Compensation Related Costs, Share Based Payments

3 Months Ended

Jun. 30, 2011

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

NOTE 8 -STOCK OPTIONS AND WARRANTS

Warrants

The following table summarizes in warrants outstanding and related prices for the shares of the Company’s common stock issued to shareholders at June 30, 2011:


				Warrants Outstanding Weighted Average						Warrants Exercisable
				Remaining		Weighted				Weighted
		Number		Contractual		Average		Number		Average
Exercise Price		Outstanding		Life (years)		Exercise price		Exercisable		Exercise Price
$	0.01		750,000		3.08	$	0.01		750,000	$	0.01
	0.85		3,000,006		3.90		0.85		3,000,006		0.85
	0.95		120,842		1.51		0.95		120,842		0.95
	0.96		203,385		1.00		0.96		203,385		0.96
	1.00		921,000		3.91		1.00		921,000		1.00
	1.10		1,250,000		4.06		1.10		1,187,500		1.10
	1.14		5,178,948		1.51		1.14		5,178,948		1.14
	1.15		162,709		1.00		1.15		162,709		1.15
	1.20		2,920,000		3.20		1.20		2,920,000		1.20
	1.50		350,000		2.70		1.50		350,000		1.50
Total			14,856,890		2.77				14,794,390

Transactions involving the Company’s warrant issuance are summarized as follows:


	Number of Shares			Weighted Average Price Per Share

Outstanding at December 31, 2009		11,247,083		$	1.08
Issued		5,000,006			0.94
Exercised		(915,199	)		0.10
Canceled or expired		(50,000	)		0.10
Outstanding at December 31, 2010		15,281,890			1.10
Issued		450,000			1.04
Expired		(625,000	)		(2.90	)
Canceled		(250,000	)		(1.00	)
Outstanding at June 30, 2011		14,856,890		$	1.03

During the six months ended June 30, 2011, the warrants totaling 200,000 were issued in connection with the sale of Series D preferred stock. The warrants are exercisable for five years from the date of issuance at an exercise price of $1.10 per share.

During the six months ended June 30, 2011, the Company canceled 250,000 warrants previously issued under the 2010 commitment fees due to a default of one of the lenders and accordingly recognized as expense the remaining amortization (included in table above). Subsequent to the cancelation, the Company re-issued 250,000 replacement warrants once the default conditions were cleared under the same remaining terms and conditions of the previous canceled warrants. The warrants were valued using the Black Scholes option pricing method with the following assumptions: dividend yield: $-0-, volatility: 75.44%, expected life: 4.24years and risk free rate: 2.50%.

Stock plans

The 2004 Equity Incentive Plan, initially established by NewCardio Technologies, Inc., was adopted by the Company in 2007, as amended, and 10.3 million shares were registered on SEC Form S-8 in the first quarter of 2008. At June 30, 2011 there are approximately 0.5 million shares available for grant.

The 2009 Equity Compensation Plan approved by the Board of Directors on April 15, 2009 and registered on SEC Form S-8 in June 2009, reserved 8.0 million shares of the Corporation’s common stock for the Plan, plus a number of shares annually as of April 15th of each year as initially equal to ten (10%) percent of the issued and outstanding common stock, on a fully diluted basis and effective April 15, 2011 a number equal to 10% of the then outstanding stock on a fully diluted basis (including warrants, options, RSUs, and Convertible Securities) but not less than 1 million over last year’s reserve. At June 30, 2011, the total reserve is approximately 13.6 million shares; approximately 8.5 million shares are available for grant.

The 2010 Restricted Equity Compensation Plan approved by the Board of Directors on September 13, 2010 reserved 1 million shares of the Corporation’s common stock for the Plan. At June 30, 2011, there are 750,000 shares available for grant.

The Company granted equity based compensation over the years under these equity plans. The Company granted non-qualified stock options to purchase 2,402,398 and 1,100,000 shares of common stock during the six months ended June 30, 2011 and 2010, respectively, under the 2004 Equity Incentive Plan and the 2009 Equity Compensation Plan as well as -0- and 116,614 restricted stock units during the six months ended June 30, 2011 and 2010, respectively, under the 2009 Equity Compensation Plan. The Company granted no restricted shares during the six months ended June 30, 2011 and 2010 under the 2010 Restricted Equity Compensation Plan.

Non Employee Stock Options

The following table summarizes in options outstanding and the related prices for the shares of the Company's common stock issued to non employees at June 30, 2011:


		Options Outstanding						Options Exercisable
				Weighted Average		Weighted				Weighted
				Remaining		Average				Average
Exercise		Number		Contractual Life		Exercise		Number		Exercise
Prices		Outstanding		(Years)		Price		Exercisable		Price

$	0.01		309,417		6.15	$	0.01		128,625	$	0.01
	0.02		165,826		4.96		0.02		165,826		0.02
	0.22		768,611		6.61		0.22		759,236		0.22
	0.77		100,000		9.25		0.77		18,750		0.77
	0.80		429,000		7.12		0.80		302,379		0.80
	0.85		100,000		9.74		0.85		6,250		-
	0.90		3,000		9.06		0.90		689		0.90
	1.16		25,000		7.08		1.16		11,461		1.16
	2.25		150,000		6.68		2.25		121,875		2.25
Total			2,050,854		6.91				1,515,091

Transactions involving stock options issued to non employees are summarized as follows:


	Number of Shares			Weighted Average Price Per Share

Outstanding at December 31, 2009:		1,405,144		$	1.10
Granted		203,000			0.40
Employment status change		735,000			0.22
Exercised		(85,385	)		(0.14	)
Expired		(400,000	)		(2.00	)
Outstanding December 31, 2010		1,857,759			0.52
Granted		209,000			0.41
Exercised		(15,905	)		(0.01	)
Expired		-			-
Outstanding, June 30, 2011		2,050,854		$	0.51

During the six months ended June 30, 2011, the Company granted an aggregate of 209,000 non employee stock options in connection services rendered at the exercise prices from $0.01 to $0.85.

