3. Stock-Based Compensation

6 Months Ended

Jun. 30, 2013

Stock-Based Compensation

3. Stock-Based Compensation

There were 20,000 option awards granted to employees and no option awards granted to non-employees in the three months ended June 30, 2013 and there were 42,500 option awards granted to employees and no option awards granted to non-employees in the three months ended June 30, 2012.  There were 180,000 option awards granted to employees and no option awards granted to non-employees in the six months ended June 30, 2013 and there were 102,500 option awards granted to employees and 5,000 option awards granted to non-employees in the six months ended June 30, 2012.  The fair values of option awards granted in the three months and six months ended June 30, 2013 and 2012 were estimated using the Black-Scholes option pricing model using the following assumptions:

	Three Months ended June 30,				Six Months ended June 30,
	2013		2012		2013		2012
Risk free interest rate		0.70%		0.75 – 1.10%		0.70 – 0.90%		0.75 – 2.31%
Dividend yield		0%		0%		0%		0%
Expected term	5 years		5 years		5 years		5-10 years
Expected volatility		62.2%		62.8%		62.2 - 62.8%		62.8 – 67.9%

The status of the options issued as of June 30, 2013 and changes during the six months ended June 30, 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
Options granted		20,000			0.18
Options exercised, expired or forfeited		(226,000	)		0.22
Balance at June 30, 2013		976,500		$	0.29

	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
Options granted		42,500			0.15
Options exercised		(5,000	)		0.07
Options expired or forfeited		(20,000	)		0.20
Balance at June 30, 2012		1,057,500		$	0.29

The following table summarizes information about options at June 30, 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
	976,500	$	0.29		5.81	$	6,295		773,250	$	0.32		4.82	$	4,170

Nonvested stock awards as of June 30, 2013 and changes during the six months ended June 30, 2013 were as follows:

	Nonvested
	Number of shares			Weighted average grant 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
Granted		20,000			0.09
Vested		(39,000	)		0.08
Balance at June 30, 2013		203,250		$	0.08

As of June 30, 2013 and 2012, unrecognized compensation cost associated with non-vested share-based employee and non-employee compensation totaled $10,267 and $6,598, respectively, which are expected to be recognized over weighted average periods of 5 months and 7 months, respectively.