NOTE 11 - OPTIONS

On February 25, 2015, the Company granted 90,000 options with an exercise price of $1.11 to its non-employee directors, which options expire ten years from the grant date under the Plan. These options became exercisable in accordance with the following schedule: (a) 25% of the options became exercisable on the first anniversary of the grant date, and (b) 6.25% of the options became exercisable on the date three months after the initial vesting date and on such date every third month thereafter, through the fourth anniversary of the grant date. The fair value of the options was calculated using the Black-Scholes options pricing model using the following assumptions: volatility of 115.20%, risk free interest rate of 1.96%, and expected term of 6.25 years. The aggregate fair value of the options was $85,822.

As of September 30, 2015 the Company had 2,922,500 outstanding vested stock options with a weighted average remaining term over 5.87 years. As of September 30, 2015, the Company had 297,500 unvested stock options with a weighted average remaining term over 6.01 years. Unrecorded stock-based compensation expense was $215,682 as of September 30, 2015. The Company recorded $417,470 and $1,838,985 stock-based compensation expense for the nine months ended September 30, 2015 and 2014, respectively. The Company recorded $102,343 and $612,995 stock-based compensation expense for the three months ended September 30, 2015 and 2014, respectively.

The following table summarizes the Company’s stock option activity:

			Weighted		Weighted Average
	Number of		Average		Remaining
	options		Exercise Price		Life in Years

Outstanding, December 31, 2014		3,130,000	$	1.93		6.66

Granted		90,000	$	1.11		9.75
Forfeited		-		-		-
Exercised		-		-		-
Outstanding, September 30, 2015		3,220,000	$	1.90		6.01

Exercisable, December 31, 2014		2,570,000	$	2.03		6.58

Exercisable, September 30, 2015		2,922,500	$	1.98		5.87