4. SHARE-BASED COMPENSATION

On February 18, 2010, at our annual meeting of stockholders, the board of directors and stockholders approved the 2010 Equity Incentive Plan (the “2010 Plan”). Prior to the 2010 stockholder meeting, we had two stock award plans: the Stock and Stock Option Plan, which was adopted in 1997 (“1997 Plan”) and the 2008 Restricted Stock Award Plan (“2008 Plan”). In conjunction with the approval of the 2010 Plan at the annual meeting, the 1997 Plan and the 2008 Plan were terminated as of February 18, 2010. Subsequently, on February 17, 2012, the 2010 Plan was amended to increase the maximum shares issuable under the 2010 Plan and again on January 27, 2016, at our annual meeting of stockholders, the stockholders approved amending the 2010 Plan to increase the number of shares available for issuance by 750,000 shares.

The 2010 Plan provides for the awards of shares of common stock, restricted stock units or incentive stock options and/or nonqualified stock options to purchase our common stock to selected employees, directors, officers, agents, consultants, attorneys, vendors and advisors of ours’ or of any parent or subsidiary thereof. Shares of common stock, options, or restricted stock can only be awarded under the 2010 Plan within 10 years from the effective date of February 18, 2010. A maximum of 2,000,000 shares are issuable under the 2010 Plan, and at September 30, 2016, 816,960 shares remained available for issuance.

The 2010 Plan provides a means to attract and retain the services of participants and also to provide added incentive to such persons by encouraging stock ownership in the Company. Plan awards are administered by the Compensation, Nominating, and Corporate Governance Committee, who has substantial discretion to determine which persons, amounts, time, price, exercise terms, and restrictions, if any.

From time to time we also issue non-compensatory warrants, such as warrants issued to investors.

Stock Options

The fair value of stock option awards is estimated using the Black-Scholes valuation model. For market based stock option awards, those options where vesting terms are dependent on achieving a specified stock price, the fair value was estimated using a Black-Scholes option pricing model with inputs adjusted for the probability of the vesting criteria being met and the median expected term for each award as determined by utilizing a Monte Carlo simulation. Expected volatility is based solely on historical volatility of our common stock over the period commensurate with the expected term of the stock options. We rely solely on historical volatility as we do not have traded options. The expected term calculation for stock options is based on the simplified method as described in the Securities and Exchange Commission Staff Accounting Bulletin number 107.

We use this method because we do not have sufficient historical information on exercise patterns to develop a model for expected term. The risk-free interest rate is based on the U. S. Treasury yield in effect at the time of award for an instrument with a maturity that is commensurate with the expected term of the stock options. The dividend yield rate of zero is based on the fact that we have never paid cash dividends on our common stock and we do not expect to pay cash dividends on our common stock during the expected term of the options.

The following table provides information about options during the three months ended September 30, 2016 and 2015:

	2016		2015
Number of options awarded	160,000		—
Compensation expense recognized	$	30,937	$	92,000
Weighted average award-date fair value of options outstanding	$	4.09	$	7.23

The following table details the significant assumptions used to compute the fair values of employee and director stock options awarded during the three month periods ended September 30, 2016 and 2015:

	2016		2015
Risk-free interest rate	0.47-1.14	%	N/A	%
Dividend yield	0	%	N/A	%
Volatility factor	109-155	%	N/A	%
Expected life (years)	1.0-4.98		N/A

Summary information regarding employee and director stock options issued and outstanding under all plans as of September 30, 2016 is as follows:

	Options		Weighted Average Exercise Price		Aggregate intrinsic value		Weighted average remaining contractual term (years)
Options outstanding at July 1, 2016	1,016,997		$	5.03	$	—	3.19
Awarded	160,000		1.03
Exercised	(20,000	)	0.90
Forfeited	—		—
Expired	(31,250	)	21.01

Options outstanding at September 30, 2016	1,125,747		$	4.09	$	199,802	3.21

Options exercisable at September 30, 2016	888,146		$	4.95	$	133,749	2.77

Options outstanding and exercisable as of September 30, 2016
Exercise Price		Outstanding Number of Shares	Remaining Life	Exercisable Number of Shares
$	0.42-4.00	91,250	Less than1 year	91,250
$	0.42-4.00	78,855	2 years	78,855
$	0.42-4.00	197,390	3 years	197,390
$	0.42-4.00	328,954	4 years	313,963
$	0.42-4.00	222,610	5 years	—
$	4.01-10.00	90,438	1 year	90,438
$	4.01-10.00	5,562	2 years	5,562
$	4.01-10.00	18,250	4 years	18,250
$	10.01-20.00	3,125	Less than1 year	3,125
$	10.01-20.00	28,750	4 years	28,750
$	20.01-30.00	31,000	4 years	31,000
$	30.01-40.00	3,750	4 years	3,750
$	40.01-48.72	25,813	5 years	25,813

		1,125,747		888,146

At September 30, 2016, there was $159 thousand of unrecognized compensation costs related to non-vested share based compensation arrangements awarded to employees and directors under the plans. During the three months of our fiscal 2017, a total of 20,000 options, with a weighted average award date fair value of $0.41 per share, vested in accordance with the underlying agreements. Unvested options at September 30, 2016 totaled 237,601 with a weighted average award date fair value of $4.95 per share, an amortization period of one to two years and a weighted average remaining life of 1.91 years.