Stock-Based Compensation

3 Months Ended

Mar. 31, 2015

Note 10: 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 1,350,000 common shares. At March 31, 2015, the Company had 923,940 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:

	Three Months Ended March 31,
	2015	2014
Volatility	69% - 76%	73%
Risk-free interest rate	1.34% - 1.75%	1.93%
Expected term	6.25 years	6.25 years

The volatility used was based on historical volatility of similar sized companies 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. The Company recognized expense of $156,568 and $151,052, for the three months ended March 31, 2015 and March 31, 2014, respectively. At March 31, 2015, future stock compensation expense (net of estimated forfeitures) not yet recognized was $1,405,356 and will be recognized over a weighted average remaining vesting period of 2.87 years. The following summarizes stock option activity for the three months ended March 31, 2015:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Fair Value	Weighted Average Remaining Contractual Life
Outstanding at December 31, 2014	805,840	$	5.51	$	3.47	8.6
Granted at market price	133,000		5.36
Exercised	(2,750)		0.05
Forfeited	(12,150)		5.98
Outstanding at March 31, 2015	923,940		5.50		3.46	8.6
Exercisable at March 31, 2015	314,957	$	5.25	$	3.15	7.7

The intrinsic value of the Company's stock options outstanding was $0 at March 31, 2015.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

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