Stock-Based Compensation

6 Months Ended

Jun. 30, 2015

During the quarter ended September 30, 2014, it was noted that the Company was applying the expected term of warrants granted in 2009 to certain consultants, rather than the contractual term, which is required by GAAP. The result of using contractual terms of the warrants was an increase to previously reported consultant compensation charges included in Operating Expenses in the Company's Consolidated Statement of Operations. The impact of this change to the prior period is not considered material to the period presented. As a consequence, the Company revised its financial presentation for the three and six months ended June 30, 2014 in which consultant compensation charges have been increased by $124,747 and $145,669, respectively. This adjustment had no impact on the Company's use of cash or cash flow.

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 six months ended June 30, 2015 and 2014, a charge of $10,007 and $65,780, respectively, and during the three months ended June 30, 2015 and 2014, $0 and $124,167, respectively was recorded to operations reflecting the fair value of the options using the Black-Scholes method with the following weighted average assumptions:

	2015			2014
Risk free interest rate		1.7	%		1.7	%
Option Life		8.9 years			5.5 years
Volatility		65	%		58	%

The Company did not grant any stock options to employees and directors during the three and six months ended June 30, 2015 and 2014.

In connection with the restricted stock grants to employees and directors, the Company charged $57,967 and $131,644 to operations during the three months ended June 30, 2015 and 2014, respectively and $115,923 and $263,287 was charged to operations during the six months ended June 30, 2015 and 2014, respectively. As of June 30, 2015, remaining unamortized compensation costs in connection with these restricted stock grants was $116,000 which will be recognized over the next 6 month period.