Employee Stock Options

12 Months Ended

Dec. 31, 2016

Employee Stock Options [Abstract]

EMPLOYEE STOCK OPTIONS

9. EMPLOYEE STOCK OPTIONS

For the year ended December 31, 2016

During 2016, the Company granted 65,000 common stock options to employees for service provided. Of these, 50,000 options were granted to two employees and were immediately vested with an exercise price of $2.91 and the expiration date is April 27, 2019. One of these employees terminated and did not exercise her 10,000 options resulting in the expiration of the option. Another 5,000 options were immediately vested and were granted with an exercise price of $3.77 and the expiration date is July 29, 2019. Another employee received 10,000 options with two-year vesting and an exercise price of $3.00 and an expiration date of December 6, 2019. Two employees who received 2,500 options each in December 2015 terminated their employment and did not exercise their options resulting in the expiration of a total of 5,000 options.

For the year ended December 31, 2015

On October 29, 2015, a 1:40 reverse split of the Company stock occurred and the effect has been applied retroactively for disclosure purposes.

During 2015, the Company granted 842,500 common stock options to employees and a director for service provided. Of these, 250,000 options were immediately vested and were granted with an exercise price of $6.00 and the expiration date is May 18, 2018. Another 105,000 options were immediately vested and were granted with an exercise price of $5.00 and the expiration date of December 10, 2018. Another 250,000 options vest over two years or upon the up-listing of the Company’s common stock to a national securities exchange in the United States and were granted with an exercise price of $6.00 and the expiration date is June 1, 2018. These 250,000 options were surrendered and cancelled on September 4, 2015. A director received two options. The first was for 75,000 shares vesting over two years and was granted with an exercise price of $10.00 and the expiration date is June 1, 2018. The second was for 125,000 shares with vesting tied to performance and was granted with an exercise price of $10.00 and the expiration date is June 1, 2018. These two director options were surrendered and cancelled on September 4, 2015. Stock-based compensation was reversed for costs previously recognized on the total 450,000 surrendered and cancelled unvested options. Another option for 37,500 shares vesting over three years was granted with an exercise price of $10.80 and the expiration date is May 4, 2019.

The Company uses the Black-Scholes option pricing model to estimate the fair value of stock-based awards on the date of grant.

The following table summarizes the assumptions used to estimate the fair value of stock options granted during 2016 and 2015:

	2016			2015
Expected dividend yield		0	%	0	%
Expected volatility		102 – 108	%	116-131	%
Risk-free interest rate		0.79 – 1.38	%	0.79 – 1.25	%
Expected life of options		2.00 – 3.00 years		2.43 – 3.00 years

Under the Black-Scholes option price model, the fair value of the options granted in 2016 is estimated at $124,831. During 2016, $229,563 compensation expense was recognized. During 2015, $2,822,132 compensation expense was recognized. The unamortized stock compensation associated with employee options as of December 31, 2016 was $85,075.

The following table represents stock option activity as of and for the period ended December 31, 2016:

	Number of Options			Weighted  Average  Exercise Price		Weighted Average Remaining Contractual Life in Years		Aggregate Intrinsic  Value
Outstanding – December 31, 2014		-		$	0.00
Exercisable – December 31, 2014		-		$	0.00			$	0.00
Granted		842,500		$	7.04
Exercised or Vested		-		$	0.00
Cancelled or Expired		450,000		$	7.78
Outstanding – December 31, 2015		392,500		$	6.19		2.62
Exercisable – December 31, 2015		355,000		$	5.70		2.55	$	0.00
Granted		65,000		$	2.99
Exercised or Vested		-		$	0.00
Cancelled or Expired		(15,000	)	$	3.61
Outstanding – December 31, 2016		442,500		$	5.81		1.72
Exercisable – December 31, 2016		407,500		$	5.57		1.65	$	0.00