The Company periodically issues stock options and warrants to directors, 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

Options vest according to the terms of the specific grant and expire from 2 to 10 years from date of grant. The weighted-average, remaining contractual life of employee and non-employee options outstanding at September 30, 2017 was 5.9 years. Stock option activity for the period January 1, 2017 up to September 30, 2017, was as follows:

The weighted average exercise prices, remaining contractual lives for options granted, exercisable, and expected to vest as of September 30, 2017 were as follows:

During the nine-month period ending September 30, 2017, the Company granted options to purchase 8,339,285 shares of common stock to members of the Company’s Board of Directors. The options are exercisable at $0.05 to $0.19 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 $909,000 using the Black-Scholes Option Pricing model with the following assumptions: life of 5 years; risk free interest rate of 1.94%; volatility of 123% to 144%, and dividend yield of 0%.

During the nine-month period ending September 30, 2017, the Company granted two officers and employees of the Company stock options to purchase a total of 4,222,567 shares of common stock. The stock options vest over a two-year period, exercisable at a price range of $0.07 through $0.40 per share and will expire in 10 years. Total fair value of the stock options amounted to $246,000 which will be expensed over the vesting period. In addition, as a result of the resignation of the Company’s CEO and three members of the Board of Directors, the Company agreed to modify the vesting term of 4.5 million options granted to them in January 2017 and fully vested those options resulting in a charge of $308,000 to account for the fair value of these options. There were no other changes in the remaining terms of the original grant.

During the nine-month periods ended September 30, 2017 and 2016, the Company recognized total compensation costs based on the fair value of options that vested of $653,000 and $265,000 respectively, which is included in Operating expenses in the Company’s statement of operations. During the three-month periods ended September 30, 2017 and 2016, the Company recognized compensation costs based on the fair value of options that vested of $117,000 and $84,000 respectively, which is included in Operating expenses in the Company’s statement of operations.

During the period ended September 30, 2017, the Company issued 271,752 shares of common stock upon exercise of stock options which resulted in proceeds of $25,000.

At September 30, 2017, the Company’s closing stock price was $0.29 per share. The aggregate intrinsic value of the options outstanding at September 30, 2017 was $3,042,000. Future unamortized compensation expense on the unvested outstanding options at September 30, 2017 is $295,000 to be recognized through December 2017.

Warrants

The following table summarizes certain information about the Company’s stock purchase warrants activity for the period starting January 1, 2017 up to September 30, 2017.

The weighted average exercise prices, remaining contractual lives for warrants granted, exercisable, and expected to vest as of September 30, 2017 were as follows:

During the nine-month period ending September 30, 2017, pursuant to terms of convertible notes issued, the Company granted warrants to purchase 16,160,770 shares of common stock with an exercise price of $0.05 per share, vesting immediately upon grant and expiring one year from the date of grant (see Note 5).

During the period ended September 30, 2017, the Company issued 3,974,000 shares of common stock upon exercise of warrants which resulted in proceeds of $337,000.

During the nine-month periods ended September 30, 2017 and 2016, the Company recognized compensation costs of $1,000 and $108,000, respectively, based on the fair value of warrants previously issued for services that vested during the period, which is included in Operating expenses in the Company’s statement of operations. During the three-month periods ended September 30, 2017 and 2016, the Company recognized compensation costs of $2,000 and $21,000, respectively, based on the fair value of warrants that vested, which is included in Operating expenses in the Company’s statement of operations.

At September 30, 2017, the aggregate intrinsic value of the warrants outstanding was $3,638,000. Future unamortized compensation expense on the unvested outstanding warrants at September 30, 2017 is approximately $1,000 to be recognized through July 2018.