10. COMMON STOCK

12 Months Ended

Dec. 31, 2014

Equity [Abstract]

10. COMMON STOCK

In January 2013, the Compensation Committee of the Board of Directors of the Company authorized the Company to grant each director 96,775 warrants for the purchase of common stock at $0.31 per share for the current year compensation for the year of service the director will serve as a member of the Board of Directors, pursuant to the Company’s Board of Directors compensation plan. The option will vest ratably over a period of two years from the date of when the option was granted. These grants were made pursuant to the annual directors’ compensation program approved by the Board in December 2007.

In August 2013, the Company modified existing options for two former employees.  The Company recognized approximately $31,000 of expense related to the change.

A summary of the status of common stock options and warrants outstanding at December 31, 2014 and 2013, and changes during the years then ended is presented below.

	For the years ended December 31,
	2014					2013
	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
Outstanding at beginning of period		6,609,854		$	0.31		4,897,754		$	0.31
Granted		303,300			0.31		2,105,560			0.31
Exercised		-			-		-			-
Expired or cancelled		(500,000	)		-		(393,460	)		-
Outstanding at end of period		6,413,154		$	0.31		6,609,854		$	0.31
Weighted average fair value of options and warrants exercisable		6,413,154		$	0.31		6,513,079		$	0.31

A summary of the status of the options and warrants outstanding at December 31, 2014 is presented below:

		Warrants Outstanding					Warrants Exercisable
Range of Exercise Prices		Number Outstanding		Weighted-Average Remaining Contractual Life	Weighted-Average Exercise Price		Number Exercisable		Weighted-Average Exercise Price
$	.01-.50		6,413,154	3.5 years	$	0.31		6,413,154	$	0.31

The fair value of each option and warrant granted is estimated on the date granted using the Binomial pricing model, with the following assumptions used for the grants: risk-free interest rate of 1.15%, expected dividend yield of zero, expected lives of five years and expected volatility of 246%.

The stock-based compensation expense recognized in the statement of operations during the years ended December 31, 2014 and 2013 was $1,936 and $97,283 respectively.