2011 Plan – On July 27, 2011, in connection with the Merger, the Company obtained the written consent of holders of a majority of its outstanding common stock approving the 2011 Incentive Stock Plan (the “2011 Plan”). The 2011 Plan covers up to 8,000,000 shares of common stock, and all officers, directors, employees, consultants and advisors are eligible to be granted awards under the 2011 Plan. An incentive stock option may be granted under the 2011 Plan only to a person who, at the time of the grant, is an employee of the Company or its subsidiaries. The 2011 Plan expires on July 26, 2021, and is administered by the Company’s Board. As of December 31, 2013, there were 3,928 shares of common stock available for issuance under the 2011 Plan.

During the year ended December 31, 2012, the Company’s board of directors approved the issuance of up to an additional 2,000,000 shares of the Company’s Common Stock in the form of restricted stock or options. These options generally have the same terms and conditions as those provided under the 2011 Plan, however, the authorization of these options is not subject to shareholder approval. The issuance of these options will be approved by the Company’s board of directors on a case-by-case basis. As of December 31, 2013, there were 66,071 shares of common stock available for issuance under this approval.

During November 2013, the Company’s board of directors approved the issuance of up to 2,000,000 shares of the Company’s Common Stock in the form of restricted stock of options (“2013 Stock Plan”). The options granted under the 2013 Stock Plan have generally the same terms and conditions as those provided under the 2011 Plan. The Stock Plan is administered by the Company’s board of directors. As of December 31, 2013, there were 1,600,000 shares of common stock available for issuance under the 2013 Stock Plan.

	Shares		Weighted Average Fair Value Per Share		Weighted Average Exercise Price Per Share		Weighted Average Remaining Terms (in years)		Aggregate Intrinsic Value
Outstanding – January 1, 2012		5,407,500	$	0.09	$	0.20	9.86		966,250
Granted		3,910,001		0.14		0.57
Exercised		-		-		-
Cancelled		-		-		-
Outstanding – December 31, 2012		9,317,501	$	0.11	$	0.36		9.03	$	539,650
Granted		1,012,500		0.09		0.41
Exercised		-		-		-
Cancelled		-		-		-
Outstanding – December 31, 2013		10,330,001	$	0.10	$	0.36		8.16	$	109,050
Exercisable – December 31, 2012		4,973,333	$	0.11	$	0.30		8.97	$	39,600
Exercisable – December 31, 2013		8,416,668	$	0.10	$	0.32		8.05	$	107,517

For the year ended December 31, 2013 and 2012, the Company recognized stock-based compensation expense of $421,305 and $508,265, respectively, which is included in payroll and related expenses in the accompanying consolidated statements of operations.

As of December 31 2013, there was $100,569 of total unrecognized compensation costs related to non-vested stock options, which will be expensed over a weighted average period of 0.65 years. The intrinsic value is calculated as the difference between the fair value of the stock price at year end and the exercise price of each of the outstanding stock options. The fair value of the stock price at December 31, 2013 and December 31, 2012 was $0.21 per share and $0.30 per share, respectively, as determined by using a weighted value between the income approach method and the weighted average bulletin board price.

During 2011, the Company executed a two year consulting agreement with a consultant, to act as a Senior Advisor of the Company. In consideration for the services to be performed under the agreement, the Company shall on the last business day of each month during the term, grant the consultant an option to purchase 10,000 shares of the Company’s common stock with an exercise price equal to fair market value. One-third of the options vest upon the grant date, the second third vests on the first anniversary date of the grant date, and the remaining third vests on the second anniversary of the grant date. During the year ended December 31, 2013, the consultant was granted options to purchase 100,000 shares of the Company’s common stock with exercise prices ranging from $0.16 to $0.32 per share. These options were not granted under the 2011 Plan or the 2013 Stock Plan. The fair value of these options upon issuance amounted to $15,083.

