3. Stock-Based Compensation

3 Months Ended

Mar. 31, 2013

Stock-Based Compensation

3. Stock-Based Compensation

There were 160,000 option awards granted to employees and no option awards granted to non-employees in the three months ended March 31, 2013 and there were 60,000 option awards granted to employees and 5,000 option awards granted to non-employees in the three months ended March 31, 2012.  The fair values of option awards granted in the three months ended March 31, 2013 and 2012 were estimated using the Black-Scholes option pricing model using the following assumptions:

	Three Months ended March 31,
	2013	2012
Risk free interest rate	0.88 – 0.90%	1.20 – 2.31%
Dividend yield	0%	0%
Expected term	5 years	5-10 years
Expected volatility	62.8%	62.8 – 67.9%

The status of the options issued as of March 31, 2013 and changes during the three months ended March 31, 2013 and 2012, were as follows:

	Options outstanding
	Number of shares		Weighted average price per share
Balance at December 31, 2012		1,032,500	$	0.29
Options granted		160,000		0.16
Options exercised, expired or forfeited		(10,000)		0.15
Balance at March 31, 2013		1,182,500	$	0.28

	Number of shares		Weighted average price per share
Balance at December 31, 2011		1,003,000	$	0.31
Options granted		65,000		0.15
Options exercised, expired or forfeited		(28,000)		0.36
Balance at March 31, 2012		1,040,000	$	0.30

The following table summarizes information about options at March 31, 2013:

Options outstanding								Options exercisable
Total shares		Weighted average exercise price		Weighted average remaining contractual life in years		Aggregate intrinsic value		Total shares		Weighted average exercise price		Weighted average remaining contractual life in years		Aggregate intrinsic value
	1,182,500	$	0.28		4.90	$	1,770		960,250	$	0.30		3.81	$	1,770

Nonvested stock awards as of March 31, 2013 and changes during the three months ended March 31, 2013 were as follows:

	Nonvested
	Number of shares		Weighted average g rant date fair value
Balance at December 31, 2012		112,250	$	0.08
Granted		160,000		0.08
Vested		50,000		0.08
Balance at March 31, 2013		222,250	$	0.08

As of March 31, 2013 and 2012, unrecognized compensation cost associated with non-vested share-based employee and non-employee compensation totaled $12,407 and $6,382, respectively, which are expected to be recognized over weighted average periods of 6 months and 5 months, respectively.