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13. STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2015

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

13. STOCK-BASED COMPENSATION

Pursuant to the Company’s Amended and Restated 2007 Equity Incentive Plan, the total aggregate number of shares of the Company’s common stock reserved for issuance is 4,341,989 shares. As of September 30, 2015, the number of shares of the Company’s common stock available for issuance is 1,048,489.

The fair value of each option award below is estimated on the date of grant using the Black-Scholes option-pricing model. The risk free rate is based on the yield-to-maturity in continuous compounding of the US Government Bonds with the time-to-maturity similar to the expected tenor of the option granted, volatility is based on the annualized historical stock price volatility of the Company, and the expected life is estimated based on historical share option exercise experience as prescribed in FASB ASC 718.

In early March 2015, the Company granted to an independent director an option to purchase 12,500 shares of the Company’s common stock at an exercise price of $1.66 per share and the options vested immediately. The options were valued at $7,400 fair value, with assumed 73.55% volatility, a three-year expiration term with an expected tenor of 1.49 years, a risk free rate of 0.42% and no dividend yield. For the three-month period ended March 31, 2015, $7,400 was recognized as general and administrative expenses.

On April 8, 2015, the Company granted to 17 management staff options to purchase 275,000 shares of the Company’s common stock, respectively, at an exercise price of $1.428 per share and the options vested immediately. The options were valued at $146,400 fair value, respectively, with assumed 68.70% volatility, a four-year expiration term with an expected tenor of 0.94 years, a risk free rate of 0.20% and no dividend yield.

On April 8, 2015, the Company granted to 3 director options to purchase 300,000 shares of the Company’s common stock, respectively, at an exercise price of $1.428 per share and the options vested immediately. The options were valued at $181,400 fair value, respectively, with assumed 65.71% volatility, a four-year expiration term with an expected tenor of 1.30 years, a risk free rate of 0.31% and no dividend yield.

On May 7, 2015, the Company granted to an independent director an option to purchase 12,500 shares of the Company’s common stock at an exercise price of $2.550 per share and the options vested immediately. The options were valued at $8,600 fair value, with assumed 69.32% volatility, a three-year expiration term with an expected tenor of 0.97 years, a risk free rate of 0.23% and no dividend yield.

On July 1, 2015, the Company granted to an independent director an option to purchase 12,500 shares of the Company’s common stock at an exercise price of $2.07 per share and the options vested immediately. The options were valued at $9,500 fair value, with assumed 67.05% volatility, a three-year expiration term with an expected tenor of 1.33 years, a risk free rate of 0.41% and no dividend yield.

The following table summarizes all Company stock option transactions between January 1, 2015 and September 30, 2015.

		Number of Option and Warrants Outstanding and exercisable			Weighted- Average Exercise price of Option and Warrants				Range of Exercise Price per Common Share
Balance, January 1, 2015			2,744,000			$2.38				$0.95 - $12.60
Granted and vested during the period Ended September 30, 2015			612,500			$1.47				$1.43-2.55
Exercised during the period ended September 30, 2015			(182,500	)		$1.12				$0.95-1.66
Expired during the period ended September 30, 2015			(817,500	)		$4.86				$2.06-4.97
Balance, September 30, 2015			2,356,500			$1.38				$0.95 - $12.60

		Stock and Warrants Options Exercisable and Outstanding
						Weighted Average
						Remaining
		Outstanding at September 30, 2015		Range of Exercise Prices		Contractual Life (Years)
Exercisable and outstanding		2,356,500		$0.95 - $12.60		2.36

The aggregate intrinsic value of options outstanding and exercisable as of September 30, 2015 was $736,442.

The total intrinsic value of options exercised was $236,535 and $400,954 for the nine months ended September 30, 2015 and 2014.

Intrinsic value is calculated as the difference between the exercise price of the underlying award and the closing market price of the stock of the Company as of September 30, 2014 for options outstanding and exercisable as of September 30, 2015, and the closing market price of the stock of the Company as of the date of exercise for options exercised.

During the nine months ended September 30, 2015, 97,244 shares of common stock were issued upon cashless exercise of 182,500 options.