STOCK BASED COMPENSATION

9 Months Ended

Sep. 30, 2012

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

STOCK BASED COMPENSATION

NOTE 5. STOCK BASED COMPENSATION

The stock based compensation cost that has been charged against income by the Company was $124,626 and $94,358 for the nine months ended September 30, 2012 and 2011, respectively, for options previously awarded by the Company.

In June 2011, we extended our consulting agreement for investor relations services.  The agreement was made effective as of April 15, 2011 and remained in effect until April 14, 2012 at which time it was renewed on a month to month basis.  We agreed to compensate the consultant with a monthly fee and reimbursement of expenses incurred in connection with and pursuant to the agreement.  The agreement may be terminated by either party at any time upon 30 days written notice.  In addition, the Company granted the consultant warrants to purchase 25,000 shares of our common stock, with cashless exercise rights, at an exercise price of $1.75 per share. On May 10, 2011, the date of grant, 6,250 shares vested immediately and the remainder vest at 33 1/3% per year.  The fair value of these warrants on the date of grant was $11,201. As of September 30, 2012, 12,500 of these warrants have been exercised.

Stock option activity for the nine months ended September 30, 2012 is summarized as follows:

	Shares			Weighted Average Exercise Price			Weighted Average Remaining Contractual Life (in Years)		Grant Date Fair Value
Outstanding at December 31, 2011		3,073,334		$	5.46			7.00	$	990,995
Options exercised		(60,000	)		(1.55	)		-		(3,439	)
Options expired		(294,167	)		(1.21	)		-		(38,878	)
Options granted		225,000			1.91			10.00		197,146
Outstanding at September 30, 2012		2,944,167		$	5.69			6.75	$	1,145,824
Vested at September 30, 2012		2,216,049		$	6.96			6.12	$	661,966
Exercisable at September 30, 2012		2,216,049		$	6.96			6.12	$	661,966

A summary of the Company’s stock warrant activity and related information for the nine months ended September 30, 2012 is as follows:

	Shares			Weighted Average Exercise Price			Weighted Average Remaining Contractual Life (in Years)			Grant Date Fair Value
Outstanding at December 31, 2011		1,245,311		$	12.48			1.41		$	142,065
Warrants exercised		(12,500	)		(1.75	)		(3.50	)		(5,601	)
Warrants cancelled/forfeited/expired		(11,377	)		(25.00	)		-			(652	)
Warrants at September 30, 2012		1,221,434		$	12.47			.90		$	135,812
Vested at September 30, 2012		1,198,532		$	12.69			.87		$	133,722
Exercisable at September 30, 2012		1,198,532		$	12.69			.87		$	133,722