Stock-Based Compensation

12 Months Ended

Dec. 31, 2013

Stock-Based Compensation [Abstract]

Stock-Based Compensation

Note 8: Stock-Based Compensation

From time to time, the Company grants stock option awards to officers and employees.

In November 2010, the board of directors authorized the 2010 Stock Incentive Plan ("the Plan") which provides us with the ability to issue options on up to 272,000 common shares.

On April 29, 2011, the Company increased the number of shares of the Company's common stock available for issuance under the plan from 272,000 to 500,000.

In August 2013, the Company increased the number of shares of the Company's common stock available for issuance under the Plan from 500,000 to 1,000,000. The Company's stockholders approved this increase on October 22, 2013 pursuant to a written consent of stockholders owning a majority of the shares of outstanding common stock.

Such awards are valued based on the grant date fair value of the instruments, net of estimated forfeitures, using a Black-Scholes option pricing model with the following assumptions:

	Year Ended December 31,
	2013			2012
Volatility		66% - 68	%		54% - 68	%
Risk-free interest rate		1.74% - 2.01	%		0.90% - 1.22	%
Expected term	6.25-7.25 years			6.3 years
Forfeiture rate		15	%		15	%
Dividend yield rate		0	%		0

The volatility used was based on historical volatility of similar sized companies due to lack of historical data of the Company's stock price. The risk free interest rate was determined based on treasury securities with maturities equal to the expected term of the underlying award. The expected term was determined based on the simplified method outlined in Staff Accounting Bulletin No. 110.

Stock option awards are expensed on a straight-line basis over the requisite service period. During the years ended December 31, 2013 and 2012, the Company recognized expense of $212,946 and $153,376, respectively, associated with stock option awards. At December 31, 2013, future stock compensation expense (net of estimated forfeitures) not yet recognized was $1,208,238 and will be recognized over a weighted average remaining vesting period of 3.68 years. The following summarizes stock option activity for the year ended December 31, 2013:

								Weighted
				Weighted		Weighted		Average
				Average		Average		Remaining
	Number			Exercise		Fair		Contractual
	of Shares			Price		Value		Life
Outstanding at December 31, 2012		437,667		$	4.45	$	2.40
Granted at market price		353,690			5.06
Exercised		(58,900	)	$	1.09
Forfeited		(107,300	)	$	6.04
Outstanding at December 31, 2013		625,157			4.83		2.92		8.9
Exercisable at December 31, 2013		148,532		$	3.97	$	2.33		8.0

The outstanding shares at December 31, 2012 were adjusted to reflect options that were issued but not included in the prior periods tables. This does not impact stock compensation expense.

The following summarizes information about the Company's stock options at December 31, 2013:

	Exercisable				Unexercisable				Total
			Weighted				Weighted				Weighted
			Average				Average				Average
	Number		Exercise		Number		Exercise		Number		Exercise
Range of Exercise Prices	Outstanding		Price		Outstanding		Price		Outstanding		Price
$1.25 per share		56,717	$	1.25		20,450	$	1.25		77,167	$	1.25
$4.95 per share		46,375	$	4.95		90,125	$	4.95		136,500	$	4.95
$5.00 per share		24,490	$	5.00		274,199	$	5.00		298,690	$	5.00
$5.15 per share		-	$	5.15		25,000	$	5.15		25,000	$	5.15
$5.55 per share		-	$	5.55		30,000	$	5.55		30,000	$	5.55
$7.95 per share		20,950	$	7.95		36,850	$	7.95		57,800	$	7.95

The intrinsic value of the Company's stock options outstanding was $0 at December 31, 2013.