The Company reversed $1,392,000 of stock option expenses during the third quarter of 2016 related to options that had been issued to two executives that left the organization in July 2016 and which had not vested. Stock option expenses recorded for the remaining employees were $254,000, resulting in a negative stock option expense of $1,138,000 for the three months ended September 30, 2016. For the nine months ended September 30, 2016 net stock option expense was $299,000. For the three and nine months ended September 30, 2015, stock option expenses of $738,000 and $2,049,000 were recognized, respectively. As of September 30, 2016, there was $1,986,000 of unrecognized compensation cost related to outstanding options that is expected to be recognized as a component of the Company’s operating expenses over a weighted average period of 2.4 years

As of September 30, 2016, an aggregate of 72,536,000 shares of common stock were reserved for issuance under the Company’s Equity Incentive Plans, including 24,651,000 shares subject to outstanding common stock options granted under the plan and 47,885,000 shares available for future grants. The administrator of the plan determines the times when an option may become exercisable at the time of grant. Vesting periods of options granted to date have not exceeded five years.  The options generally will expire, unless previously exercised, no later than ten years from the grant date. The Company is using unissued shares for all shares issued for options and restricted share awards.

The following schedule presents activity in the Company’s outstanding stock options for the nine months ended September 30, 2016 (in thousands, except per share amounts):

As of September 30, 2016, options to purchase 24,651,200 shares of common stock, with an aggregate intrinsic value of $7,619,000, were outstanding that were fully vested or expected to vest with a weighted average remaining contractual term of 4.2 years. As of September 30, 2016, options to purchase 21,598,860 shares of common stock, with an intrinsic value of $6,342,000 were exercisable with a weighted average exercise price of $0.17 per share and a weighted average remaining contractual term of 3.7 years.

The aggregate intrinsic value of outstanding and exercisable options at September 30, 2016 was calculated based on the closing price of the Company’s common stock as reported on the OTCQB market on September 30, 2016 of $0.49 per share less the exercise price of the options. The aggregate intrinsic value is calculated based on the positive difference between the closing fair market value of the Company’s common stock and the exercise price of the underlying options.