NOTE

- OPTIONS AND WARRANTS TO PURCHASE COMMON STOCK

Outstanding Stock Warrants

A summary of the status of the warrants outstanding and exercisable at

June 30, 2017

is presented below:

		Warrants Outstanding and Exercisable
Exercise Price		Number Outstanding		Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price
$	0.25		3,283,283		4.00	$	0.25
$	1.15		461,340		3.83	$	1.15
			3,744,623		3.98	$	0.36

warrants were issued during

2017

2016.

The aggregate intrinsic value of the outstanding warrants was

June 30, 2017.

Outstanding Stock Options

A summary of the status and changes of the options granted under stock option plans for the

six

months ended

June 30, 2017

is as follows:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life *

Outstanding at beginning of period		21,277,479	$	0.87		4.26
Issued		650,000		0.25		5.00
Exercised		- 0 -		- 0 -
Forfeited		30,000		1.55
Outstanding at end of period		21,897,479	$	0.85		3.97
Exercisable at end of period		21,435,784	$	0.86		4.50

* Measured in years

During the

six

months ended

June 30, 2017,

the Company granted

650,000

options to purchase the Company’s common stock with a weighted average exercise price of

$0.25.

The options vested immediately. The weighted-average grant-date fair value of options granted during the

first

half of

2017

was

$0.02.

Compensation expense of

$44,927

and

$238,064

has been recognized for the vested options for the

three

months ended

June 30, 2017

and

2016,

respectively, and

$113,811

and

$365,045

for the

six

months ended

June 30, 2017

and

2016,

respectively. The aggregate intrinsic value of the outstanding and exercisable options at

June 30, 2017

was

and

$0,

respectively. At

June 30, 2017,

approximately

$58,000

of unamortized compensation expense for unvested options is expected to be recognized over the next

0.58

years on a weighted average basis.