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 six-month period ended June 30, 2016, 176,500 options were issued, and 65,000 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 $116,194 for the six-months ended June 30, 2016. As of June 30, 2016, there was $398,736 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 June 30, 2016:


	Number of	Average		Contractual	Intrinsic
	Options	Exercise Price		Life 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	8.17		-
Granted	176,000	$	1.02	9.78		-
Expired	22,500	$	1.53	7.82		-

Outstanding at June 30, 2016	1,311,500	$	1.13	5.70		-
Exercisable at June 30, 2016	511,688	$	1.02	3.07	$	7,516