WaveDancer, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

3. Stock-Based Compensation

3. Stock-Based Compensation

6 Months Ended

Jun. 30, 2014

There were 1,000 option awards granted to employees and no option awards granted to non-employees in the three months ended June 30, 2014 and there were 20,000 option awards granted to employees and no option awards granted to non-employees in the three months ended June 30, 2013. There were 1,000 option awards granted to employees and no option awards granted to non-employees in the six months ended June 30, 2014 and there were 180,000 option awards granted to employees and no option awards granted to non-employees in the six months ended June 30, 2013. The fair values of option awards granted in the three months and six months ended June 30, 2014 and 2013 were estimated using the Black-Scholes option pricing model using the following assumptions:

	Three Months ended June 30,				Six Months ended June 30,
	2014		2013		2014		2013
Risk free interest rate		1.77%		0.70%		1.77%		0.70 0.90%
Dividend yield		0%		0%		0%		0%
Expected term	5 years		5 years		5 years		5 years
Expected volatility		47.3%		62.2%		47.3%		62.2 - 62.8%

The status of the options issued as of June 30, 2014 and changes during the six months ended June 30, 2014 and 2013, were as follows:

	Options outstanding
	Number of shares			Weighted average price per share
Balance at December 31, 2013		1,187,000		$	0.26
Options granted, exercised, expired or forfeited		--			--
Balance at March 31, 2014		1,187,000		$	0.26
Options granted		1,000			0.24
Options exercised, expired or forfeited		(3,000	)		0.11
Balance at June 30, 2014		1,185,000		$	0.26

	Number of shares			Weighted average price per share
Balance at December 31, 2012		1,032,500		$	0.29
Options granted		160,000			0.16
Options exercised, expired or forfeited		(10,000	)		0.15
Balance at March 31, 2013		1,182,500		$	0.28
Options granted		20,000			0.18
Options exercised, expired or forfeited		(226,000	)		0.22
Balance at June 30, 2013		976,500		$	0.29

The following table summarizes information about options at June 30, 2014:

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
	1,185,000	$	0.26		5.76	$	52,808		939,000	$	0.29		4.85	$	32,735

Nonvested stock awards as of June 30, 2014 and changes during the six months ended June 30, 2014 were as follows:

	Nonvested
	Number of shares			Weighted average grant date fair value
Balance at December 31, 2013		431,250		$	0.08
Vested		(155,000	)		0.08
Balance at March 31, 2014		276,250		$	0.08
Granted		1,000			0.10
Vested		(31,250	)		0.08
Balance at June 30, 2014		246,000		$	0.08

As of June 30, 2014 and 2013, unrecognized compensation cost associated with non-vested share-based employee and non-employee compensation totaled $8,018 and $10,267, respectively, which are expected to be recognized over weighted average periods of 6 months and 5 months, respectively.