2. SHARE BASED PAYMENT

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

2. SHARE BASED PAYMENT

NOTE 2 - SHARE BASED PAYMENT

The Company has outstanding stock options issued to employees and board members which are exercisable at $0.23 per share. The options vest 20% each year over a five year period and expire after ten years. As of September 30, 2016, there were no unvested options. There was no stock option expense recognized for the nine months ended September 30, 2016 or 2015 in the accompanying condensed consolidated statements of income.

A summary of stock option activity as of September 30, 2016, and changes during the period then ended is presented below.

				Weighted-
			Weighted-	Average
			Average	Remaining		Aggregate
			Exercise	Contractual		Intrinsic
	Options		Price	Life (Years)		Value
Outstanding at December 31, 2015	385,000	$	0.23	2.66	$	-
Granted	-		-	-		-
Exercised	-		-	-		-
Forfeited	(305,000)		0.23			-
Outstanding at September 30, 2016 (unaudited)	80,000	$	0.23	1.91	$	-
Vested and expected to vest
at September 30, 2016 (unaudited)	80,000	$	0.23	1.91	$	-
Exercisable at September 30, 2016 (unaudited)	80,000	$	0.23	1.91	$	-

On August 11, 2016, the Company granted an aggregate of 450,000 shares of restricted stock to its directors and a consultant. Pursuant to the stock award agreement, the grant of restricted stock of the Company vests in full on August 11, 2017 (the "Vesting Date"), subject to the recipient's continued service with the Company; provided, however, to the extent the recipient's service with the Company is terminated for any reason within thirty (30) days prior to or upon a Change in Control (as defined in the Agreement) prior to the Vesting Date, this grant of restricted stock will immediately and automatically vest in full. The Company recorded stock based compensation of approximately $9,000 related to this grant during the three and nine months ended September 30, 2016. Total unrecognized expense related to the restricted stock grant amounted to approximately $54,000, which will be recognized through the Vesting Date.