Stock-Based Compensation

9 Months Ended

Sep. 30, 2014

Stock-Based Compensation [Abstract]

Stock-Based Compensation

Note 8:  Stock-Based Compensation

From time to time, the Company grants stock option awards to officers and employees under the 2010 Stock Incentive Plan ("the Plan") which, as amended, provides us with the ability to issue options on up to 1,000,000 common shares. On April 28, 2014, the Company's Board of Directors approved an increase of the shares of common stock under the Company's 2010 Employee Stock Plan to 1,350,000 shares. At September 30, 2014, the Company had 740,640 outstanding options issued under the plan.

Such awards are valued based on the grant date fair value of the instruments, net of estimated forfeitures, using a Black-Scholes option pricing model with the following assumptions:

	Nine Months Ended September 30,
	2014		2013
Volatility	73% - 76	%	66% - 68%
Risk-free interest rate	1.76%-1.93	%	1.74% - 2.01%
Expected term	6.25 years		6.25 - 7.25 years

The volatility used was based on historical volatility of similar sized companies, in a similar industry, due to lack of historical data of the Company's stock price. The risk free interest rate was determined based on treasury securities with maturities equal to the expected term of the underlying award. The expected term was determined based on the simplified method outlined in Staff Accounting Bulletin No. 110.

Stock option awards are expensed on a straight-line basis over the requisite service period. During the three and nine months ended September 30, 2014, the Company recognized expense of $133,613 and $408,544, respectively, associated with stock option awards. During the three and nine months ended September 30, 2013, the Company recognized expense of $71,237 and $131,381, respectively, associated with stock option awards. At September 30, 2014, future stock compensation expense (net of estimated forfeitures) not yet recognized was $1,256,891 and will be recognized over a weighted average remaining vesting period of 3.17 years.  

The following summarizes stock option activity for the nine months ended September 30, 2014:

				Weighted		Weighted		Weighted
				Average		Average		Average
	Number of			Exercise		Fair		Remaining
	Shares			Price		Value		Contractual Life
Outstanding at December 31, 2013		627,807		$	4.83	$	2.92
Granted at market price		260,400			6.65
Exercised		(47,867	)		0.47
Forfeited		(99,700	)		6.72
Outstanding at September 30, 2014		740,640			5.44		3.40		8.7
Exercisable		185,869		$	5.11	$	3.02		8.1

The outstanding shares at December 31, 2013 were adjusted to reflect options that were issued but not included in the prior periods tables. This does not impact stock compensation expense.

The intrinsic value of the Company's stock options outstanding was $711,408 at September 30, 2014.

The Company may also grant shares of stock to directors, consultants and employees from time to time, as payment for services rendered or for other employee matters.  Such shares may have a vesting schedule or may be immediately vested.  During the three and nine months ended September 30, 2014, the Company granted 5,171 and 7,133 shares of stock, respectively,  that were immediately vested.  During the three and nine months ended September 30, 2013, the Company granted 75,370 and 148,118 shares of stock, respectively,  that were immediately vested.