3. Stock-Based Compensation

3 Months Ended

Mar. 31, 2015

Stock-based Compensation

3. Stock-Based Compensation

At March 31, 2015, the Company had the stock-based compensation plans described below.  Total compensation expense related to these plans was $2,871 and $5,254 for the quarters ended March 31, 2015 and 2014, respectively, of which $0 and $564, respectively, related to options awarded to non-employees.  The Company estimates the fair value of options granted using a Black-Scholes valuation model to establish the expense.  When stock-based compensation is awarded to employees, the expense is recognized ratably over the vesting period.  When stock-based compensation is awarded to non-employees, the expense is recognized over the period of performance.

There were 20,000 option awards granted to employees and members of the Board of Directors in the three months ended March 31, 2015 and there were no option awards granted to employees and no option awards granted to non-employees in the three months ended March 31, 2014.  The fair values of option awards granted in the three months ended March 31, 2015 were estimated using the Black-Scholes option pricing model using the following assumptions:

	2015
Risk free interest rate		1.61 – 1.97	%
Dividend yield		0	%
Expected term	5-10 years
Expected volatility		41.2 – 54.2	%

The status of the options issued as of March 31, 2015 and changes during the three months ended March 31, 2015 and 2014 were as follows:

	Options outstanding
	Number of shares			Weighted average exercise price per share
Balance at December 31, 2014		1,264,000		$	0.26
Options granted		20,000			0.20
Options exercised		--			--
Options expired or forfeited		(1,000	)		0.24
Balance at March 31, 2015		1,283,000		$	0.26

	Options outstanding
	Number of shares		Weighted average exercise price per share
Balance at December 31, 2013		1,187,000	$	0.26
Options granted		--		--
Options exercised		--		--
Options expired or forfeited		--		--
Balance at March 31, 2014		1,187,000	$	0.26

The following table summarizes information about options at March 31, 2015:

Options outstanding								Options exercisable
Total shares		Weighted average exercise price		Weighted average remaining contractual life in years		Aggregate intrinsic value		Total shares		Weighted average exercise price		Weighted average remaining contractual life in years		Aggregate intrinsic value
	1,283,000	$	0.26		5.36	$	42,258		1,059,500	$	0.28		4.56	$	30,602

Nonvested stock awards as of March 31, 2015 and changes during the three months ended March 31, 2015 were as follows:

	Nonvested
	Number of shares			Weighted average grant date fair value
Balance at December 31, 2014		209,500		$	0.07
Granted		20,000			0.11
Vested		(5,000	)		0.08
Expired before vesting		(1,000	)		0.10
Balance at March 31, 2015		223,500		$	0.08

As of March 31, 2015 and 2014, unrecognized compensation cost associated with non-vested share-based employee and non-employee compensation totaled $6,801 and $11,469, respectively, which are expected to be recognized over weighted average periods of 6 months and 7 months, respectively.