STOCK OPTIONS

On October 30, 2007, our stockholders approved and the Board of Directors adopted an amendment to the 2003 Executive and Employee Stock Option Plan (the “Plan”) to increase the maximum aggregate number of shares of common stock reserved for issuance under the Plan from 1.2 million shares (already reserved against outstanding options) to 1.7 million shares. Except for the increase in the number of shares covered by the Plan, the Plan remained otherwise unchanged. In 2001, the Board of Directors adopted the 2001 Executive and Employee Stock Option Plan which reserved for issuance 1.2 million stock options. Stock options typically have a ten-year life and currently vest over a seven year period.

In July of 2012, the stockholders approved the 2012 Share Incentive Plan covering a total of 750,000 shares of common stock issuable upon exercise of options to be granted under the plan. At December 31, 2017 approximately 37,000 remain to be issued in this plan.

In July of 2015, the stockholders approved the 2015 Executive and Employee Stock Option Plan covering a total of 2,000,000 shares of common stock issuable upon exercise of options to be granted under the plan. At December 31, 2017 approximately 343,578 remain to be issued in this plan.

In August of 2017, the stockholders approved the 2017 Executive and Employee Stock Option Plan covering a total of 3,000,000 shares of common stock issuable upon exercise of options to be granted under the plan. At December 31, 2017 approximately 1,900,000 remain to be issued in this plan.

The status of our stock options and stock awards are summarized as follows:



	Number of options		Weighted average exercise price
Outstanding at December 31, 2015	3,131,447		$	3.38
Granted	810,762		1.87
Exercised	(36,250	)	3.62
Canceled and forfeited	(153,750	)	3.69
Outstanding at December 31, 2016	3,752,209		$	3.04
Granted	1,728,000		3.09
Exercised	(176,750	)	2.41
Canceled and forfeited	(443,302	)	3.95
Outstanding at December 31, 2017	4,860,157		$	3.00

Exercisable at December 31, 2017	2,627,722		$	3.46



	Number of options		Weighted average grant date fair value
Non-vested at December 31, 2016	1,745,506		$	1.25
Granted	1,728,000		1.82
Vested	(797,769	)	1.01
Forfeited	(443,302	)	1.95
Non-vested at December 31, 2017	2,232,435		1.40

Common shares required to be issued upon the exercise of stock options and warrants would be issued from our authorized and unissued shares. We calculated the fair value of issued options utilizing a trinomial lattice with an expected life calculated via the simplified method as we do not have sufficient history to determine actual expected life.



	2017 Grants			2016 Grants			2015 Grants
Option value	$1.73	-	$2.34	$0.80	-	$0.91	$0.90	-	$1.84
Risk-free rate	1.5%	-	1.9%	1.5%	-	1.8%	0.2%		1.6%
Expected dividend yield	—%			—%			—%
Expected volatility	62.1%	-	68.0%	49.5%	-	50.3%	53.0%	-	54.0%
Expected term (in years)	6			6			6

As of December 31, 2017, the aggregate intrinsic value of all stock options outstanding and expected to vest was approximately $1,306,791 and the aggregate intrinsic value of currently exercisable stock options was approximately $768,706. The intrinsic value of each option share is the difference between the fair market value of our common stock and the exercise price of such option share to the extent it is “in-the-money”. Aggregate intrinsic value represents the value that would have been received by the holders of in-the-money options had they exercised their options on the last trading day of the year and sold the underlying shares at the closing stock price on such day. The intrinsic value calculation is based on the $2.60 closing stock price of our common stock on December 31, 2017, the last trading day of 2017. The total number of in-the-money options outstanding and exercisable as of December 31, 2017 was approximately 2,318,887.

As of December 31, 2016, the aggregate intrinsic value of all stock options outstanding and expected to vest was approximately $4,150,334 and the aggregate intrinsic value of currently exercisable stock options was approximately $1,574,318. The intrinsic value calculation is based on the $3.59 closing stock price of our common stock on December 31, 2016, the last trading day of 2016. The total number of in-the-money options outstanding and exercisable as of December 31, 2016 was approximately 1,211,014.

The total intrinsic value of options exercised during the years ended December 31, 2017, 2016 and 2015 was approximately $223,340, $119,026 and $51,575, respectively. Intrinsic value of exercised shares is the total value of such shares on the date of exercise less the cash received from the option holder to exercise the options. The total cash proceeds received from the exercise of stock options was approximately $0 and $12,300 and $209,250 for the years ended December 31, 2017, 2016 and 2015, respectively.

The total fair value of options granted during the years ended December 31, 2017, 2016 and 2015 was approximately $3,144,960, $1,516,125 and $932,771, respectively. The total fair value of option shares vested during the years ended December 31, 2017, 2016 and 2015, was approximately $805,748, $612,464 and $412,638, respectively.

During the year ended December 31, 2017, we issued 47,372 common shares in exchange for 176,750 non-employee stock options and 129,378 common shares (via stock swaps).

During the year ended December 31, 2016, we issued 9,614 common shares in exchange for 36,250 non-employee stock options and 26,636 common shares (via stock swaps). Net proceeds from the issuance of common shares along with the shares received in the stock swap exercises were approximately $12,300 for the year ended December 31, 2016.

During the year ended December 31, 2015, we issued 33,520 common shares in exchange for 114,500 employee and non-employee stock options and 80,980 common shares (via stock swaps).

As of December 31, 2017, there was approximately $3.0 million of total unrecognized stock-based compensation cost, related to unvested stock options granted under the Amended Plan. This cost is expected to be recognized over a weighted-average period of approximately 4 years.

Allocation of stock based compensation expense was as follows:



	Year Ended December 31,
(In thousands)	2017		2016		2015
Cost of sales	$	—	$	2	$	3
Research and development	27		27		39
Salaries and related costs	844		780		526
Total	$	871	$	809	$	568