On May 20, 2014, the Company adopted the 2014 XSUNX, Inc. Stock Option and Award Plan (the “Plan”) to enable the Company to obtain and retain the services of the types of Employees, Consultants and Directors who will contribute to the Company’s long range success and to provide incentives which are linked directly to increases in share value which will inure to the benefit of all stockholders of the Company. The 2007 Stock Option Plan is superseded by the newly adopted 2014 XSUNX, Inc. Stock Option and Award Plan. Options granted under the Plan may be either Incentive Options or Nonqualified Options and shall be administered by the Company's Board of Directors ("Board"). Each Option shall be exercisable to the nearest whole share, in installments or otherwise, as the respective Option agreements may provide. Notwithstanding any other provision of the Plan or of any Option agreement, each Option shall expire on the date specified in the Option agreement. A total of 50,000,000 shares of common stock are authorized under the Plan, of which 7,000,000 options were issued and outstanding under the Plan at June 30, 2014.

A summary of the Company’s stock option activity and related information follows:

	For the period ended
	6/30/2014
		Weighted
	Number	average
	of	exercise
	Options	price
Outstanding, beginning of the period	9,500,000	$ 0.066
Granted	-	-
Exercised	-	-
Expired	(2,500,000)	0.16
Outstanding, end of the period	7,000,000	$ 0.033
Exercisable at the end of the period	6,000,000	$ 0.015
Weighted average fair value of
options granted during the period		$ -

The weighted average remaining contractual life of options outstanding issued under the plan as of June 30, 2014 was as follows:

			Weighted
			Average
	Stock	Stock	Remaining
Exercisable	Options	Options	Contractual
Prices	Outstanding	Exercisable	Life (years)
$ 0.014	500,000	500,000	0.87 years
$ 0.100	1,000,000	-	1.30 years
$ 0.014	4,000,000	4,000,000	1.73 years
$ 0.045	1,500,000	1,500,000	2.54 years
	7,000,000	6,000,000

Stock-based compensation expense recognized during the period is based on the value of the portion of stock-based payment awards that is ultimately expected to vest. Stock-based compensation expense recognized in the financial statements of operations during the nine months ended June 30, 2014, included compensation expense for the stock-based payment awards granted prior to, but not yet vested, as of June 30, 2014 based on the grant date fair value estimated, and compensation expense for the stock-based payment awards granted subsequent to June 30, 2014, based on the grant date fair value estimated. We account for forfeitures as they occur, and no options were forfeited during the period ended June 30, 2014. There was $0 and $44,964 of stock-based compensation expense recognized in the statement of income during the nine months ended June 30, 2014, and 2013 respectively.