The Company maintains a stock option plan under which certain employees are awarded option grants based on a combination of performance and tenure. The stock option plan provides for the grant of up to 2,000,000 shares. All options may be exercised for a period up to 5 years following the grant date, after which they expire. Options are vested in 4 or 5 years from the grant date.

For the three-month period ended March 31, 2016, no options were issued, and 52,500 options were forfeited or expired due to employee resignation. The options were not vested and the option expense reversed was $47,370.

The Company uses the Black-Scholes option pricing model to estimate the fair value of stock-based awards on the date of grant.

Total compensation cost related to stock options was $27,525 for the three months ended March 31, 2016. As of March 31, 2016, there was $322,808 of unrecognized compensation costs related to stock options, which is expected to be recognized over a weighted average period of 4.0 to 5.0 years. The following table represents stock option activity as of and for the period ended March 31, 2016:

	Number of		Average	Contractual Life		Intrinsic
	Options		Exercise Price	in Years		Value

Outstanding at December 31, 2015	1,200,000	$	1.07	5.19		-
Exercisable at December 31, 2015	332,000	$	1.04	3.34	$	28,000

Forfeited	42,500	$	1.56	8.42		-
Granted	-	$	-	-		-
Expired	10,000	$	1.60	8.80		-

Outstanding at March 31, 2016	1,147,500	$	1.00	4.57		-
Exercisable at March 31, 2016	431,500	$	1.05	3.24	$	13,515