Stockholders' Deficiency

3 Months Ended

Sep. 30, 2012

Equity [Abstract]

Stockholders' Deficiency

4. Stockholders’ Deficiency

Common Stock

During the nine months ended September 30, 2012, the Company entered into securities purchase agreements with investors for the purchase of an aggregate of $425,004 for 94,448 shares of common stock at $4.50 per share. The Company received $50,000 in cash proceeds and recorded the transaction as shares issuable since the shares had not been issued as of September 30, 2012. The shares issuable were issued on November 5, 2012.

Preferred Stock

On January 1, 2012, the Company issued 25,823 shares of Series B convertible preferred stock valued at $244,001 to the Series B convertible preferred stock owners as payment in kind for dividends. In connection with the outstanding preferred stock, during the three and nine months ended September 30, 2012, the Company recorded $65,271 and $195,813 as contractual dividends, respectively.

Given the Company’s obligations under the Certificate of Designation of Preference, Rights, and Limitations of Series C Preferred Stock (“Series C”) entered into on October 14, 2010, the Company has accelerated the accretion rate of the deemed dividend on the Redeemable Preferred Stock – Series C and has reclassified the Redeemable Preferred Stock – Series C from Stockholders’ Deficiency to Current Liabilities as a result of the Company receiving notices of default under its notes and convertible notes payable (see Note 2). During the three and nine months ended September 30, 2012 the Company recorded Series C deemed dividends of $247,774 and $433,606, respectively.

Stock Options

On January 6, 2012, the Company’s former Chief Financial Officer was issued 92,858 shares of common stock per a cashless exercise of a stock option with an exercise price of $0.80 to purchase 105,450 shares of common stock.

On March 30, 2012, the Company granted four Directors options to purchase an aggregate of 60,000 shares of common stock under a previously approved plan with an exercise price of $6.99, which is the approximate fair value of a share of common stock on the grant date.  The options have an aggregate grant date fair value of $391,028, vest over a three year period and have a term of ten years.

On March 30, 2012, the Company granted employees options to purchase an aggregate of 30,000 shares of common stock under a previously approved plan with an exercise price of $6.99, which is the approximate fair value of a share of common stock on the grant date. The options have an aggregate grant date fair value of $195,514, vest over a three year period and have a term of ten years.

On May 7, 2012, the Company received $26,662 in proceeds from the exercise of options to purchase 4,166 shares of the common stock at $2.80 per share and 4,166 shares of common stock at $3.60 per share.

Details of the options outstanding under all plans are as follows:

	Shares			Weighted Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
Options outstanding at January 1, 2012		2,165,925		$	2.89		6.25		-
Granted		90,000		$	6.99		--		-
Expired		--			--		--		-
Canceled		(116,668	)	$	3.97		--		-
Exercised		(113,782	)	$	0.98		--		-
Options outstanding at September 30, 2012		2,025,475		$	3.12		5.72	$	4,741,830
Options exercisable at September 30, 2012		931,321		$	2.43		5.37	$	2,759,134

Range of Exercise		Number Outstanding		Weighted Average Remaining Years of Contractual Life		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$	0.80 – 2.00		253,475		4.54	$	0.92		244,684	$	0.93
$	2.00 – 6.99		1,772,000		5.88	$	3.43		686,637	$	2.96
$	0.80 – $6.99		2,025,475		5.72	$	3.12		931,321	$	2.43

Warrants

During the nine months ended September 30, 2012, the Company issued an aggregate of 1,465,578 shares of common stock to three holders of warrants who elected to exercise 2,353,744 warrants on a “cashless” basis under the terms of the warrants. The warrants had exercise prices of $1.60 per share (471,628 net shares), $3.00 per share (701,388 net shares) and $2.90 per share (292,562 net shares).

	Shares			Weighted Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
Warrants outstanding at January 1, 2012		2,916,590		$	2.67		4.00		-
Granted		--			--		--		-
Expired		--			--		--		-
Canceled		--			--		--		-
Exercised		(2,353,744	)	$	2.61		--		-
Warrants outstanding at September 30, 2012		562,846		$	2.91		3.92	$	1,397,202
Warrants exercisable at September 30, 2012		312,846		$	2.91		3.92	$	774,702