NOTE P

—STOCK OPTIONS

1999

Stock Option Plan

During

1999,

the Board of Directors of the Company adopted the

1999

Stock Option Plan (the

1999

Plan). The

1999

Plan was not presented to stockholders for approval and thus incentive stock options are not available under the plan. Under the

1999

Plan,

83,334

shares of common stock were reserved for issuance to employees, officers, directors, and consultants of the Company at exercise prices which

may

not be below

85%

of fair market value. The term of nonstatutory stock options granted

may

not exceed

ten

years. Options issued under the

1999

Plan vest pursuant to the terms of stock option agreements with the recipients. In the event of a change in control, as defined, all options outstanding vest immediately. The

1999

Plan expired in

August

2009.

2004

Stock Option Plan

October

12,

2004,

the Board of Directors of the Company approved the

2004

Stock Option Plan (the

2004

Plan). The

2004

Plan was not presented to stockholders for approval and thus incentive stock options are not available under this plan. Under the terms of this plan,

166,667

shares of common stock are reserved for issuance to employees, officers, directors, and consultants of the Company at exercise prices which

may

not be below

85%

of fair market value. The term of stock options granted

may

not exceed

ten

years. Options issued under the

2004

Plan vest pursuant to the terms of stock option agreements with the recipients. In the event of a change in control, as defined, all options outstanding vest immediately. The

2004

Plan expired in

October

2014.

2015

Stock Option Plan

January

27,

2016,

the shareholders approved the

2015

Equity Incentive Plan (the

2015

Plan). Under the terms of this plan,

666,667

shares of common stock are reserved for issuance to employees, officers, directors, and consultants of the Company at exercise prices which

may

not be below

100

110%

of fair market value. The term of stock options granted

may

not exceed

ten

years. Options issued under the

2015

Plan vest pursuant to the terms of stock option agreements with the recipients. In the event of a change in control, certain stock awards issued under this plan

may

be subject to additional acceleration of vesting as

may

be provided in the participants’ written agreement. The

2015

Plan expires in

December

2025.

Non-Plan Stock Options

Periodically, the Company has granted options outside of the

1999,

2004

and

2015

Plans to various employees and consultants. In the event of change in control, as defined, certain of the non-plan options outstanding vest immediately.

Stock Option Activity

Information summarizing option activity is as follows:

	Number of Options															Weighted average exercise		Weighted average remaining life		Aggregate intrinsic
	1999 Plan			2004 Plan			2015 Plan			Non Plan			Total			price		(in years)		value

Outstanding, as of December 31, 2014		20,834			136,276			—			184,167			341,277		$	4.32

Granted		—			—			—			119,000			119,000			2.16
Exercised		—			—			—			—			—
Forfeited		—			(3,473	)		—			(38,531	)		(42,004	)		3.72
Expired		—			(47,795	)		—			(5,548	)		(53,343	)		3.00
Outstanding, as of December 31, 2015		20,834			85,008			—			259,088			364,930		$	3.87		4.57	$	240

Granted		—			—			27,087			—			27,087			2.74
Exercised		—			—			—			—			—
Forfeited		—			—			(2,084	)		(8,335	)		(10,419	)		2.16
Expired		(20,834	)		(15,628	)		—			(3,473	)		(39,935	)		2.50
Outstanding, as of December 31, 2016		—			69,380			25,003			247,280			341,663		$	3.99		4.23	$	53,936
Vested or expected to vest at December 31, 2016														307,164		$	4.16		4.04	$	41,816
Exercisable at December 31, 2016														216,566		$	4.56		3.51	$	17,367

The options outstanding and exercisable at

December

31,

2016

were in the following exercise price ranges:

				Options Outstanding						Options Exercisable
Range of exercise prices				Number of shares		Weighted average exercise price		Weighted average remaining life (in years)		Number exercisable		Weighted average exercise price
$	1.90	-	3.00		122,485	$	2.24		5.81		34,815	$	2.15
	3.01	-	5.00		197,927		4.47		3.66		160,500		4.41
	5.01	-	11.04		21,251		9.67		0.72		21,251		9.67
$	1.90	-	11.04		341,663						216,566

The aggregate intrinsic value in the table above represents the total intrinsic value, based on the Company’s closing stock price of

$2.65

as of

December

31,

2016,

which would have been received by the option holders had all option holders exercised their options as of that date. The total number of in-the-money options exercisable as of

December

31,

2016

was

34,815.

The weighted average fair value of options granted during the years ended

December

31,

2016

and

2015

was

$1.86

and

$1.68

per share, respectively. The total intrinsic value of options exercised during the years ended

December

31,

2016

and

2015

was

and

$0,

respectively. The total fair value of shares vested during the years ended

December

31,

2016

and

2015

was

$285,430

and

$265,247

respectively.

As of

December

31,

2016,

future compensation cost related to nonvested stock options is

$166,146

and will be recognized over an estimated weighted average period of

1.18

years.