STOCK BASED COMPENSATION

12 Months Ended

Dec. 31, 2014

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 2014 and 2013: no dividend yield in both years, expected volatility, based on the Company's historical volatility, 70.25% to 109% in 2014 and between 107% to 113% in 2013, risk-free interest rate between 0.58% to 2.08% in 2014 and between 0.94% to 1.86% in 2013 and expected option life of 2.13 to 7.25 years in 2014 and 3 to 10 years in 2013.

As of December 31, 2014, there was $324,004 of unrecognized compensation expense related to non-vested market-based share awards that is expected to be recognized through May 2017.

The following tables summarize all stock option and warrant activity of the Company during the year ended December 31, 2014 and 2013:


	Non-Qualified Stock Options and Warrants Outstanding and Exercisable

	Number of			Exercise		Weighted Average
	Shares			Price		Exercise Price

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

Granted		5,257,600			$0.72 - $1.25		$1.07
Expired		(10,000	)		$1.25		$1.25
Forfeited		(125,000	)		$0.92 - $1.03		$0.93
Exercised		(449,000	)		$0.25 - $0.345		$0.34

Outstanding, December 31, 2014		11,819,600			$0.63 - $1.75		$1.15

Exercisable, December 31, 2014		11,267,723			$0.63 - $1.75		$1.16

The aggregate intrinsic value of options and warrants outstanding and exercisable as of December 31, 2014 was $92,950. The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and warrants and the closing stock price of $.77 for our common stock on December 31, 2014. The total intrinsic value of options and warrants exercised during the year ended December 31, 2014 and 2013 was $232,139 and $32,139.


Non-Qualified Stock Options and Warrants Outstanding
Range of Exercise Prices	Number Outstanding Currently Exercisable at December 31, 2014	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price of Options and Warrants Currently Exercisable

$0.63 - $1.75	11,267,723	3.58 Years	$1.16

- 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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