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STOCK BASED COMPENSATION
 12 Months Ended
Dec. 31, 2011
Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]  
STOCK BASED COMPENSATION
5.   
STOCK BASED COMPENSATION
 
Options to directors, officers and employees
The Company maintains, as adopted by the board of directors, the 2010 Incentive Stock Plan and the 2011 Incentive Stock Plan (the plans) providing for the issuance of up to 3,000,000 options to employees, officers, directors or consultants of the Company. Incentive stock options granted under the plans may only be granted with an exercise price of not less than fair market value of the Company’s common stock on the date of grant (110% of fair market value for incentive stock options granted to principal stockholders). Non-qualified stock options granted under the plans may only be granted with an exercise price of not less than 85% of the fair market value of the Company’s common stock on the date of grant. Awards under the plans may be either vested or unvested options. The unvested options vest ratably over eight quarters for options with a five year term and after one year for options with a two year term.
 
In addition to the plan, the Company has granted, on various dates, stock options to directors, officers and employees to purchase common stock of the Company. The terms, exercise prices and vesting of these awards vary.
 
The following table summarizes option activity for directors, officers and employees:
 
Number of Shares
Weighted
Average
Exercise Price
per Share
Weighted
Average Grant
Date Fair Value
per Share
Weighted
Average
Remaining
Exercise Term
in Months
Outstanding at January 1, 2010
 - $ - $ - -
Granted
 4,940,000 0.56 0.33 81
Exercised
 - - - -
Forfeited or expired
 - - - -
Outstanding at December 31, 2010
 4,940,000 $ 0.56 $ 0.33 77
Exercisable at December 31, 2010
 1,854,625 $ 0.53 $ 0.32 75
Granted
 3,425,000 0.63 0.28 54
Exercised
 (29,750 ) 0.41 0.26 40
Forfeited or expired
 - - - -
Outstanding at December 31, 2011
 8,335,250 $ 0.59 $ 0.31 58
Exercisable at December 31, 2011
 4,588,875 $ 0.57 $ 0.31 60
 
The Company recorded $855,246, $588,202 and $1,461,188 compensation expense for stock options to directors, officers and employees for the year ended December 31, 2011, the year ended December 31, 2010 and the period from inception (February 20, 2007) to December 31, 2011, respectively. As of December 31, 2011, unrecognized compensation expense of $1,122,084 is related to non-vested options granted to directors, officers and employees which is anticipated to be recognized over the next 55 months, commensurate with the vesting schedules.
 
    Options to consultants
The Company has also granted, on various dates, stock options to purchase common stock of the Company to consultants for services previously provided to the Company. The terms, exercise prices and vesting of these awards vary.
 
The following table summarizes option activity for consultants:
 
Number of Shares
Weighted
Average
Exercise Price
per Share
Weighted
Average Grant
Date Fair Value
per Share
Weighted
Average
Remaining
Exercise Term
in Months
Outstanding at January 1, 2010
 - $ - $ - -
Granted
 810,000 0.67 0.23 36
Exercised
 - - - -
Forfeited or expired
 - - - -
Outstanding at December 31, 2010
 810,000 $ 0.67 $ 0.23 32
Exercisable at December 31, 2010
 380,000 $ 0.63 $ 0.22 31
Granted
 70,000 0.59 0.18 31
Exercised
 - - - -
Forfeited or expired
 - - - -
Outstanding at December 31, 2011
 880,000 $ 0.66 $ 0.23 20
Exercisable at December 31, 2011
 755,000 $ 0.64 $ 0.22 20
 
The Company recorded $83,265, $82,900 and $166,165 compensation expense for stock options to consultants for the year ended December 31, 2011, the year ended December 31, 2010 and the period from inception (February 20, 2007) to December 31, 2011, respectively. As of December 31, 2011, unrecognized compensation expense of $32,633 is related to non-vested options granted to consultants which is anticipated to be recognized over the next 20 months, commensurate with the vesting schedules.
 
Warrants to accredited investors
Since December 2010, common stock sold by the Company has included common stock purchase warrants to acquire shares of common stock of the Company. For each ten shares sold, each investor received a warrant to purchase five shares of common stock for a period of two years at an exercise price of $0.80 per share. The securities were offered and sold to the investors in private placement transactions made in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act of 1933 (the “Securities Act”) and/or Rule 506 promulgated under the Securities Act. The investors are accredited investors as defined in Rule 501 of Regulation D promulgated under the Securities Act.
 
