Quarterly report pursuant to Section 13 or 15(d)

STOCK OPTION PLAN AND STOCK-BASED COMPENSATION

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STOCK OPTION PLAN AND STOCK-BASED COMPENSATION
9 Months Ended
Sep. 30, 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 September 30, 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 September 30, 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 nine month period ending September 30, 2017 or 2016.

 

The Company recognized $12,439 and $37,317 of stock-based compensation costs in the accompanying statement of operations for the three and nine months ended September 30, 2017, respectively. The Company recognized $225,877 of stock-based compensation costs in the accompanying statement of operations for the three and nine months ended September 30, 2016. As of September 30, 2017, there was $194,878 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 nine months ended September 30, 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 September 30, 2017     12,094,000     $ 0.10-1.21     $ 0.39  

 

There were no stock option exercises during the nine months ended September 30, 2017 or September 30, 2016.

 

The following table summarizes information about stock options that are vested or expected to vest at September 30, 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       8.45     $       1,600,000     $ 0.10       8.45     $  
  0.18       934,000       0.18       5.75             934,000       0.18       5.75        
  0.20       2,150,000       0.20       4.16             2,150,000       0.20       4.16        
  0.37       58,000       0.37       4.92             58,000       0.37       4.92        
  0.40       2,000,000       0.40       3.92                   0.40       3.92        
  0.42       63,000       0.42       3.25             63,000       0.42       3.25        
  0.50       2,810,000       0.50       0.30             2,810,000       0.50       0.30        
  0.60       2,000,000       0.60       3.92                   0.60       3.92        
  0.69       100,000       0.69       6.50             100,000       0.69       6.50        
  1.21       379,000       1.21       6.28             379,000       1.21       6.28        
$ 0.10-1.21       12,094,000     $ 0.39       3.96     $       8,094,000     $ 0.39       3.96     $  

 

The weighted-average remaining contractual life for stock options exercisable at September 30, 2017 is 3.96 years. At September 30, 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 September 30, 2017 and December 31, 2016. There were no options exercised in the nine months ended September 30, 2017 or September 30, 2016. No actual tax benefit was realized from stock option exercises during these periods.

 

As of September 30, 2017, 8,094,000 of the stock options issued by the Company are fully vested and 4,000,000 remain unvested.