STOCK OPTION PLAN AND STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2017

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

STOCK OPTION PLAN AND STOCK-BASED COMPENSATION

7. STOCK OPTION PLAN AND STOCK-BASED COMPENSATION

During the year ended December 31, 2010, the Company adopted a stock option plan entitled “The 2010 Stock Plan” (“2010 Plan”) under which the Company may grant options to purchase up to 5,000,000 shares of common stock.  On September 7, 2013, the 2010 plan was amended to increase the number of shares of common stock issuable under the 2010 Plan to 7,500,000.  As of March 31, 2017 and December 31, 2016, there were 250,000 and 250,000 options outstanding under the 2010 Plan, respectively.

During the year ended December 31, 2011, the Company adopted a non-qualified stock option plan entitled “2011 Non-Qualified Stock Plan” (“2011 Plan”) under which the Company may grant options to purchase 2,100,000 shares of common stock.  In

December 2012, the 2011 Plan was amended to increase the number of shares of common stock issuable under the 2011 Plan to 12,000,000 shares.  During the period ended March 31, 2013, the 2011 Plan was amended to increase the number of shares of common stock issuable under the 2011 Plan to 17,500,000.  As of March 31, 2017 and December 31, 2016, there were 11,844,000 and 12,039,000 options outstanding under the 2011 Plan, respectively.

Under the terms of the stock plans, the Board of Directors shall specify the exercise price and vesting period of each stock option on the grant date. Vesting of the options is typically one to four years and the options typically expire in five to ten years.

No stock options were granted in either three month period ending March 31, 2017 or 2016.

The Company recognized $12,439 and $0 of stock-based compensation costs in the accompanying statement of operations for the three months ended March 31, 2017 and 2016, respectively.  As of March 31, 2017, there was $219,756 of unrecognized compensation expense related to non-vested stock option awards that is expected to be recognized in future periods. 

The following table summarizes the Company’s stock option activity during the three months ended March 31, 2017:

	Shares			Exercise Price per Share		Weighted Average Exercise Price per Share
Outstanding as of December 31, 2016		12,289,000		$	0.10-1.21	$	0.39
Granted		-			-		-
Exercised		-			-		-
Options forfeited/cancelled		(195,000	)		0.10		0.10
Outstanding as of March 31, 2017		12,094,000		$	0.10-1.21	$	0.39

There were no stock option exercises during the three months ended March 31, 2017 or March 31, 2016. 

The following table summarizes information about stock options that are vested or expected to vest at March 31, 2017: 

Vested or Expected to Vest										Exercisable Options
				Weighted		Weighted						Weighted		Weighted
				Average		Average						Average		Average
				Exercise		Remaining		Aggregate		Number		Exercise		Remaining		Aggregate
Exercise		Number of		Price Per		Contractual		Intrinsic		of		Price		Contractual		Intrinsic
Price		Options		Share		Life (Years)		Value		Options		Per Share		Life (Years)		Value
$	0.10		1,600,000	$	0.10		8.95	$	-		1,600,000	$	0.10		8.95	$	-
	0.18		934,000		0.18		6.25		-		934,000		0.18		6.25		-
	0.20		2,150,000		0.20		4.66		-		2,150,000		0.20		4.66		-
	0.37		58,000		0.37		5.42		-		58,000		0.37		5.42		-
	0.40		2,000,000		0.40		4.42		-		-		0.40		4.42		-
	0.42		63,000		0.42		3.75		-		63,000		0.42		3.75		-
	0.50		2,810,000		0.50		0.80		-		2,810,000		0.50		0.80		-
	0.60		2,000,000		0.60		4.42		-		-		0.60		4.42		-
	0.69		100,000		0.69		7.00		-		100,000		0.69		7.00		-
	1.21		379,000		1.21		6.78		-		379,000		1.21		6.78		-
$	0.10-1.21		12,094,000	$	0.39		4.46	$	-		8,094,000	$	0.39		4.46	$	-

The weighted-average remaining contractual life for stock options exercisable at March 31, 2017 is 4.46 years. At March 31, 2017, the Company has 5,656,000 and 7,250,000 options available for grant under the 2011 Plan and 2010 Plan, respectively. There was $0 intrinsic value for fully vested, exercisable options at both March 31, 2017 and December 31, 2016. There were no options exercised in the three months ended March 31, 2017 or March 31, 2016. No actual tax benefit was realized from stock option exercises during these periods.

As of March 31, 2017, 8,094,000 of the stock options issued by the Company are fully vested and 4,000,000 remain unvested.