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. The Plan expired by its terms on March 2, 2014. At its meeting on May 7, 2015, the Board determined not to amend the Plan to extend its term past March 2, 2014. The Board then determined that all options granted under the Plan from the period March 2, 2014, through May 7, 2015, a total of 1,456,604 options, would instead be deemed granted, as of the date of such grants, pursuant to the terms and conditions of such grant, outside the Plan.

As of June 30, 2015 and December 31, 2014, options to purchase 3,544,908 shares granted under the Plan were outstanding, respectively.

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 June 30, 2015 was 5.7 years. Stock option activity for the period December 31, 2014 up to June 30, 2015, was as follows:

The weighted average exercise prices, remaining contractual lives for options granted, exercisable, and expected to vest as of June 30, 2015 were as follows:

During the three month period ending June 30, 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 and six month periods ended June 30, 2015, the Company recognized compensation costs based on the fair value of options that vested of $178,450 and $385,875 respectively.

During the three and six month periods ended June 30, 2014, the Company recognized compensation costs based on the fair value of options that vested of $285,923 and $401,575 respectively.

At June 30, 2015 the aggregate intrinsic value of the options outstanding was $1,565,000. Future unamortized compensation expense on the unvested outstanding options at June 30, 2015 is approximately $367,322.

Warrants

The following table summarizes certain information about the Company’s stock purchase warrants activity for the period starting December 31, 2014 up to June 30, 2015.

The weighted average exercise prices, remaining contractual lives for warrants granted, exercisable, and expected to vest as of June 30, 2015 were as follows:

During the six month period ending June 30, 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.

In May through June 2015, pursuant to terms of convertible notes issued, the Company granted warrants to purchase 916,667 shares with an exercise price of $0.30 per share, vesting immediately upon grant and expiring one year from the date of grant (see Note 4).

During the three and six month periods ended June 30, 2015, the Company recognized compensation costs of $20,370 and $41,297, respectively, based on the fair value of warrants that vest.

During the three and six month periods ended June 30, 2014, the Company recognized compensation costs of $18,376 and $35,647, respectively, based on the fair value of warrants that vest.

At June 30, 2015, the aggregate intrinsic value of the warrants outstanding was $200,667. Future unamortized compensation expense on the unvested outstanding warrants at June 30, 2015 is approximately $18,250.