Equity-Based Compensation

9 Months Ended

Sep. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

The fair value of each option and equity warrant award is estimated on the date of grant using a Black-Scholes-Merton option pricing valuation model. Expected volatility is based on the historical volatility of the price of the Company’s stock. The risk-free interest rate is based on U.S. Treasury issues with a term equal to the expected life of the option and equity warrant. The Company uses historical data to estimate expected dividend yield, expected life and forfeiture rates. There were 800,000 and 955,000 options or equity warrants granted in the nine months ended September 30, 2015 and 2014, respectively.

Stock option for employees' activity during the nine months ended September 30, 2015 is as follows:

Stock option activity for employees:



	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding January 1, 2015	11,287,888		$	1.64	4.61	$	—
Granted	800,000		0.25		—	—
Forfeited	(565,000	)	1.75		—	—
Outstanding September 30, 2015	11,522,888		$	1.54	4.45	$	—
Vested and expected to vest September 30, 2015	11,522,888		$	1.54	4.45	$	—
Exercisable September 30, 2015	10,929,674		$	1.58	4.05	$	—

Unvested stock option activity for employees:



	Number of Options		Weighted Average Exercise Price		Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Unvested January 1, 2015	710,594		$	1.38	8.76	$	—
Granted	800,000		0.25		—	—
Vested	(917,380	)	0.96		—	—
Forfeited	—		—		—	—
Unvested September 30, 2015	593,214		$	0.50	8.69	$	—

Stock option activity for non-employees:



	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding January 1, 2015	3,800,000		$	1.36	4.75	$	—
Granted	—		—		—	—
Exercised	—		—		—	—
Forfeited	(477,000	)	1.83		—	—
Outstanding September 30, 2015	3,323,000		$	1.29	4.57	$	—
Vested and expected to vest September 30, 2015	3,323,000		$	1.29	4.57	$	—
Exercisable September 30, 2015	3,323,000		$	1.29	4.57	$	—

Unvested stock option activity for non-employees during the year:



	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Unvested January 1, 2015	33,333		$	2.60	9.08	$	—
Options granted	—		—		—	—
Options vested	(33,333	)	2.60		—	—
Options forfeited	—		—		—	—
Unvested September 30, 2015	—		$	—	0.00	$	—

The impact on the Company’s results of operations of recording equity-based compensation for the nine months ended September 30, 2015 and 2014 was to increase general and administrative expenses by approximately $148,000 and $260,000, respectively, which had no impact on earnings per share.

As of September 30, 2015 and 2014, respectively, there was $231,000 and $301,000 of unrecognized equity-based compensation cost related to options granted under the Equity Incentive Plan. Generally, the Company's stock options will become recognizable within a 12 month period.

Warrants:

The Company has 2,232,392 warrants outstanding as of September 30, 2015. The Company has not issued any warrants for the nine months ended September 30, 2015 and 2014.