Stock Options

12 Months Ended

Dec. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Options

13. Stock Options

The Company has three stock option plans, one adopted in September 1999 and amended in June 2000 (the “1999 Option Plan”), one adopted on November 8, 2000 (the “Directors’ Plan”), and one adopted in July 2010 (the “2010 Option Plan”). The 1999 Option Plan provides for the granting of up to 3,000,000 options, the Directors’ Plan provides for the granting of up to 400,000 options, and the 2010 Option Plan provides for the granting of 4,000,000 options.

On June 24, 2014, the Company filed a registration statement on Form S-8 with the Securities and Exchange Commission amending the shares of Common Stock included within its 2010 Stock Option from 2,000,000 shares to 4,000,000 shares.

The 1999 and 2010 Plans provide for the granting of both incentive and non-qualified stock options to key personnel, including officers, directors, consultants and advisors to the Company, at the discretion of the Board of Directors. Each plan limits the exercise price of the options at no less than the quoted market price of the common stock on the date of grant. The option term is determined by the Board of the Directors or the Compensation Committee, provided that no option may be exercisable more than 10 years after the date of its grant and, in the case of an Incentive Option granted to an eligible employee owning more than 10% of the Company’s common stock, no more than five years after the date of the grant. Generally, under both plans, options to employees vest over four years at 25% per annum, except for certain grants to employees that vest 25% upon grant with remaining amounts over two years at 50% and 25% per annum, respectively.

The Directors’ Plan provides for the granting of non-qualified options to members of the Board of Directors at exercise prices not less than the quoted market price of the common stock on the date of grant and options expire five years from the date of grant. In the event a person ceases to serve on the Board of Directors, the outstanding options expire one year from the date of cessation of service. Such options may be exercised commencing two years from the date of grant.

On August 25, 2014, the Company granted two directors options to purchase 15,000 shares of the Company’s common stock, at an exercise price of $0.27 per share. The options vest over a two year period and expire August 25, 2019. The quoted market price of the common stock at the time of issuance of the options was $0.27 per share. The fair value of the options totaled $3,856 using the Black-Scholes option pricing model with the following assumptions: i) risk free interest rate of 0.0097%, ii) expected life of 5 years, iii) dividend yield of 0%, iv) expected volatility of 176%.

On September 3, 2014, the Company granted an employee options to purchase 30,000 shares of the Company’s common stock, at an exercise price of $0.27 per share. The options vest over a four-year period and expire May 22, 2024. The fair value of the options totaled $8,049 using the Black-Scholes option pricing model with the following assumptions: i) risk free interest rate of 1.63%, ii) expected life of 5 years, iii) dividend yield of 0%, iv) expected volatility of 174%.

On November 10, 2014, the Company granted one director options to purchase 10,000 shares of the Company’s common stock, at an exercise price of $0.21 per share. The options vest over a two year period and expire November 10, 2019. The quoted market price of the common stock at the time of issuance of the options was $0.21 per share. The fair value of the options totaled $2,030 using the Black-Scholes option pricing model with the following assumptions: i) risk free interest rate of 0.088%, ii) expected life of 5 years, iii) dividend yield of 0%, iv) expected volatility of 175%.

On December 19, 2014, the Company granted one director options to purchase 5,000 shares of the Company’s common stock, at an exercise price of $0.22 per share. The options vest over a two year period and expire December 18, 2019. The quoted market price of the common stock at the time of issuance of the options was $0.22 per share. The fair value of the options totaled $1,044 using the Black-Scholes option pricing model with the following assumptions: i) risk free interest rate of 0.96%, ii) expected life of 5 years, iii) dividend yield of 0%, iv) expected volatility of 174%.

On May 27, 2015, the Company granted employees options to purchase 755,000 shares of the Company’s common stock, at an exercise price of $0.16 per share. The options vest over a three-year period and expire May 26, 2025. The quoted market price of the common stock at the time of issuance of the options was $0.16 per share. The fair value of the options totaled $123,591 using the Black-Scholes option pricing model with the following assumptions: i) risk free interest rate of 0.125%, ii) expected life of 10 years, iii) dividend yield of 0%, iv) expected volatility of 168%.

On August 25, 2015, the Company granted two directors options to purchase 15,000 shares of the Company’s common stock, at an exercise price of $0.13 per share. The options vest over a two year period and expire August 25, 2020. The quoted market price of the common stock at the time of issuance of the options was $0.13 per share. The fair value of the options totaled $1,791 using the Black-Scholes option pricing model with the following assumptions: i) risk free interest rate of 1.03%, ii) expected life of 5 years, iii) dividend yield of 0%, iv) expected volatility of 165%.

