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

Pursuant to the Company’s 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. On March 2, 2014, the Plan expired and the Board decided not to extend it. As of September 30, 2015 and December 31, 2014, options to purchase 3,544,908 shares granted under the Plan were outstanding.

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 September 30, 2015 was 5.5 years. Stock option activity for the period December 31, 2014 up to September 30, 2015, was as follows:

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

During the nine month period ending September 30, 2015 the Company granted options to purchase 888,522 shares of common stock to members of the Company’s Board of Directors and an employee. The options are exercisable at prices ranging from $0.35 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 $336,767 using the Black-Scholes Option Pricing model with the following assumptions: life of 5 to 5.5 years; risk free interest rate of 1.56% to 1.72%; volatility of 106% to 121% and dividend yield of 0%.

During the three and nine month periods ended September 30, 2015, the Company recognized compensation costs based on the fair value of options that vested of $162,744 and $548,619 respectively.

During the three and nine month periods ended September 30, 2014, the Company recognized compensation costs based on the fair value of options that vested of $145,403 and $547,016 respectively.

At September 30, 2015 the aggregate intrinsic value of the options outstanding was $1,565,000. Future unamortized compensation expense on the unvested outstanding options at September 30, 2015 is $189,957 to be recognized through June 2016.

Warrants

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

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

In May 2015 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 nine month period ending September 30, 2015, warrants to acquire 200,000 shares of common stock were exercised at $0.25 per share resulting in proceeds of $50,000.

During the three and nine month periods ended September 30, 2015, the Company recognized compensation costs of $3,816 and $45,113, respectively, based on the fair value of warrants that vested.

During the three and nine month periods ended September 30, 2014, the Company recognized compensation costs of $14,292 and $21,901, respectively, based on the fair value of warrants that vested.

At September 30, 2015, the aggregate intrinsic value of the warrants outstanding was $119,667. Future unamortized compensation expense on the unvested outstanding warrants at September 30, 2015 is approximately $6,375 to be recognized through June 2016.