NOTE 12 — STOCK-BASED COMPENSATION

In May 2013, the Company granted to a director, upon his initial election to the board, options to purchase an aggregate of 100,000 shares of the Company’s common stock at an exercise price of $0.32 per share under the Company’s 2003 Stock Incentive Plan. The options, which expire in May 2023, vest 25% on each of the first four anniversaries of the grant date. The Company has valued the options at $19,076 using the Black-Scholes option pricing model.

In June 2013, the Company granted to certain employees options to purchase an aggregate of 425,000 shares of the Company’s common stock at an exercise price of $0.38 per share under the Company’s 2003 Stock Incentive Plan. The options, which expire in June 2023, vest 33.3% on each of the first three anniversaries of the grant date. The Company has valued the options at $93,500 using the Black-Scholes option pricing model.

In June 2013, the Company granted to employees, directors and certain consultants options to purchase an aggregate of 1,495,000 shares of the Company’s common stock at an exercise price of $0.38 per share under the Company’s 2003 Stock Incentive Plan. The options, which expire in June 2023, vest 25% on each of the first four anniversaries of the grant date. The Company has valued the options at $343,850 using the Black-Scholes option pricing model.

In July 2013, the Company granted to a director options to purchase an aggregate of 1,000,000 shares of the Company’s common stock at an exercise price of $0.35 per share under the Company’s 2003 Stock Incentive Plan. The options, which expire in July 2023, vest 33.3% on each of the first three anniversaries of the grant date. The Company has valued the options at $208,405 using the Black-Scholes option pricing model.

Stock-based compensation expense for the three months ended September 30, 2013 and 2012 and for the six months ended September 30, 2013 and 2012 amounted to $105,215 and $79,748, respectively and $177,749 and $138,928, respectively. At September 30, 2013, total unrecognized compensation cost amounted to $968,786, representing 6,032,799 unvested options. This cost is expected to be recognized over a weighted-average vesting period of 2.59 years. There were no options exercised during the six months ended September 30, 2013 and 2012. The Company did not recognize any related tax benefit for the three months ended September 30, 2013 and 2012 from option exercises.