Employee Stock Options

12 Months Ended

Dec. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

EMPLOYEE STOCK OPTIONS

8. EMPLOYEE STOCK OPTIONS

For the year ended December 31, 2015

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 2015, the Company granted 842,500 common stock options 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 105,000 options were immediately vested and were granted with an exercise price of $5.00 and the expiration date of December 10, 2018. Another 250,000 options vest over two years or upon the up listing of the Company’s common 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 reversed 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 2015:

	2015
Expected dividend yield		0	%
Expected volatility		116% – 131	%
Risk-free interest rate		0.79% – 1.25	%
Expected life of options		2.43 – 3.00 years

Under the Black-Scholes option price model, fair value of the options granted is estimated at $3,013,531. During 2015, $2,822,132 compensation expense was recognized and the remaining $191,399 will be recognized over the next three years.

The following table represents stock option activity as of and for the period ended December 31, 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		842,500	$	7.04
Exercised or Vested		-	$	0.00
Cancelled or Expired		450,000	$	7.78
Outstanding – December 31, 2015		392,500	$	6.19		2.62
Exercisable – December 31, 2015		355,000	$	5.70		2.55	$	0.00

For the year ended December 31, 2014

On April 30, 2014, the effective date of the Redomestication and effective date of the Merger Exchange Ratio, there were a total of 920 vested and 618 unvested options, on a post-reverse split basis, carried over to the reverse merger with DAC on June 3, 2014 with strike prices ranging from $66.80 to $5,056. During September 2014, the holders of these options voluntarily agreed to terminate their options. At December 31, 2014 there are no outstanding options.