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Stock Option Plans and Warrants to Purchase Common Stock

12 Months Ended

Dec. 31, 2014

Stock Option Plans and Warrants To Purchase Common Stock [Abstract]

Stock Option Plans and Warrants to Purchase Common Stock

Note 7. Stock Option Plans and Warrants to Purchase Common Stock

Stock Option Plans

The Amended and Restated 1995 Omnibus Plan was replaced by the 2005 Equity Incentive Plan and is divided into four separate equity programs:

the Discretionary Option Grant Program, under which eligible persons may, at the discretion of the Plan Administrator, be granted options to purchase shares of common stock,

the Salary Investment Option Grant Program, under which eligible employees may elect to have a portion of their base salary invested each year in options to purchase shares of common stock,

the Automatic Option Grant Program, under which eligible nonemployee Board members will automatically receive options at periodic intervals to purchase shares of common stock, and

the Director Fee Option Grant Program, under which non-employee Board members may elect to have all, or any portion, of their annual retainer fee otherwise payable in cash applied to a special option grant.

The 2005 Equity Incentive Plan (“2005 Plan”) is divided into four separate equity programs:

the Discretionary Option Grant Program, under which eligible persons may, at the discretion of the Plan Administrator, be issued common stock or granted options to purchase shares of common stock,

the Salary Investment Option Grant Program, under which eligible employees may elect to have a portion of their base salary invested each year in options to purchase shares of common stock,

the Automatic Option Grant Program, under which eligible nonemployee Board members will automatically receive options at periodic intervals to purchase shares of common stock, and

In addition, under the 2005 Plan, the Board may elect to pay certain consultants, directors, and employees in common stock. The 2005 Plan was amended in September 2007 to increase the number of options available under the plan to 1,000,000, in 2010 to increase the number of shares under the plan to 1,750,000 and again in 2013 to increase the number shares available under the plan to 3,000,000.

The table below only accounts for transactions occurring as part of the 2005 Plan.

	December 31,
	2014			2013
Shares available for grant at beginning of year		672,485			129,711
Increase in shares available for the plan		-			1,250,000
Options granted		(637,495	)		(791,100	)
Options forfeited or expired		149,055			83,874

Shares available for grant at end of year		184,045			672,485

The total option activity for the 1995 Omnibus Plan and the amended 2005 Plan for the years ended December 31, 2014 and 2013 was as follows:

	Options			Weighted Average Options Exercise Price
Balance at December 31, 2012		1,457,724		$	3.19
Granted		791,100			1.35
Exercised		(103,439	)		0.57
Forfeited		(93,874	)		2.84
Balance at December 31, 2013		2,051,511		$	2.63
Granted		637,495			1.79
Exercised		(36,672	)		0.77
Forfeited		(164,055	)		3.13
Balance at December 31, 2014		2,488,279		$	2.40

As of December 31, 2014, there were 1,875,609 options exercisable with a weighted average exercise price of $2.64, a weighted average remaining contractual term of 6.9 years and an intrinsic value of $196,655. The intrinsic value of options exercised during the years ended December 31, 2014 and 2013 was $47,241 and $56,750, respectively. As of December 31, 2014, there were 2,488,279 options outstanding and expected to vest with a weighted average exercise price of $2.40, weighted average remaining term of 6.9 years and an intrinsic value of $215,103. The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the closing price of our common stock on the last trading day on December 31, 2014 and the exercise price, multiplied by the number of in-the-money options) what would have been received by the option holders had all option holders exercised their options on December 31, 2014. This amount changes based on the fair market value of our common stock.

The Company awarded 637,495 and 791,100 stock options to new employees and existing Board members during the years ended 2014 and 2013, respectively. During the year ended 2014, under the 2005 Equity Incentive plan, 569,000 option grants were issued to employees and 68,495 option grants were issued to Board members.

The weighted-average exercise price, by price range, for outstanding options to purchase common stock at December 31, 2014 was:

Price Range	Weighted Average Remaining Contractual Life in Years	Outstanding Options		Exercisable Options
$0.30-$2.20	7.7		1,805,755		1,193,081
$2.26-$4.10	6.9		174,774		174,778
$4.64-$9.40	3.7		507,750		507,750
Total	6.9		2,488,279		1,875,609

The Company’s stock-based compensation for the years ended December 31, 2014 and 2013 was $720,150 and $803,060, respectively. At December 31, 2014, the total compensation cost for stock options not yet recognized was approximately $1,009,941 and will be expensed over the next three years.

Warrants to Purchase Common Stock

Warrant activity for the years ended December 31, 2014 and 2013 was as follows:

	Warrants			Weighted Average Warrant Exercise Price
Balance at December 31, 2012		2,843,338		$	3.13
Granted		5,421,581			1.65
Exercised		(107,143	)		1.65
Expired/Cancelled		(1,250	)		15.00
Balance at December 31, 2013		8,156,526		$	2.17
Granted		1,169,318			1.48
Exercised		(586,081	)		1.65
Expired/Cancelled		(1,470,263	)		3.49
Balance at December 31, 2014		7,269,500		$	1.15

During the year ended 2014, the Company issued warrants to purchase 1,169,318 shares of common stock, with an exercise price of $1.48, pursuant to a registered direct offering of common stock and warrants. Warrants of 1,470,263 either expired or were cancelled by the Company with an average exercise price of $3.49 and 586,081 warrants were exercised with an exercise price of $1.65.

The weighted-average exercise price, by price range, for outstanding warrants at December 31, 2014 was:

Price Range	Weighted Average Remaining Contractual Life in Years	Outstanding Warrants		Exercisable Warrants
$.53-$2.05	3.7		6,672,548		6,672,548
$5.12-$6.06	0.5		596,952		596,952
Total	3.4		7,269,500		7,269,500

During the year ended December 31, 2015, warrants to purchase 596,952 shares of the Company’s common stock will expire.