
Granted		1,780			0.19		--			--		--			--		--			--
Exercised		--			--		--			--		--			--		--			--
Forfeited		(616	)		0.10		--					(1,002	)		0.90		(1,049	)	$	1.04
Outstanding at December 31, 2012		24,852		$	0.41		1,384		$	0.51		990		$	0.89		1,465		$	1.20

The weighted average fair value of options granted during the year ended December 31, 2012 and 2011 was $0.19 and $0.47.

The fair value of each option and warrant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

	2011	2012
Dividends	None	None
Expected volatility	104.6 to 105.4	146.54 and 127.78
Risk free interest rate	1.14% to 2.01%	0.79% to 1.11%
Expected life	5.0 to 6.06 years	6.06 years

The following table provides information about options under the 2008 Plan, 2007 Plan, 2006 Plan and 2002 Plan that are outstanding and exercisable at December 31, 2012. (In thousands):

Plan	Exercise Price Range		Options Outstanding at December 31, 2012		Options exercisable at December 31, 2012
2008	$	0.10 - $1.50		24,852		19,266
2007	$	0.25 - $1.15		1,384		1,384
2006	$	0.81 - $0.94		990		990
2002	$	0.25 - $1.32		1,465		1,464
				28,691		23,104

At December 31, 2012, the Company has outstanding stock options for employees, consultants and board members to purchase 23.1 million shares at exercise prices ranging from $0.25 to $1.50.

401K Retirement Savings Plan

The Company has an Employees' Retirement Savings Plan ("the 401K Plan").  Employees are eligible to participate in the 401(K) Plan if they have been continuously employed for three months or more. The Company may match each employee's 401(K) elective deferrals in common stock. At December 31, 2012, the Company has not matched any of the employee's elective deferrals in common stock.