STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2015

NOTE 12– STOCK-BASED COMPENSATION

Services performed and other transactions settled in the Company's common stock are recorded at the estimated fair value of the stock issued if that value is more readily determinable, than the fair value of the consideration received.

We have stock compensation plans for employees and directors. We recognize the stock-based compensation expense over the requisite service period of the individual grantees, which generally equals the vesting period. All of our stock-based compensation is accounted for as an equity instrument.

						Weighted		Aggregate
	Number of			Weighted		Average		Intrinsic
	Shares			Average		Remaining		Value
				Exercise		Contractual
				Price		Term
						(in years)
December 31, 2013		12,048		$	0.40		4.0		-
Options forfeited and expired		(200	)		-		-		-
December 31, 2014		11,848		$	0.38		3.0		-
Options forfeited and expired		(421	)		-		-		-
December 31, 2015		11,427		$	0.40		2.0		-

Aggregate intrinsic value is the sum of the amounts by which the quoted market price of our stock exceeded the exercise price of the options at December 31, 2015 and 2014 for those options for which the quoted market price was in excess of the exercise price (“in-the-money options”). There were no options in the money at December 31, 2015 and 2014.

As of December 31, 2015, total compensation cost of unvested employee stock options is $150,000. This cost is expected to be recognized through December 31, 2016. We recorded no income tax benefits for stock-based compensation expense arrangements for the years ended December 31, 2015 and 2014, as we have cumulative operating losses.

In June 2015, the Company granted 200,000 restricted shares to Michael Ringstad in lieu of salary compensation and also for his acceptance for the position of Interim CFO. The stock was set at average of last 30 trading days, and the vesting period is for a period of 3 years from the date of grant. Michael Ringstad cannot sell the shares within 6 months from the date of grant and the Company retains the right to buy back the shares at any time at the market price. $2,632 was charged to general and administrative expense for the year ended December 31, 2015.

For the year ended December 31, 2015 and 2014, $74,000 and $224,000 stock based compensation expense have been charged to general and administrative expense, respectively.