STOCK BASED COMPENSATION

3 Months Ended

Mar. 31, 2012

Stock Based Compensation

STOCK BASED COMPENSATION

NOTE 5. STOCK BASED COMPENSATION

The stock based compensation cost that has been charged against income by the Company was $44,441 and $33,415 for the three months ended March 31, 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.  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.

Stock option activity for the three months ended March 31, 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		(15,000	)		(1.55	)		-		(860	)
Outstanding at March 31, 2012		3,058,334		$	5.48			6.75	$	990,135
Vested at March 31, 2012		2,139,215		$	7.17			6.13	$	497,211
Exercisable at March 31, 2012		2,139,215		$	7.17			6.13	$	497,211

A summary of the Company’s stock warrant activity and related information for the three months ended March 31, 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		(6,250	)		(1.75	)		(3.50	)		(2,801	)
Warrants cancelled/forfeited/expired		(10,275	)		(25.00	)		-			(589	)
Warrants at March 31, 2012		1,228,786		$	12.43			1.41		$	138,675
Vested at March 31, 2012		1,168,380		$	13.02			1.32		$	121,901
Exercisable at March 31, 2012		1,168,380		$	13.02			1.32		$	121,901