SHARE-BASED COMPENSATION EXPENSE

3 Months Ended

Mar. 31, 2016

SHARE-BASED COMPENSATION EXPENSE [Abstract]

NOTE 4 – STOCK-BASED COMPENSATION EXPENSE

The Company periodically grants options to employees, directors and consultants under the Company’s 2008 Equity Incentive Plan (together, the “Plan”). The Company is required to make estimates of the fair value of the related instruments and recognize expense over the period benefited, usually the vesting period.

Stock Option Activity

During the three months ended March 31, 2016, options to purchase an aggregate of 20,000 shares were granted to non-employee directors. The options were granted in connection with service on an ad hoc board committee and vest on the earlier of August 15, 2016, the termination of the committee or termination of service on the committee due to death or disability. The options have a five-year life and an exercise price of $0.1982 per share. The options were valued on the date of grant at $2,896 using the Black-Scholes option-pricing model with the following parameters: (1) risk-free interest rate of 1.49%; (2) expected life in years of 4.99; (3) expected stock volatility of 106.95%; and (4) expected dividend yield of 0%. The Company determined the options qualify as ‘plain vanilla’ under the provisions of SAB 107 and the simplified method was used to estimate the expected option life.

A summary of stock option activity and related information for the three months ended March 31, 2016 is presented below:

	Options		Weighted- Average Exercise Price		Aggregate Intrinsic Value

Outstanding at January 1, 2016		4,432,165	$	2.47
Granted		20,000		0.20
Exercised		-		-
Forfeited		-		-
Outstanding at March 31, 2016		4,452,165	$	2.46	$	1,676
Exercisable at March 31, 2016		3,132,165	$	3.37	$	1,440

During the three months ended March 31, 2016, the Company recognized $22,868 of stock compensation expense attributable to the amortization of unrecognized stock-based compensation. As of March 31, 2016, total unrecognized stock-based compensation expense related to non-vested stock options was $110,719. The unrecognized expense is expected to be recognized over a weighted average period of 1.6 years and the weighted average remaining contractual term of the outstanding options and exercisable options at March 31, 2016 is 4.23 years and 4.55 years, respectively.

Shares available for issuance under the Plan as of March 31, 2016 totaled 1,547,835 shares.

Share-Based Compensation Expense

The following table reflects share-based compensation recorded by the Company for the three months ended March 31, 2016 and 2015:

	Three Months Ended March 31,
	2016			2015

Share-based compensation expense included in general and administrative expense	$	22,868		$	19,795
Earnings per share effect of share-based compensation expense – basic and diluted	$	(0.00	)	$	(0.00	)