Employee Stock Options

9 Months Ended

Sep. 30, 2015

Employee Stock Options [Abstract]

EMPLOYEE STOCK OPTIONS

8. EMPLOYEE STOCK OPTIONS

On October 29, 2015 a 1:40 reverse split of the Company stock occurred and the effect has been applied retroactively for disclosure purposes.

During the nine months ended September 30, 2015, 737,500 options were granted to employees and a director for service provided. Of these, 250,000 options were immediately vested and were granted with an exercise price of $6.00 and the expiration date is May 18, 2018. Another 250,000 options vest over two years or upon the up listing of the Company’s stock and were granted with an exercise price of $6.00 and the expiration date is June 1, 2018. These 250,000 options were surrendered and cancelled on September 4, 2015. A director received two options. The first was for 75,000 shares vesting over two years and was granted with an exercise price of $10.00 and the expiration date is June 1, 2018. The second was for 125,000 shares with vesting tied to performance and was granted with an exercise price of $10.00 and the expiration date is June 1, 2018. These two director options were surrendered and cancelled on September 4, 2015.Stock based compensation was reduced by $170,396 for costs previously recognized on the total 450,000 surrendered and cancelled unvested options. Another option for 37,500 shares vesting over three years was granted with an exercise price of $10.80 and the expiration date is May 4, 2019.

The Company uses the Black-Scholes option pricing model to estimate the fair value of stock-based awards on the date of grant.

The following table summarizes the assumptions used to estimate the fair value of stock options granted during the nine months ended September 30, 2015:

	2015
Expected dividend yield	0%
Expected volatility	128%
Risk-free interest rate	0.40 - 0.99%
Expected life of options	1.50 – 3.42 years

Under the Black-Scholes option price model, fair value of the options granted is estimated at $2,302,837. During the nine months ended September 30, 2015, $2,126,109 compensation expense was recognized and the remaining $176,728 will be recognized over the next three years.

The following table represents stock option activity as of and for the period ended September 30, 2015:

	Number of Options		Weighted Average Exercise Price	Contractual Life in Years		Intrinsic Value
Outstanding – December 31, 2014	–	$	0.00
Exercisable – December 31, 2014	–	$	0.00		$	0.00
Granted	737,500	$	7.33
Exercised or Vested	–	$	0.00
Cancelled or Expired	450,000	$	7.78
Outstanding – September 30, 2015	287,500	$	6.63	2.76
Exercisable – September 30, 2015	250,000	$	6.00	2.63	$	113,000