Quarterly report pursuant to Section 13 or 15(d)

Stock-based compensation

Stock-based compensation

6 Months Ended

Jun. 30, 2016

Stock-Based Compensation

In 2006, the Company adopted the 2006 Stock Option and Incentive Plan or the Plan, under which the Board of Directors may grant incentive or non-qualified stock options and stock grants to key employees, directors, advisors and consultants of the Company. The Plan was amended at various dates by the Board of Directors to increase the reserved shares of common stock issuable under the Plan to 3,838,750 as of June 30, 2016, or the Amended Plan.

Stock options vest based upon the terms within the individual option grants, with an acceleration of the unvested portion of such options upon a change in control event, as defined in the Amended Plan. The options are not transferable except by will or domestic relations order. The option price per share under the Amended Plan cannot be less than the fair market value of the underlying shares on the date of the grant. The number of shares remaining available for future issuance under the Amended Plan as of June 30, 2016 was 1,676,957.

Stock option activity for the six months ended June 30, 2016 was as follows:



Common Stock Options	Number of Options		Exercise Price Per Share	Weighted Average Exercise Price		Weighted Average Remaining Life	Aggregate Intrinsic Value
Outstanding, December 31, 2015	1,268,200		$1.20-$5.39	$	3.06	6.01 years	$	985,578
Granted	87,701		$0.79-$3.93	2.56
Exercised	(12,125	)	$1.20-$2.60	1.56
Canceled and forfeited	(150,125	)	$3.39-$4.50	3.39
Expired	—		—	—
Outstanding, June 30, 2016	1,193,651		$0.79-$5.39	$	3.00	5.19 years	$	2,517,999
Exercisable, June 30, 2016	941,826			$	2.54		$	2,412,166
Vested and expected to vest, June 30, 2016	1,193,651			$	3.00		$	2,517,999

Stock-Based Compensation - Ilios

In 2009, Ilios adopted the 2009 Stock Incentive Plan, or the 2009 Plan, under which the Board of Directors may grant incentive or non-qualified stock options and stock grants to key employees, directors, advisors and consultants of the Company. The maximum number of shares allowable for issuance under the 2009 Plan is 2,000,000 shares of common stock. The 2009 Plan had 1,325,000 available for grant as of March 31, 2016. At the time of the merger between Ilios and the Company, stock options vested with an acceleration of the unvested portion upon the change in control event, as defined in the Plan. These options were exchanged for options for Tecogen stock at the same ratio and price as the share exchange described in Note 4. The grant was for a total of 82,701 options. The impact of the option exchange was immaterial.

Consolidated stock-based compensation expense for the six months ended June 30, 2016 and 2015 was $88,177 and $51,497, respectively. No tax benefit was recognized related to the stock-based compensation recorded during the periods.