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9. STOCK COMPENSATION

9 Months Ended

Dec. 31, 2013

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

The following table summarizes share-based compensation expenses relating to shares and options granted and the effect on basic and diluted loss per common share during the three and nine months ended December 31, 2013 and 2012:

	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
	December 31, 2013			December 31, 2012			December 31, 2013			December 31, 2012

Total share-based compensation expense	$	32,750		$	175,045		$	223,351		$	570,540

Total share-based compensation expense included in net loss	$	32,750		$	175,045		$	223,351		$	570,540

Basic and diluted loss per common share	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)

The following table breaks out the components of our share-based compensation expenses relating to shares and options granted and the effect on basic and diluted loss per common share during the three and nine months ended December 31, 2013 and 2012.

	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
	December 31, 2013			December 31, 2012			December 31, 2013			December 31, 2012
Vesting of stock options		32,750			77,421			156,993			258,468
Incremental fair value of option modifications		--			957			1,914			22,071
Vesting expense associated with CEO restricted stock grant		--			96,667			64,444			290,001
Total share-based compensation expense	$	32,750		$	175,045		$	223,351		$	570,540

Total share-based compensation expense included in net loss	$	32,750		$	175,045		$	223,351		$	570,540

Basic and diluted loss per common share	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)

All of the stock-based compensation expense recorded during the nine months ended December 31, 2013 and 2012, which totaled $223,351 and $570,540, respectively, is included in payroll and related expense in the accompanying condensed consolidated statements of operations. Stock-based compensation expense recorded during the three and nine months ended December 31, 2013 and 2012 had no impact on basic and diluted loss per common share.

In the nine months ended December 31, 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, which is based on historical data, with respect to stock option grants utilizing the Binomial Lattice option pricing models at, and during the nine months ended December 31, 2013:

Risk free interest rate	0.38% - 2.50%
Average expected life	3 years - 10 years
Expected volatility	94.6% - 102.7%
Expected dividends	None

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 nine months ended December 31, 2013 was insignificant.

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.

Options outstanding that have vested and are expected to vest as of December 31, 2013 are as follows:

					Weighted
			Weighted		Average
			Average		Remaining
	Number of		Exercise		Contractual
	Shares		Price		Term in Years

Vested		21,012,455	$	0.28		3.63
Expected to vest		3,708,343	$	0.11		9.45
Total		24,720,798	$	0.26		4.50

A summary of stock option activity during the nine months ended December 31, 2013 is presented below:

	Number of Options		Range of Exercise Price	Weighted Average Exercise Price
Stock options outstanding at March 31, 2013		21,095,798	$0.76 - $0.41	$0.28
Exercised		–	$--
Granted		3,625,000	$0.10 - 0.11	$0.10
Cancelled/Expired		–	--
Stock options outstanding at December 31, 2013		24,720,798	$0.076 - $0.41	$0.28
Stock options exercisable at December 31, 2013		21,012,455	$0.076 - $0.41	$0.26

At December 31, 2013, there was approximately $304,529 of unrecognized compensation cost related to share-based payments which is expected to be recognized over a weighted average period of 2.32 years.

On December 31, 2013, our stock options had a negative intrinsic value since the closing price on that date of $0.17 per share was below the weighted average exercise price of our stock options.