STOCK BASED COMPENSATION

12 Months Ended

Dec. 31, 2013

NOTE 8 - STOCK BASED COMPENSATION

The Company uses the Black-Scholes option pricing model to calculate the grant-date fair value of an award, with the following assumptions for 2013 and 2012: no dividend yield in both years, expected volatility, based on the Company's historical volatility, 107% to 113% in 2013 and between 77% and 217% in 2012, risk-free interest rate between 0.94% to 1.86% in 2013 and between 0.13% and 2.26% in 2012 and expected option life of 3 to 10 years in 2013 and 2 to 10 years in 2012.

As of December 31, 2013, there was $384,591 of unrecognized compensation expense related to non-vested market-based share awards that is expected to be recognized through October 2016.

The following tables summarize all stock option and warrant activity of the Company during the year ended December 31, 2013 and 2012:

	Non-Qualified Stock Options and Warrants Outstanding and Exercisable
						Weighted
	Number of			Exercise		Average
	Shares			Price		Exercise Price

Outstanding, December 31, 2011		8,798,500			$0.25 - $1.75	$	1.02

Granted		1,210,000			$0.90 - $1.69	$	1.19
Expired		(25,000	)		$1.25	$	1.25
Forfeited					-		-
Exercised		(1,210,000	)		$0.25 - $1.25	$	0.37

Outstanding, December 31, 2012		8,773,500			$0.25 - $1.75	$	1.13

Granted		560,000			$0.84 - $1.16	$	0.96
Expired		(1,971,650	)		$0.73 - $1.25	$	1.02
Forfeited		(120,000	)		$0.93 - $1.03	$	0.99
Exercised		(95,850	)		$0.345 - $1.25	$	0.76

Outstanding, December 31, 2013		7,146,000			$0.25 - $1.75	$	1.16

Exercisable, December 31, 2013		6,529,123			$0.25 - $1.75	$	1.18

Non-Qualified Stock Options and Warrants Outstanding
	Number Outstanding	Weighted Average	Weighted Average
Range of	Currently Exercisable	Remaining	Exercise Price of Options and
Exercise Prices	at December 31, 2013	Contractual Life	Warrants Currently Exercisable

$0.25 - $1.75	6,529,123	2.82	$1.18

- 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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