On January 2, 2012, the Chief Executive Officer of the Company was granted an option to purchase 2,000,000 shares of the Company’s Common Stock with an exercise price of $0.75. One-third of the options vest upon the grant date, the second third vests on the first anniversary date of the grant date, and the remaining third vests on the second anniversary of the grant date. The fair value of these options upon issuance amounted to $206,500.

On March 20, 2012, three employees of the Company were granted options to purchase a total of 215,000 shares of the Company’s Common Stock with an exercise price of $0.50. One-third of the options vest upon the grant date, the second third vests on the first anniversary date of the grant date, and the remaining third vests on the second anniversary of the grant date. The fair value of these options upon issuance amounted to $30,143.

On March 21, 2012, seven employees and directors of the Company were granted options to purchase 155,000 shares of the Company’s Common Stock with an exercise price of $0.50. One-third of the options vest upon the grant date, the second third vests on the first anniversary date of the grant date, and the remaining third vests on the second anniversary of the grant date. The fair value of these options upon issuance amounted to $21,669.

On June 20, 2012, four consultants of the Company were granted options to purchase 195,000 shares of the Company’s Common Stock with an exercise price of $0.28. These options were granted separate and apart from the 2011 Plan and were not granted from the shares available under the Company’s 2011 Plan. One-third of the options vest upon the grant date, the second third vests on December 20, 2012 and the remaining third vests on June 20, 2013. The fair value of these options upon issuance amounted to $34,632.

On August 7, 2012, eight executives and directors of the Company were granted options to purchase 125,001 shares of the Company’s Common Stock with an exercise price of $0.35. One-third of the options vest upon the grant date, the second third vests on the first anniversary date of the grant date, and the remaining third vests on the second anniversary of the grant date. The fair value of these options upon issuance amounted to $17,559.

On August 10, 2012, two consultants of the Company were granted options to purchase 1,100,000 shares of the Company’s Common Stock with an exercise price of $0.35. One-third of the options vest upon the grant date, the second third vests on the first anniversary date of the grant date, and the remaining third vests on the second anniversary of the grant date. The fair value of these options upon issuance amounted to $225,610.

On March 14, 2013, under the 2011 Plan, three employees and directors of the Company were granted options to purchase 150,000 shares of the Company’s Common Stock with an exercise price of $0.43 per share. One-third of the options vest upon the grant date, the second third vests on the first anniversary date of the grant date, and the remaining third vests on the second anniversary of the grant date. The fair value of these options upon issuance amounted to $11,310.

On March 14, 2013, seven employees and directors of the Company were granted options to purchase 362,500 shares of the Company’s Common Stock with an exercise price of $0.43 per share. These options were granted separate and apart from the 2011 Plan and were not granted from the shares available under the Company’s 2011 Plan. One-third of the options vest upon the grant date, the second third vests on the first anniversary date of the grant date, and the remaining third vests on the second anniversary of the grant date. The fair value of these options upon issuance amounted to $27,333.

On November 8, 2013, two consultants of the Company were granted options to purchase 400,000 shares of the Company’s Common Stock with an exercise price of $0.43 per share. These shares were granted under the 2013 Stock Plan. One-third of the options vest upon the grant date, the second third vests on the first anniversary date of the grant date, and the remaining third vests on the second anniversary of the grant date. The fair value of these options upon issuance amounted to $37,600.

The fair value of the stock-based option awards granted during the years ended December 31, 2013 and 2012 were estimated at the date of grant using the Black-Scholes option valuation model with the following assumptions:

	2013			2012
Expected dividend yield		0.00	%		0.00	%
Expected stock volatility		50	%		50	%
Risk-free interest rate		0.88 – 3.04	%		0.59 – 1.22	%
Expected life	5.25-10 years			5.25-10 years

Because the Company does not have significant historical data on employee exercise behavior, the Company uses the “Simplified Method” to calculate the expected life of the stock-based option awards granted to employees. The simplified method is calculated by averaging the vesting period and contractual term of the options.