Stock-Based Compensation

9 Months Ended

Sep. 30, 2014

GAAP requires that all stock-based compensation be recognized as an expense in the financial statements and that such costs be measured at the fair value of the award.

The Company has granted options/warrants to consultants. These awards generally vest ratably over 12 to 60 months from the date of grant and the Company charges to operations quarterly the current market value of the options using the Black-Scholes method. During the nine months ended September 30, 2014 and 2013, a charge (benefit) of $31,879 and $114,931, respectively, and during the three months ended September 30, 2014 and 2013, $(33,901) and $42,746, respectively was recorded to operations reflecting the fair value of the options using the Black-Scholes method with the following weighted average assumptions:

	2014			2013
Risk free interest rate		1.7	%		1.5	%
Option Life		5.2 years			5.4 years
Volatility		55	%		63	%

The Company granted 80,200 fully vested options during the nine months ended September 30, 2013 to employees and recorded share-based compensation of $173,120. The Company valued these grants using the Black-Scholes option pricing model with the following assumptions:

Risk free interest rate	0.8	%
Option Life	5 years
Volatility	71	%

The Company did not grant any stock options to employees and directors during the nine months ended September 30, 2014.

In connection with the restricted stock grants to employees and directors, the Company charged $131,643 and $190,576 to operations during the three months ended September 30, 2014 and 2013, respectively and $394,930 and $922,864 was charged to operations during the nine months ended September 30, 2014 and 2013, respectively. As of September 30, 2014, remaining unamortized compensation costs in connection with these restricted stock grants was $364,000 which will be recognized over the next 15 month period.

- 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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