The following table summarizes warrant activity for accredited investors:
 
Number of Shares
Weighted
Average
Exercise Price
per Share
Weighted
Average Grant
Date Fair Value
per Share
Weighted
Average
Remaining
Exercise Term
in Months
Outstanding at January 1, 2010
 - $ - $ - -
Granted
 785,001 0.80 0.11 24
Exercised
 - - - -
Forfeited or expired
 - - - -
Outstanding at December 31, 2010
 785,001 $ 0.80 $ 0.11 24
Exercisable at December 31, 2010
 785,001 $ 0.80 $ 0.11 24
Granted
 4,956,224 0.80 0.11 24
Exercised
 - - - -
Forfeited or expired
 - - - -
Outstanding at December 31, 2011
 5,741,225 $ 0.80 $ 0.11 17
Exercisable at December 31, 2011
 5,741,225 $ 0.80 $ 0.11 17
 
The Company recorded $546,824, $86,350 and $633,174 compensation expense for stock warrants to accredited investors for the year ended December 31, 2011, the year ended December 31, 2010 and the period from inception (February 20, 2007) to December 31, 2011, respectively. There is no unrecognized compensation expense for these warrants because they are fully vested at date of grant.
 
Warrants to placement agent and consultants
The Company has compensated the placement agent for assisting in the sale of the Company’s securities by paying the placement agent commissions and issuing the placement agent common stock purchase warrants to purchase shares of the Company’s common stock. The warrants have a five year term and various exercise prices.
 
The Company has also granted, on various dates, stock warrants to purchase common stock of the Company to consultants for services previously provided to the Company. The terms, exercise prices and vesting of these awards vary.
 
The following table summarizes warrant activity for the placement agent and consultants:
 
Number of Shares
Weighted
Average
Exercise Price
per Share
Weighted
Average Grant
Date Fair Value
per Share
Weighted
Average
Remaining
Exercise Term
in Months
Outstanding at January 1, 2010
 614,680 $ 0.39 $ 0.18 60
Granted
 3,103,304 0.64 0.21 57
Exercised
 - - - -
Forfeited or expired
 - - - -
Outstanding at December 31, 2010
 3,717,984 $ 0.60 $ 0.21 52
Exercisable at December 31, 2010
 2,617,984 $ 0.61 $ 0.19 51
Granted
 887,910 0.60 0.27 60
Exercised
 (44,638 ) 0.40 0.18 39
Forfeited or expired
 - - - -
Outstanding at December 31, 2011
 4,561,256 $ 0.60 $ 0.22 43
Exercisable at December 31, 2011
 4,081,256 $ 0.59 $ 0.21 42
 
The Company recorded $373,876, $497,527 and $871,403 compensation expense for stock warrants to the placement agent and consultants for the year ended December 31, 2011, the year ended December 31, 2010 and the period from inception (February 20, 2007) to December 31, 2011, respectively. As of December 31, 2011, unrecognized compensation expense of $140,775 is related to non-vested warrants granted to consultants which is anticipated to be recognized over the next 44 months, commensurate with the vesting schedules. There is no unrecognized compensation expense for the placement agent warrants because they are fully vested at date of grant.
 
Warrants to directors and officers
The Company has issued to certain directors and officers common stock purchase warrants to acquire shares of common stock at an exercise price of $2.00 per share for a period of five years. Additionally, under the terms of a Promissory Note issued to an officer and director, common stock purchase warrants were issued to acquire 100,000 shares of common stock at an exercise price of $0.50 per share for a period of two years.
 
The following table summarizes warrant activity for directors and officers:
 
Number of Shares
Weighted
Average
Exercise Price
per Share
Weighted
Average Grant
Date Fair Value
per Share
Weighted
Average
Remaining
Exercise Term
in Months
Outstanding at January 1, 2010
 - $ - $ - -
Granted
 1,400,000 2.00 0.13 60
Exercised
 - - - -
Forfeited or expired
 - - - -
Outstanding at December 31, 2010
 1,400,000 $ 2.00 $ 0.13 59
Exercisable at December 31, 2010
 1,400,000 $ 2.00 $ 0.13 59
Granted
 1,600,000 1.91 0.09 57
Exercised
 - - - -
Forfeited or expired
 - - - -
Outstanding at December 31, 2011
 3,000,000 $ 1.95 $ 0.11 49
Exercisable at December 31, 2011
 3,000,000 $ 1.95 $ 0.11 49
 
The Company recorded $143,680, $182,000 and $325,680 compensation expense for stock warrants to directors and officers for the year ended December 31, 2011, the year ended December 31, 2010 and the period from inception (February 20, 2007) to December 31, 2011, respectively. There is no unrecognized compensation expense for these warrants because they are fully vested at date of grant.