The Company periodically issues stock options and warrants to employees and non-employees in capital raising transactions, for services and for financing costs.  Options and warrants vest and expire according to terms established at the grant date.

Options 

The Company currently issues stock options to employees, directors and consultants under its 2004 Stock Option Plan (the Plan). The Company could issue options under the Plan to acquire up to 7,000,000 shares of common stock as amended in May 2006.

From the Plan’s inception in 2004 up to December 31, 2014, the Company granted options to purchase 9,943,937 shares under the Plan, of which 4,383,574 shares were subsequently cancelled or forfeited and made available for grants under the Plan. In years ending December 31, 2014, 2013 and 2012, the Company granted options to purchase shares under the plan to employees and directors totaling 852,122 shares, 207,819 shares and 858,000 shares, respectively, and prior grants were cancelled or forfeited totaling 871,127 shares, 21,009 shares and 90,000 shares, respectively. As of December 31, 2014, options to purchase 4,292,030 shares granted under the Plan remain outstanding and 1,439,637 shares were available to be granted under the Plan.

From the Company’s inception in February 1998 up to December 31, 2014, options to purchase a total of 37,050,000 shares were granted outside of the Plan, of which, 2,860,000 shares were exercised and 17,430,000 shares were subsequently cancelled or forfeited. During the year ended December 31, 2012, 4,000,000 shares were granted outside the Plan. There were no such grants or forfeitures outside of the Plan in 2014 and 2013. During the year ended December 31, 2013, prior grants outside of the plan were forfeited totaling 7,040,000 shares. No such prior grants outside of the plan were forfeited or canceled in 2012 and 2014. As of December 31, 2014, options granted outside of the Plan to purchase 16,760,000 shares remain outstanding.

Employee options vest according to the terms of the specific grant and expire from 5 to 10 years from date of grant. Non-employee option grants vest upon issuance up to 2 years. The weighted-average, remaining contractual life of employee and Non-employee options outstanding at December 31, 2014 was 7.1 years. Stock option activity for the period January 1, 2012 to December 31, 2014, was as follows: 

The weighted average exercise prices, remaining contractual lives for options granted, exercisable, and expected to vest under the Plan as of December 31, 2014 were as follows:

As of December 31, 2014 the market price of the Company’s stock was $0.47 per share.  At December 31, 2014 the aggregate intrinsic value of the options outstanding was $4,107,750. Future unamortized compensation expense on the unvested outstanding options at December 31, 2014 is approximately $474,000.

2014

2013

2012

Black-Scholes Option Pricing

During the years ended December 31, 2014, 2013 and 2012, the Company used the following average assumptions in its calculation using the Black-Scholes Option Pricing model:

The expected life warrants are based on the expiration date of the related options. The risk-free interest rate is based on the yield available on U.S. Treasury securities. The Company estimates volatility based on the historical volatility of its common stock. The expected dividend yield was based on the fact that the Company has not paid dividends to stockholders in the past nor is it expected to pay any dividends in the foreseeable future. 

The weighted average fair value for options granted in 2013, 2012 and 2011 were $0.96, $0.30 and $0.37, respectively.

Warrants

The following table summarizes certain information about the Company’s stock purchase warrants.

At December 31, 2014 the price of the Company’s common stock was $0.47 per share and the aggregate intrinsic value of the warrants outstanding was $715,174. Future unamortized compensation expense on the unvested outstanding warrants at December 31, 2014 is approximately $66,000.

2014

2013

2012