Employee Stock Options

The Company maintains an equity incentive plan, (the “Plan”). The Plan was established in 2010 as an incentive plan for officers, employees, non-employee directors, prospective employees and other key persons. It is anticipated that providing such persons with a direct stake in the Company’s welfare will assure a better alignment of their interests with those of the Company and its stockholders.

The following table summarizes the changes in options outstanding and the related prices for the shares of the Company’s common stock issued to employees of the Company under the Plan as of December 31, 2014.

Transactions involving stock options issued to employees are summarized as follows:

The expected life of awards granted represents the period of time that they are expected to be outstanding.  We determine the expected life based on historical experience with similar awards, giving consideration to the contractual terms, vesting schedules, exercise patterns and pre-vesting and post-vesting forfeitures.  We estimate the volatility of our common stock based on the calculated historical volatility of our own common stock using the trailing 24 months of share price data prior to the date of the award.  We base the risk-free interest rate used in the Black-Scholes option valuation model on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent remaining term equal to the expected life of the award.  We have not paid any cash dividends on our common stock and do not anticipate paying any cash dividends in the foreseeable future.  Consequently, we use an expected dividend yield of zero in the Black-Scholes option valuation model. We use historical data to estimate pre-vesting option forfeitures and record share-based compensation for those awards that are expected to vest. In accordance with ASC 718-10, we adjust share-based compensation for changes to the estimate of expected equity award forfeitures based on actual forfeiture experience.

The following table summarizes the assumptions used to estimate the fair value of options granted during the years ended December 2014 and 2013, using the Black-Scholes option-pricing model:

The total estimated fair value of the options granted during the years ended December 31, 2014 and 2013 was $35,298 and $86,672. The total fair value of underlying shares related to options that vested during the years ended December 31, 2014 and 2013 was $15,047 and $124,208. Future compensation expense related to non-vested options at December 31, 2014 was $48,695 and will be recognized over the next 3.41 years. The aggregate intrinsic value of the vested options was zero as of December 31, 2014 and 2013. Total stock-based compensation expense recognized in the consolidated statements of operations for the years ended December 31, 2014 and 2013 was $15,046 and $89,565, respectively.

Non-Employee Stock Options

There were no non-employees stock options issued or outstanding at December 31, 2014 or 2013.

Warrants

The following table summarizes the changes in warrants outstanding and the related exercise prices for the warrants issued to non-employees of the Company.

Transactions involving warrants are summarized as follows:

The Company issued 300,000 warrants during the year ended December 31, 2014. During the year ended December 31, 2013, 86,472 warrants were exercised. These warrants were originally granted to the Company’s placement agent in lieu of cash compensation for services performed or financing expenses in connection with the placement of convertible preferred stock.