The Company periodically issues stock options and warrants to employees and non-employees in capital raising transactions, for services and for financing costs.  Options 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.

As of December 31, 2014, options to purchase 4,292,030 shares granted under the Plan were outstanding and 1,439,637 shares were available to be granted. In the three-month period ended March 31, 2015, the Company granted options to purchase shares under the plan to directors totaling 738,522 shares, and prior grants totaling 29,070 shares were forfeited. As of March 31, 2015, options to purchase 5,001,482 shares granted under the Plan remain outstanding and 730,185 shares were available to be granted under the Plan.

As of March 31, 2015 and December 31, 2014, options granted outside of the Plan to purchase 16,760,000 shares were outstanding. During the three-month period ended March 31, 2015, there were no grants, forfeitures or shares exercised outside of the Plan.

Employee options vest according to the terms of the specific grant and expire from 2 to 10 years from date of grant. Non-employee option grants have vested upon issuance and up to 2 years from the date of grant. The weighted-average, remaining contractual life of employee and non-employee options outstanding at March 31, 2015 was 6.4 years. Stock option activity for the period December 31, 2014 up to March 31, 2015, was as follows: 

The weighted average exercise prices, remaining contractual lives for options granted, exercisable, and expected to vest as of March 31, 2015 were as follows:

During the three month period ending March 31, 2015 the Company granted options to purchase 738,522 shares of common stock to members of the Company’s Board of Directors. The options are exercisable at prices ranging from $0.46 per share to $0.48 per share, vest monthly over a twelve month period, and expire ten years from the date granted. Total fair value of these options at grant date was approximately $296,267 using the Black-Scholes Option Pricing model with the following assumptions: life of 5 to 5.5 years; risk free interest rate of 1.67% to 1.72%; volatility of 121% and dividend yield of 0%. During the three month periods ended March 31, 2015 and 2014, the Company recognized compensation costs based on the fair value of options that vested of $207,425 and $107,907 respectively.

At March 31, 2015 the aggregate intrinsic value of the options outstanding was $3,517,500. Future unamortized compensation expense on the unvested outstanding options at March 31, 2015 is approximately $531,000.

Warrants

The following table summarizes certain information about the Company’s stock purchase warrants activity for the period starting December 31, 2014 up to March 31, 2015.

The weighted average exercise prices, remaining contractual lives for warrants granted, exercisable, and expected to vest as of March 31, 2015 were as follows:

During the three month period ending March 31, 2015, warrants to acquire 200,000 shares of common stock were exercised at $0.25 per share resulting in proceeds of $50,000, and warrants to purchase 100,000 shares of common stock at $0.25 per share expired.

During the three months ended March 31, 2015 and 2014, the Company recognized compensation costs of $20,927 and $17,271, respectively, based on the vested fair value of warrants granted to consultants and an employee.

At March 31, 2015, the aggregate intrinsic value of the warrants outstanding was $577,242. Future unamortized compensation expense on the unvested outstanding warrants at March 31, 2015 is approximately $25,138.