STOCK OPTION PLAN AND WARRANTS

3 Months Ended

Mar. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

NOTE 5

STOCK OPTION PLAN AND WARRANTS

The Company has also granted non-qualified stock options to employees and contractors. All non-qualified options are generally issued with an exercise price equal to the closing price of the Common Stock on the date of the grant. Options may be exercised up to ten years following the date of the grant, with vesting schedules determined by the Company upon grant. Vesting periods range from 100% fully vested upon grant to a range of four to five years. Vested options may be exercised up to three months following date of termination of the relationship. The fair values of options are determined using the Black-Scholes option-pricing model. The estimated fair value of options is recognized as an expense on the straight-line basis over the options’ vesting periods.

Stock option transactions during the three months ended March 31, 2014 were as follows:

	Three months ended March 31, 2014
	Shares		Weighted - Average Exercise Price
Outstanding at Beginning of Year		5,693,322	$	1.07
Granted		130,000		1.71
Exercised		(56,345)		0.10
Forfeited or Canceled		(127,750)		1.16
Outstanding at End of Period		5,639,227		1.09
Options Exercisable at Period-End		4,612,441	$	1.33
Weighted-Average Fair Value of Options Granted During the Period	$	0.44

Information with respect to stock options outstanding and exercisable as of March 31, 2014 is as follows:

Options Outstanding

Options Exercisable

Number

Weighted -

Number

Outstanding

Average

Weighted -

Exercisable

Weighted -

Range of

Remaining

Average

Exercise

Mar. 31,

Contractual

Exercise

Mar. 31,

Exercise

Prices

2014

Life

Price

2014

Price

$ 0.10 - $1.80

5,639,227

7.4 Years

1.09

4,612,441

1.33

The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for options granted.

	2014
Expected Life	6.25 yrs
Dividend Yield	0	%
Expected Volatility	24.22	%
Risk-Free Interest Rate	2.73	%

Expected volatility for 2014 was estimated by using the Dow Jones U.S. Industry indexes sector classification methodology for industries similar to the Company. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the grant date. The expected life of the options is based on management’s estimate using historical experience.

Warrants

All Stock Warrant activity during the three months ended March 31, 2014 was related to the convertible debentures sold during the same period (See Note 3). Warrants included in the sale of the convertible debentures may be exercised up to 5 years following the date of grant with an exercise price of $1.65.

Stock warrant transactions during the three months ended March 31, 2014 were as follows:

Outstanding at December 31, 2013		3,883,641
Granted		199,197
Exercised		-
Forfeited or Canceled		-
Warrants Redeemable at March 31, 2014		4,082,838

- 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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