10. STOCK COMPENSATION

3 Months Ended

Jun. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK COMPENSATION

The following tables summarize share-based compensation expenses relating to shares and options granted and the effect on basic and diluted loss per common share during the three months ended June 30, 2013 and 2012:

	June 30, 2013			June 30, 2012
Vesting of stock options	$	50,387		$	52,794
Incremental fair value of option modifications		957			19,838
Vesting expense associated with CEO restricted stock grant		64,444			96,667
Total stock-based compensation expense	$	115,788		$	169,299
Basic and diluted loss per common share	$	(0.00	)	$	(0.00	)

All of the stock-based compensation expense recorded during the three months ended June 30, 2013 and 2012, which totaled $115,788 and $169,299, respectively, is included in payroll and related expense in the accompanying condensed consolidated statements of operations. Stock-based compensation expense recorded during the three months ended June 30, 2013 had no impact on basic and diluted loss per common share and the stock-based compensation expense recorded during the three months ended June 30, 2012 also had no impact on basic and diluted loss per common share .

We review share-based compensation on a quarterly basis for changes to the estimate of expected award forfeitures based on actual forfeiture experience. The cumulative effect of adjusting the forfeiture rate for all expense amortization is recognized in the period the forfeiture estimate is changed. The effect of forfeiture adjustments for the three months ended June 30, 2013 was insignificant.

In the three months ended June 30, 2013, In May 2013, we granted to a scientific advisory board member and a scientific consultant a three year option to purchase 125,000 shares of our common stock at a price of $0.11 per share.

The following outlines the significant weighted average assumptions used to estimate the fair value information presented, with respect to stock option grants utilizing the Binomial Lattice option pricing models at, and during the three months ended June 30, 2013: 

Risk free interest rate	0.38%
Average expected life	3 years
Expected volatility	94.6%
Expected dividends	None

The expected volatility is based on the historic volatility. The expected life of options granted is based on the "simplified method" as described in the SEC's guidance due to changes in the vesting terms and contractual life of current option grants compared to our historical grants.

We did not issue any stock option grants in the three months ended June 30, 2012.

Options outstanding that have vested and are expected to vest as of June 30, 2013 are as follows:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term in Years
Vested		20,204,123	$	0.28		3.86
Expected to vest		1,016,675	$	0.25		7.88
Total		21,220,798

A summary of stock option activity during the three months ended June 30, 2013 is presented below:

	Amount		Range of Exercise Price		Weighted Average Exercise Price
Stock options outstanding at March 31, 2013		21,095,798	$	0.076 - $0.41	$	0.28
Exercised		–		–
Granted		125,000		0.11	$	0.11
Cancelled/Expired		–		–
Stock options outstanding at June 30, 2013		21,220,798	$	0.076 - $0.41	$	0.28
Stock options exercisable at June 30, 2013		20,204,123	$	0.076 - $0.41	$	0.28

At June 30, 2013, there was approximately $97,091 of unrecognized compensation cost related to share-based payments, which is expected to be recognized over a weighted average period of 0.21 years.

On June 30, 2013, our stock options had a negative intrinsic value since the closing price on that date of $0.10 per share was below the weighted average exercise price of our stock options