9. Stock Options

At December 31, 2015, we had two stock-based compensation plans, which are described below. These plans were developed to retain and attract key employees and directors.

On March 17, 2005, the Board approved the 2005 Stock Incentive Plan (the “2005 Plan”), which was approved by the stockholders on June 14, 2005. The 2005 Plan provided for the issuance of up to 750,000 shares of common stock upon exercise of options granted pursuant to the 2005 Plan. On May 30, 2007, the stockholders approved an Amendment to the 2005 Plan that increased this amount by 750,000 for a total of 1,500,000 shares of common stock that may be issued upon the exercise of options granted pursuant to the 2005 Plan. On May 29, 2008 and May 21, 2009, the stockholders approved an increase of 500,000 shares, respectively, of common stock that may be issued pursuant to the 2005 Plan for a total of 2,500,000 shares. On May 20, 2010, the stockholders approved an additional increase of 500,000 shares of common stock that may be issued pursuant to the 2005 Plan for a total of 3,000,000 shares. On May 19, 2011, the stockholders approved an additional increase of 400,000 shares of common stock that may be issued pursuant to the 2005 Plan for a total of 3,400,000 shares. Finally, on May 17, 2012, the stockholders approved an additional increase of 300,000 shares of common stock that may be issued pursuant to the 2005 Plan for a total of 3,700,000 shares. At December 31, 2015, 632,835 had been exercised and options to purchase a total of 2,595,334 shares of common stock were outstanding. A total of 3,892,000 options had been granted under the 2005 Plan, of which 663,831 have been cancelled. The 2015 Plan expired on December 31, 2015 and no shares remain for grant.

On March 19, 2015, the Board approved the 2015 Stock Incentive Plan (the “2015 Plan”), which was approved by the stockholders on May 14, 2015. The 2015 Plan serves as a replacement for the 2005 Plan which expired by its terms on June 14, 2015. The approval of the 2015 Plan had no effect on the 2005 Plan or any options granted pursuant to the plan. All options will continue with their existing terms and will be subject to the 2005 Plan. Further, the Company will not be able to re-issue any option which is cancelled or terminated under the 2005 Plan. The 2015 Plan provided for the issuance of up to 600,000 shares of common stock upon exercise of options granted pursuant to the 2015 Plan.

The 2015 Plan consists of three separate equity incentive programs: the Discretionary Option Grant Program; the Stock Issuance Program; and the Automatic Option Grant Program for non-employee Board members. Officers and employees, non-employee Board members and independent contractors are eligible to participate in the Discretionary Option Grant and Stock Issuance Programs. Participation in the Automatic Option Grant Program is limited to non-employee members of the Board. Each non-employee Board member will receive an option grant for 10,000 shares of common stock upon initial election or appointment to the Board, provided that such individual has not previously been employed by the Company in the preceding three (3) months. In addition, on the date of each annual stockholders meeting, each Board member will automatically be granted an option to purchase 8,000 shares of common stock, provided he or she has served as a non-employee Board member for at least three months. At December 31, 2015, no options had been exercised and options to purchase a total of 3,000 shares of common stock were outstanding. A total of 3,000 options had been granted under the 2015 Plan, of which no shares have been cancelled and options for 597,000 shares remained available for future grant. No shares have been issued pursuant to the Stock Issuance Program.

Common shares reserved for future issuance, including conversions of preferred stock, outstanding options and options available for future grant under all of the stock option plans totaled 4,262,776 shares at December 31, 2015 as follows, in thousands:

(In thousands)		Common Shares Reserved for Future Issuance

Preferred Stock		1,067
2015 Plan		600
2005 Plan		2,595

Total		4,262

The Compensation Committee of our Board of Directors determines for all employee options, the term of each option, option exercise price within limits set forth in the plans, number of shares for which each option is granted and the rate at which each option is exercisable (generally ratably over one, three or five years from grant date). However, the exercise price of any incentive stock option may not be less than the fair market value of the shares on the date granted (or less than 110% of the fair market value in the case of optionees holding more than 10% of our voting stock of the Company), and the term cannot exceed ten years (five years for incentive stock options granted to holders of more than 10% of our voting stock).

Stock Incentive Plan Summary

A summary of our stock option activity and related information for the years ended December 31, 2015 and 2014 is as follows:

	2015				2014
	Number of Options (in thousands)		Weighted Average Exercise Price		Number of Options (in thousands)		Weighted Average Exercise Price

Outstanding at beginning of year	3,076		$	0.86	3,045		$	0.74
Granted at price = market value	43		2.13		224		1.83
Granted at price > market value	—		—		75		1.98
Exercised	(150	)	0.44		(193	)	0.40
Forfeited	(10	)	1.36		(40	)	1.28
Expired	(361	)	2.77		(33	)	1.90


Outstanding at end of year	2,598		$	0.63	3,076		$	0.86

Options exercisable at end of year	2,287		$	0.51	2,511		$	0.78

Stock Options Outstanding and Exercisable

Information related to stock options outstanding at December 31, 2015, is summarized below:

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Outstanding at 12/31/15 (in thousands)	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Exercisable at 12/31/15 (in thousands)	Weighted Average Exercise Price

$ 0.20-$0.50	1,481	3.10 years	$	0.34	1,418	$	0.33
$ 0.51-$1.00	803	3.72 years	$	0.68	778	$	0.69
$ 1.01-$2.87	314	6.99 years	$	1.91	91	$	1.87

	2,598	3.76 years	$	0.63	2,287	$	0.51

Summarized information about outstanding stock options as of December 31, 2015, that are fully vested and those that are expected to vest in the future as well as stock options that are fully vested and currently exercisable, are as follows:

	Outstanding Stock Options (Fully Vested and Expected to Vest)*		Options that are Exercisable
As of December 31, 2015
Number of outstanding options (in thousands)	2,598		2,287
Weighted average remaining contractual life	3.73		3.36
Weighted average exercise price per share	$	0.62	$	.51
Intrinsic value (in thousands)	$	1,439	$	1,393

* Includes effects of expected forfeitures

As of December 31, 2015, the total unrecognized compensation cost related to non-vested options not yet recognized in the statement of operations totaled approximately $117 thousand (including expected forfeitures) and the weighted average period over which these awards are expected to vest was .58 years.