On April 9, 2014, the Company issued 5-year stock options to (i) each of its Chief Financial Officer and Executive Vice President to purchase 50,000 shares of common stock, at an exercise price of $1.65 per share, which options vest 25,000 shares on December 31, 2014 and 25,000 shares on December 31, 2015 and (ii) a consultant to the Company to purchase 75,000 shares of common stock at an exercise price of $1.65 per share, which option vests 37,500 shares on December 31, 2014 and 37,500 shares on December 31, 2015.

On April 9, 2014, the Company issued 5-year stock options as an annual grant to each of its three non-management directors to purchase 35,000 shares of common stock at an exercise price of $1.65 per share. Such options vested 8,750 shares on the date of grant and 8,750 shares in three equal quarterly amounts which began on June 30, 2014, subject to continued service on the Board of Directors. The Company recorded $49,000 in non-cash compensation expense in connection with the vested portion of these options for the nine month period ended September 30, 2014.

During the nine month period ended September 30, 2014 and September 30, 2013, the Company recorded non-cash compensation expense of $81,000, for the vested portion of 10-year stock options to purchase 500,000 shares issued to the Company’s Chairman and Chief Executive Officer in November 2012. During the nine month period ended September 30, 2013, the Company recorded non-cash compensation expense of $37,000 for the vested portion of 10-year stock options to purchase 750,000 shares of its common stock issued to the Company’s Chairman and Chief Executive Officer in June 2009. In addition, during the nine month period ended September 30, 2014 and September 30, 2013, the Company recorded non-cash compensation expense of $77,000 and $129,000, respectively, for the vested portion of stock options granted to its Chief Financial Officer, directors and consultants in prior years.

During the nine month period ended September 30, 2014, the Company’s Chairman and Chief Executive Officer exercised stock options to purchase an aggregate of 1,517,500 shares of common stock at exercise prices of $0.25 per share (1,100,000 shares) and $0.68 per share (417,500 shares). All such shares were exercised on a cashless (net exercise) basis by delivery to the Company of an aggregate of 292,618 shares of common stock. In addition, the Chairman and Chief Executive Officer delivered to the Company an aggregate of 516,288 shares of common stock with an aggregate value of $986,110 to fund payroll withholding taxes with respect to such option exercises. As a result of the aforementioned stock option exercises, the Chairman and Chief Executive Officer received 708,594 net shares of the Company’s common stock.

During the nine month period ended September 30, 2014, the Company’s Executive Vice President exercised a stock option to purchase 75,000 shares of the Company’s common stock at an exercise price of $0.68 per share. The option was exercised on a cashless (net exercise) basis by delivery to the Company of 31,098 shares of common stock. In addition, 16,968 shares were delivered to the Company with an aggregate value of $27,828 to fund payroll withholding taxes on exercise, resulting in net shares of 26,934 issued to the Company’s Executive Vice President with respect to such option exercise.

On June 19, 2013, the Company issued to a director a 5-year stock option to purchase 300,000 shares of its common stock, at an exercise price of $1.88 per share, for service as the sole member of the Company’s Strategic Development Committee. The shares underlying such option vested 100,000 shares on the date of grant, 100,000 shares on June 19, 2014 and 100,000 shares will vest on June 19, 2015. The Company recorded $75,000 in non-cash compensation in connection with the vested portion of the option for the nine month period ended September 30, 2014 and September 30, 2013.

During the nine month period ended September 30, 2013, the Company issued stock options as an annual grant to each of its then four non-management directors to purchase 25,000 shares of common stock at an exercise price of $1.19 per share. Such options vested over a one year period in equal quarterly amounts of 6,250 shares beginning April 24, 2013, subject to continued service on the Board of Directors (the vesting was accelerated for one of the directors following his resignation from the Board of Directors in August 2013). The Company recorded $39,000 in non-cash compensation in connection with the vested portion of these options for the nine month period ended September 30, 2013.

During the nine month period ended September 30, 2013, the Company’s Chairman and Chief Executive Officer, Chief Financial Officer and an employee (who subsequently became Executive Vice President) exercised stock options to purchase an aggregate of 1,125,000, 10,000 and 52,500 shares, respectively, of the Company’s common stock at an exercise price of $0.68 per share. All such options were exercised on a cashless (net exercise) basis (except for the option to purchase 10,000 shares by the Chief Financial Officer) by delivery to the Company of an aggregate of 396,373 and 18,497 shares of common stock, respectively. In addition, 241,540 and 10,201 shares of common stock were delivered to the Company with an aggregate value of $466,617 and $19,688 to fund payroll withholding taxes with respect to such option exercises. As result of the aforementioned stock option exercises, the Chairman and Chief Executive Officer and the employee received net shares of 487,087 and 23,802, respectively.

The fair value of each option grant on the date of grant is estimated using the Black-Scholes option-pricing model. On the date of grant, the following weighted average assumptions were utilized as follows: