Quarterly report pursuant to Section 13 or 15(d)

STOCK OPTIONS AND WARRANTS

STOCK OPTIONS AND WARRANTS

3 Months Ended

Mar. 31, 2015

Employee Options

The following table summarizes the changes in employee options outstanding and the related prices for the shares of the Company’s common stock issued to non-employees of the Company under the 2014 Stock Option Plan:

Options Outstanding						Options Exercisable
Exercise Prices		Number Outstanding		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price

$	0.10		15,000,000		4.63	$	0.10		15,000,000	$	0.10

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

	Number of Shares			Weighted Average Exercise Price Per Share
Outstanding at December 31, 2013		9,000,000		$	0.015
Granted		15,000,000			0.100
Exercised		(9,000,000	)		0.015
Expired
Outstanding at December 31, 2014		15,000,000		$	0.100
Granted		-
Exercised		-
Expired		-			-
Outstanding at March 31, 2015		15,000,000		$	0.100

The intrinsic value of the vested employee stock options as of March 31, 2015 was $300,000 based on the Company’s stock price of $0.12 per share at March 31, 2015.

Non-employee options

The following table summarizes the changes in non-employee options outstanding and the related prices for the shares of the Company’s common stock issued to non-employees of the Company under the 2013 Stock Option Plan:

Options Outstanding						Options Exercisable
Exercise Prices		Number Outstanding		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$	0.10		200,000		3.52	$	0.10		200,000	$	0.10
	0.20		150,000		3.94		0.20		150,000		0.20
			350,000		3.70		0.14		350,000

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

	Number of Shares			Weighted Average Exercise Price Per Share
Outstanding at December 31, 2013		2,750,000		$	0.015
Granted		150,000			0.200
Exercised		(2,550,000	)		0.017
Expired		-			-
Outstanding at December 31, 2014		350,000			0.0140
Granted		-			-
Exercised		-			-
Expired		-			-
Outstanding at March 31, 2015		350,000		$	0.14

The assumptions used in the valuation of stock options vesting during the three months ended March 31, 2015 and 2014 were as follows:

	2015			2014
Risk-free interest rate		0.89	%		1.73	%
Expected term of option		3.95 years			4.56 years
Expected stock price volatility		164.63	%		226.04	%
Expected dividend yield		0.0	%		0.0	%

The risk-free interest rate is based on the yield of Daily U.S. Treasury Yield Curve Rates with terms equal to the expected term of the options as of the grant date.

The intrinsic value of the vested non- employee stock options as of March 31, 2015 was $4,000 based on the Company’s stock price of $0.12 per share at March 31, 2015.