15. STOCK OPTIONS

Stock options

Options for the purchase of 3,649,508 shares of Common Stock have been issued under the 2008 Stock Option Plan. Options for the purchase of 1,357,803 shares under the 2008 Stock Option Plan were outstanding as of December 31, 2018. No shares are available for future issuance under the 2008 Stock Option Plan which expired July 25, 2018. A stock option for 3,000,000 shares granted to Thomas J. Shaw on November 2, 2016 terminated by its terms prior to becoming exercisable following a December 27, 2016 shareholder vote against such option.

The Compensation and Benefits Committee administered the Company’s stock option plan prior to its termination.

Employee options

A summary of Director, officer, and employee options granted and outstanding under the 2008 Stock Option Plan is presented below:


	Years Ended December 31,
	2018			2017			2016
		Weighted			Weighted			Weighted
		Average			Average			Average
		Exercise			Exercise			Exercise
	Shares	Price		Shares	Price		Shares	Price
Outstanding at beginning of period	1,805,519	$	1.51	1,817,919	$	1.52	2,125,069	$	0.94
Granted	—	$	—	—	$	—	750,400	$	2.18
Exercised	—	$	—	—	$	—	(1,046,580)	$	(0.82)
Forfeited	(505,216)	$	(1.36)	(12,400)	$	(2.75)	(10,970)	$	(1.08)

Outstanding at end of period	1,300,303	$	1.57	1,805,519	$	1.51	1,817,919	$	1.52

Exercisable at end of period	1,300,303	$	1.57	1,803,119	$	1.51	1,218,519	$	1.06

No options were issued in 2018 or 2017 to employees. 600,400 employee stock options were issued in 2016. A grant of three million options to the Company’s chief executive officer terminated by its terms prior to becoming exercisable. The fair value of the September 2016 grants exercisable into 500,400 shares was $1.783 per share of underlying Common Stock and was estimated on the date of the grant using the Black Scholes pricing model with the following assumptions: expected volatility of 67.1%, risk free interest rate of 1.51%, and an expected life of 7.1 years. These options were issued under the First Amended 2008 Stock Option Plan. The fair value of the December 2016 grants exercisable into 100,000 shares was $0.728 per share of underlying Common Stock and was estimated on the date of the grant using the Black Scholes pricing model with the following assumptions: expected volatility of 72.5%, risk free interest rate of 2.37%, and an expected life of 7.1 years. These options were issued under the First Amended 2008 Stock Option Plan.

No options were issued to non-employee directors in 2018 or 2017. 150,000 stock options were issued to non-employee directors in 2016. The fair value of the 2016 grants was $0.728 per share of underlying Common Stock and was estimated on the date of the grant using the Black Scholes pricing model with the following assumptions: expected volatility of 72.5%, risk free interest rate of 2.37%, and an expected life of 7.1 years. These options were issued under the First Amended 2008 Stock Option Plan.

The following table summarizes information about Director, officer, and employee options outstanding under the stock option plan at December 31, 2018:


			Weighted Average
Exercise Prices		Shares Outstanding	Remaining Contractual Life	Shares Exercisable
$	1.46	50,000	4.37	50,000
$	0.81	535,303	0.54	535,303
$	1.05	250,000	7.99	250,000
$	2.75	465,000	7.70	465,000

Non-employee options

A summary of options outstanding and held by non-employees is as follows:


	Years Ended December 31,
	2018			2017			2016
		Weighted			Weighted			Weighted
		Average			Average			Average
	Shares	Exercise Price		Shares	Exercise Price		Shares	Exercise Price

Outstanding at beginning of period	57,500	$	0.81	57,500	$	0.81	57,500	$	0.81
Granted	—	$	—	—	$	—	—	$	—
Exercised	—	$	—	—	$	—	—	$	—
Forfeited	—	$	—	—	$	—	—	$	—

Outstanding at end of period	57,500	$	0.81	57,500	$	0.81	57,500	$	0.81

Exercisable at end of period	57,500	$	0.81	57,500	$	0.81	57,500	$	0.81

The following table summarizes information about non-employee options outstanding under the stock option plan at December 31, 2018:


			Weighted Average
Exercise Price		Shares Outstanding	Remaining Contractual Life	Shares Exercisable
$	0.81	57,500	0.54	57,500

The Company recorded $388 thousand of stock-based compensation expense in 2016. In 2017, the Company recognized stock-based compensation expense of $672 thousand. The Company recorded no stock-based compensation expense in 2018. The total intrinsic value of options exercised was $0; $0; and $1,414,892 in 2018, 2017, and 2016, respectively. There were no options outstanding and exercisable with exercise prices lower than market price at December 31, 2018.

Options Pricing Models – Assumptions

The expected life is based on the Company’s historical experience with option exercise trends. The assumptions for expected volatility is based on a calculation of volatility over the five-years preceding the grant date. Risk-free interest rates are set using grant-date U.S. Treasury yield curves. In its calculations, the Company assumed no dividends.