On December 9, 2015, the Company granted a director options to purchase 2,500 shares of the Company’s common stock, at an exercise price of $0.11 per share. The options vest over a two-year period and expire December 9, 2025. The quoted market price of the common stock at the time of issuance of the options was $0.11 per share. The fair value of the options totaled $272 using the Black-Scholes option pricing model with the following assumptions: i) risk free interest rate of 1.39%, ii) expected life of  10 years, iii) dividend yield of 0%, iv) expected volatility of 167%.

On December 9, 2015, the Company granted one director options to purchase 10,000 shares of the Company’s common stock, at an exercise price of $0.11 per share. The options vest over a two-year period and expire December 9, 2020. The quoted market price of the common stock at the time of issuance of the options was $0.11 per share. The fair value of the options totaled $1,033 using the Black-Scholes option pricing model with the following assumptions: i) risk free interest rate of 0.93%, ii) expected life of 10 years, iii) dividend yield of 0%, iv) expected volatility of 167%.

On December 18, 2015, the Company granted one director options to purchase 5,000 shares of the Company’s common stock, at an exercise price of $0.07 per share. The options vest over a two-year period and expire December 18, 2020. The quoted market price of the common stock at the time of issuance of the options was $0.07 per share. The fair value of the options totaled $330 using the Black-Scholes option pricing model with the following assumptions: i) risk free interest rate of 1.20%, ii) expected life of 5 years, iii) dividend yield of 0%, iv) expected volatility of 169%.

At December 31, 2015 there was $129,577 of unrecognized compensation cost related to nonvested share-based payments, which is expected to be recognized over a weighted-average period of 2.08 years. At December 31, 2014 there was $72,820 of unrecognized compensation cost related to nonvested share-based payments, which is expected to be recognized over a weighted-average period of 1.72 years.

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company’s common stock for those awards that have an exercise price currently below the closing price. As of December 31, 2015 and 2014, the Company had options outstanding to purchase an aggregate of 3,858,000 and 3,560,065 shares respectively, with an exercise price above the quoted price of the Company’s stock, resulting in no intrinsic value.

• In July 2014 an employee exercised a total of 66,666 employee stock options with an exercise price of $0.14 per share The Company received net proceeds of $9,333 upon the exercise.

• In September 2014 an employee exercised a total 25,000 employee stock options with an exercise price of $0.21 per share The Company received net proceeds of $5,250 upon the exercise.

• In September 2014 an employee exercised a total 26,666 employee stock options with an exercise price of $0.14 per share The Company received net proceeds of $3,733 upon the exercise.

• In November  2014 an employee exercised a total 43,332 employee stock options with an exercise price of $0.14 per share The Company received net proceeds of $6,067 upon the exercise.

Additional information concerning the activity in the three option plans is as follows:

	2015					2014
	Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price
Outstanding, beginning of year		3,560,065			0.24		4,194,972			0.25
Granted		787,500			0.16		60,000			0.26
Exercised		—			—		(161,664	)		0.15
Cancelled		—			—		(45,418	)		0.15
Expired		(489,565	)		0.34		(487,825	)		0.32
Outstanding, end of year		3,858,000			0.22		3,560,065			0.24
Exercisable, end of year		2,851,333			0.23		2,885,051			0.19
Options available for future grant, end of year		537,008					834,943			0.16

Additional information concerning the unvested options is as follows:

	2015				2014
	Options		Weighted Average Exercise Price		Options			Weighted Average Exercise Price
Non-Vested options at beginning of year		675,014		0.16		1,311,674			0.18
Granted		787,500		0.16		60,000			0.26
Vested		(455,847)		0.16		(691,242	)		0.18
Cancelled		—		—		(5,418	)		0.15
Non-Vested options end of year		1,006,667		0.17		675,014			0.16

Summarized information with respect to options outstanding under the three option plans at December 31, 2015 is as follows:

	Options Outstanding						Options Exercisable
Range of Exercise Price	Number Outstanding		Remaining Average Contractual Life (In Years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
0.11-.94		3,858,000		5.33		.022		2,851,333		0.23

The estimated fair value of each stock option grant on the date of grant was computed using the following weighted-average assumptions:

	December 31,
	2015		2014
Risk-free interest rate	0.93%-1.39	%	0.88%-1.63	%
Expected term (life) of options (in years)	5-10		4.65-9.40
Expected dividends			—
Expected volatility	164.47%-169.10%		173.78%-176.67	%