The fair values of the vesting non employee options for the six months ended June 30, 2011 were determined using the Black Scholes option pricing model with the following assumptions: Dividend yield: 0%; Volatility: 74.02% to 85.81%; and Risk free rate: 1.80% to 3.47%.

The fair value of all non employee options vesting during the three and six months ended June 30, 2011 of $13,844 and $55,733, respectively, was charged to current period operations.

The fair value of all non-employee options vesting during the three and six months ended June 30, 2010 of $49,447 and $110,380, respectively was charged to current period operations.

Employee Stock Options

The following table summarizes the options outstanding and the related prices for the shares of the Company's common stock issued to employees of the Company under a non-qualified employee stock option plan at June 30, 2011:


		Options Outstanding						Options Exercisable
				Weighted Average		Weighted				Weighted
				Remaining		Average				Average
Exercise		Number		Contractual Life		Exercise		Number		Exercise
Prices		Outstanding		(Years)		Price		Exercisable		Price

$	0.001		100,000		2.54	$	0.001		100,000	$	0.001
	0.01		1,778,214		8.74		0.01		497,381		0.01
	0.02		880,000		5.69		0.02		880,000		0.02
	0.22		1,000,000		6.40		0.22		1,000,000		0.22
	0.36		200,000		9.97
	0.69		105,000		9.36		0.69		67,500		0.69
	0.77		100,000		8.80		0.77		27,083		-
	0.78		40,000		8.38		0.78		15,833		0.78
	0.80		4,090,000		7.07		0.80		3,004,593		0.80
	0.81		185,184		9.51		0.81		23,148		9.76
	0.83		120,000		9.50		0.83		-		-
	0.85		330,000		9.74		0.85		-		-
	0.98		500,000		8.96		0.98		125,000		-
	1.32		450,000		8.90		1.32		150,012		1.32
Total			9,878,398		7.58				5,890,550

Transactions involving stock options issued to employees are summarized as follows:


	Number of Shares			Weighted Average Price Per Share

Outstanding at December 31, 2009:		7,365,000		$	0.53
Granted		1,275,000			1.06
Employment status change		(735,000	)		(0.22	)
Exercised		-			-
Forfeitures		(101,256	)		(0.80	)
Outstanding at December 31, 2010		7,803,744			0.63
Granted		2,193,398			0.24
Exercised		(92,500	)		(0.80	)
Forfeitures		(26,244	)		(0.80	)
Outstanding at June 30, 2011:		9,878,398		$	0.54

During the six months ended June 30, 2011, the Company granted an aggregate of 2,193,398 stock options with an exercise prices of $0.01 to $0.85. The fair values were determined using the Black Scholes option pricing model with the following assumptions: Dividend yield: 0%; Volatility: 72.17% to 91.09%; and Risk free rate: 2.94% to 3.58%.

The fair value of all employee options vesting in the three and six months ended June 30, 2011 of $950,405 and $1,744,030, respectively, was charged to current period operations.

The fair value of all employee options vesting in the three and six months ended June 30, 2010 of $828,820 and $1,628,912, respectively, was charged to current period operations.

Restrictive Stock Units (“RSUs”)

The Company has issued RSUs to certain employees and non employees under the 2009 Equity Compensation Plan. RSUs issued to date vest in up to 24 months with certain acceleration clauses, as defined by the 2009 Equity Compensation Plan.

Employees

Transactions involving employee RSUs are summarized as follows:


	Number of Shares			Weighted Average Price Per Share

Outstanding at December 31, 2009:		1,470,000		$	0.80
Granted		116,614			1.32
Exercised		(18,183	)		(1.32
Forfeitures		(65,810	)		(0.81	)
Outstanding at December 31, 2010		1,502,621			0.83
Granted		-			-
Exercised		(1,453,812	)		(0.82	)
Forfeitures		-
Outstanding at June 30, 2011:		48,809		$	1.32

The fair value of all employees RSUs vesting three and six months ended June 30, 2011 of $46,833 and $187,333, respectively, was charged to current period operations.

The fair value of all employees RSUs vesting three and six months ended June 30, 2010 of $147,000 and $447,930, respectively, was charged to current period operations.

Non employees

Transactions involving non employee RSUs are summarized as follows:


	Number of Shares			Weighted Average Price Per Share

Outstanding at December 31, 2009:		105,000		$	0.80
Granted		-			-
Exercised		-			-
Outstanding at December 31, 2010:		105,000			0.80
Granted		-			-
Exercised		(105,000	)		-
Outstanding at June 30, 2011:		-		$	-

The fair value of all non employees RSUs vesting during the three and six months ended June 30, 2011 of $1,094 and $12,513 respectively was charged to current period operations. The fair value of all non employees RSUs vesting during the three and six months ended June 30, 2010 of $13,125 and $28,350 respectively was charged to current period operations.

NewCardio, Inc. 10-Q/A