Stock-Based Compensation

6 Months Ended

Jun. 30, 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 June 30, 2015, the Company had 984,490 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:

	Six Months Ended June 30,
	2015	2014

Volatility	68% - 76%	73%
Risk-free interest rate	1.34% - 2.00%	1.93%
Expected term	6.25 years - 6.7 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. During the three and six months ended June 30, 2015, the Company recognized expense of $188,459 and $345,327, respectively, associated with stock option awards. During the three and six months ended June 30, 2014, the Company recognized expense of $123,879 and $274,931, respectively, associated with stock option awards. At June 30, 2015, future stock compensation expense (net of estimated forfeitures) not yet recognized was $1,737,832 and will be recognized over a weighted average remaining vesting period of 3.0 years. The following summarizes stock option activity for the six months ended June 30, 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	272,000			5.79
Exercised	(35,075	)		0.83
Forfeited	(58,275	)		5.66
Outstanding at June 30, 2015	984,490			5.63		3.57	8.5
Exercisable at June 30, 2015	301,535		$	5.28	$	3.21	7.6

The intrinsic value of the Company's stock options outstanding was $194,812 at June 30, 2015.