STOCK-BASED COMPENSATION PLANS

12 Months Ended

Dec. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK-BASED COMPENSATION PLANS

14. STOCK-BASED COMPENSATION PLANS

2011 Employees', Directors' and Consultants' Stock Option Plan – In May 2011, the Board of Directors approved a new option plan for employees, directors and consultants. Pursuant to this plan which is administered by a Committee appointed by the Board of Directors, we could grant to qualified employees, directors and consultants either incentive options or nonstatutory options (as defined by the Internal Revenue Service). The stock options granted per written option agreements approved by the Committee, must have exercise prices not less than 100% of the Fair Market Value of our common stock on the date of the grant. Up to 2,000,000 common shares are available for grants under this plan. No options may be granted under this plan after December 31, 2015.

The following information relates to the 2011 Option Plan:

	December 31, 2015		December 31, 2014
Common shares reserved for issuance on exercise of options		1,867,500		1,517,500
Shares available for future option grants		0		482,500

1997Employee Stock Option Plan – Pursuant to our 1997 Employees' Stock Option Plan, as amended (the "1997 Option Plan"), we could grant to employees either incentive stock options or nonqualified stock options (as defined by the Internal Revenue Service). The stock options had to be granted at exercise prices not less than 100% of the fair market value of our common stock at the grant date. The maximum life of stock options granted under this plan is ten years from the grant date. The Compensation Committee or the Board of Directors determined vesting provisions when stock options were granted, and stock options granted generally vested over three or four years. No options could be granted under this plan after September 30, 2007.

The following information relates to the 1997 Option Plan:

	December 31, 2015		December 31, 2014
Common shares reserved for issuance on exercise of options		51,000		55,000
Shares available for future option grants		-		-

2000 Director's Stock Option Plan – Pursuant to our Directors' Stock Option Plan (the "Directors' Option Plan"), we could grant each non-employee director 10,000 fully vested, nonqualified common stock options when the director first is elected, and 10,000 common stock options on the first business day of January thereafter, as long as the individual is a director. All such stock options are granted at an option price not less than 100% of the fair market value of the common stock at the grant date. The maximum life of options granted under this plan is ten years from the grant date. No options could be granted after January 4, 2010.

The following information relates to the 2000 Directors' Stock Option Plan:

	December 31, 2015		December 31, 2014
Common shares reserved for issuance on exercise of options		120,000		120,000
Shares available for future option grants		-		-

Summary of Common Stock Options – The total fair value of shares vested in the years ended December 31, 2015 and December 31, 2014 was $61,186 and $57,291, respectively, of non-cash compensation expense. Of these amounts, $53,223 and $46,113 was included in personnel and consulting expenses, from stock options granted to employees, and vesting during the year ended December 31, 2015 and 2014, respectively.

Also $7,963and $11,178 of noncash compensation expense was included in general and administrative expenses, from stock options granted to directors pursuant to the Directors Option Plan in the years ended December 31, 2015 and 2014, respectively. Since these stock options are fully vested upon grant, the full fair value of the stock options is recorded as expense at the date of grant.

During the year ended December 31, 2014, the Company granted 42,500 options to non-employee directors which were fully vested upon issuance, as approved by the Board of Directors.

During the year ended December 31, 2014, the Company granted 300,000 options to the former CFO. As approved by the Board of Directors, these options vest over a four (4) year period, with 60,000 options vested upon issuance and another 60,000 vested on his one-year anniversary. Because the former CFO is no longer employed by the Company as of January 8, 2016, 180,000 options will be cancelled and 120,000 vested options will expire 90 days from January 8, 2016, per the Option Agreement.

During the year ended December 31, 2014, the Company granted 20,000 options to employees. As approved by the Board of Directors, these options vest over a four (4) year period, with 20% of the options vested upon issuance.

During the year ended December 31, 2015, the Company granted 50,000 options to non-employee directors which were fully vested upon issuance, as approved by the Board of Directors.

During the year ended December 31, 2015, the Company granted 300,000 options to the Company’s Chief Medical Officer. As approved by the Board of Directors, these options vest over a four (4) year period, with 60,000 options vested upon issuance.

We estimated the fair value of each option on the grant date using a Black-Scholes option-pricing model with the following weighted average assumptions:

	Year ended December 31, 2015			Year ended December 31, 2014
Dividend yield (1)		0.0	%		0.0	%
Expected volatility (2)		159.8% - 164.5	%		118.5% - 122.24	%
Risk-free interest rates (3)		1.61	%		1.19 – 1.72	%
Expected lives (2)		5 years			4-5 years

(1) We have not paid cash dividends on our common stock since 1981, and currently do not have plans to pay or declare cash dividends. Consequently, we used an expected dividend rate of zero for the valuations.

(2) Estimated based on our historical experience. Volatility was based on historical experience over a period equivalent to the expected life in years.

(3) Based on the U.S. Treasury constant maturity interest rate with a term consistent with the expected life of the options granted.

A summary of the status of all our common stock options as of December 31, 2015 and 2014, and changes during the periods then ended is presented below.

	Year ended December 31, 2015							Year ended December 31, 2014
	Shares			Weighted Average Exercise Price		Aggregate Intrinsic Values		Shares			Weighted Average Exercise Price		Aggregate Intrinsic Values
Outstanding at beginning of period		1,692,500		$	0.44	$			1,372,000		$	0.50
Granted		350,000			0.26				362,500			0.39
Forfeited		-							(30,500	)		2.03
Exercised		-							-
Expired or terminated		(4,000	)		5.34				(11,500	)		2.87
Outstanding at end of year		2,038,500		$	0.40	$	100,550		1,692,500		$	0.44	$	80,000
Vested at end of year		1,212,500		$	0.52	$	60,550		844,500		$	0.70	$	32,000
Nonvested at end of year		826,000		$	0.21	$	40,000		848,000		$	0.18	$	48,000
Weighted average fair value per share of options issued during the year				$	0.26						$	0.26

Generally, we issue new shares of common stock to satisfy stock option exercises.