STOCK OPTIONS
 9 Months Ended
Sep. 30, 2012
Stock Options [Abstract]  
STOCK OPTIONS

NOTE 9 – STOCK OPTIONS

 

We recognized compensation expense related to stock options during the nine months ended September 30, 2012 and 2011 in accordance with the Financial Accounting Standards Board (“FASB”) standard regarding share-based payments, and as such, has measured the share-based compensation expense for stock options granted based upon the estimated fair value of the award on the date of grant and recognizes the compensation expense over the award’s requisite service period. The weighted average fair values for the stock options granted during the second quarter of 2011 were calculated using the Black-Scholes option pricing model.

 

On June 6, 2011, we granted 975,000 stock options to directors and officers as follows:

 

  · Options to purchase up to a total of 75,000 shares of common stock were granted to three members of the Board of Directors. These options vested and became exercisable immediately. The weighted-average estimated fair value of the stock options granted was $0.65 per share using the Black-Scholes model with the following assumptions:

 

Description   Amount  
         
Expected volatility     165 %
Risk-free interest rate     0.74 %
Expected life     3 years  
Dividend yield     0 %

  

  · Options to purchase up to a total of 900,000 shares of common stock were granted to two executive officers. These options vest and become exercisable in twelve quarterly periods for the first three years of the five-year life of the options. The weighted-average estimated fair value of the stock options granted was $0.72 per share using the Black-Scholes model with the following assumptions:

 

Description   Amount  
         
Expected volatility     165 %
Risk-free interest rate     1.60 %
Expected life     5 years  
Dividend yield     0 %

 

On June 28, 2012, we granted 150,000 stock options to directors as follows:

 

· Options to purchase up to a total of 150,000 shares of common stock to certain members of the Board of Directors as director compensation. These options vested and became exercisable immediately resulting in a charge of $132,000. The weighted-average estimated fair value of the stock options granted was $0.88 per share using the Black-Scholes model with the following assumptions:

 

Description   Amount  
         
Expected volatility     136 %
Risk-free interest rate     0.40 %
Expected life     3 years  
Dividend yield     0 %

 

The total weighted-average estimated fair value of the options granted during the nine months ended September 30, 2012 and 2011 was $132,000 and $696,750, respectively. Compensation expense recognized in operating, general and administrative expenses in the Statements of Operations for the nine months ended September 30, 2012 and 2011 was $264,000 and $117,585, respectively. At September 30, 2012 and December 31, 2011, the total unrecognized compensation expense related to non-vested stock option awards was $242,110 and $525,165, respectively. The remaining $242,110 in unrecognized compensation expense, at September 30, 2012, will be recognized at $36,000 per quarter with the final $26,110 being recognized in the quarter ending September 30, 2014.