7. Stock Purchases Rights, Stock Options and Warrants

The Company established the pdvWireless, Inc. 2014 Stock Plan (the “2014 Stock Plan”) to attract, retain and reward individuals who contribute to the growth of the Company. This 2014 Stock Plan superseded previous stock plans although under such previous plans, 54,479 stock options were vested and outstanding as of September 30, 2015.

The Company’s Board of Directors authorized and reserved 1,823,651 shares of common stock for issuance under its 2014 Stock Plan. The number of shares reserved for issuance under the 2014 Stock Plan automatically increased on January 1, 2015 and will continue to automatically increase each subsequent anniversary through January 1, 2024 by an amount equal to the smaller of 5% of the number of shares of common stock issued and outstanding on the immediately preceding December 31 or a lesser amount determined by the Board of Directors.

From April 1, 2015 through September 30, 2015, the Company awarded certain employees of the Company 170,250 options to purchase shares of common stock with a weighted average exercise price of $38.42 per share. The shares have a ten year contractual life and 25% will vest on the first anniversary of grant, and the remainder will vest in three equal annual installments. Shares granted to employees are subject to vesting, future settlement conditions and other such terms as determined by the Board of Directors.

Restricted Stock Units

During the six months ended September 30, 2015, the Company did not award any restricted stock units. As of September 30, 2015, there were 83,804 restricted stock units outstanding, all of which were vested. These restricted stock units were issued under the pdvWireless, Inc. 2010 Stock Plan and the 2014 Stock Plan. The Company recognizes compensation expense for restricted stock units over the explicit vesting period. Vested restricted stock units are settled and issuable upon the earlier of the date the employee ceases to be an employee of the Company or a date certain in the future. There was no stock compensation expense related to the restricted stock units in the three and six months ended September 30, 2015.

Stock Options

A summary of Stock Option activity for the six months ended September 30, 2015 is as follows:



		Weighted
		Average
	Options	Exercise Price
Options outstanding at March 31, 2015	1,425,451	$	20.73
Granted	170,250		38.42
Expirations	(15)		72.85
Exercised	(3,019)		13.25
Options outstanding at September 30, 2015	1,592,667	$	22.75

Additional information regarding Stock Options outstanding at September 30, 2015 is as follows:



										Weighted
						Weighted				Average
						Average	Weighted			Exercise Price
Exercise					Number	Remaining	Average		Options	of Shares
Prices					Outstanding	Life in Years	Exercise Price		Exercisable	Exercisable
$	13.25	-	$	20.00	1,171,030	8.55	$	19.74	333,569	$	19.10
	25.00	-		46.23	324,000	9.46		25.91	100,000		25.00
	47.10	-		72.85	97,637	8.96		48.36	7,387		52.98
					1,592,667	8.76	$	22.75	440,956	$	21.01

The Black-Scholes option model requires weighted average assumptions to be used for calculation of the Company’s stock compensation expense. The assumptions used during the three and six months ended September 30, 2015 were: the expected life of the awards was 5 years, the risk-free interest rate ranged from 1.50% to 1.69%, the expected volatility was 40.0%, and the expected dividend yield was 0.0%. There was a 2% forfeiture rate used for the calculation.

Stock compensation expense was $1,105,976 and $2,455,611 for the three and six months ended September 30, 2015, respectively. For the three and six months ended September 30, 2014, stock compensation expense was $1,180,824 and $3,276,600. Included in the six months ended September 30, 2014, the Company recognized $1,676,080 related to restricted stock units issued. Stock compensation expense is included as part of general and administrative expense in the accompanying consolidated statements of operations.

The weighted average fair value for each stock option award granted during the six months ended September 30, 2015, was $14.27 per share. As of September 30, 2015, there was approximately $6.6 million of unrecognized compensation cost related to non-vested share options granted under the Company’s stock option plans. The cost is expected to be recognized over a weighted-average period of 3.0 years. The intrinsic value of the options outstanding and exercisable at September 30, 2015 was approximately $13.3 million and $4.0 million, respectively.

Warrants

A summary of Warrant activity is as follows:



		Weighted
		Average
	Warrants	Exercise Price
Warrants outstanding at March 31, 2015	6,039	$	82.79
Expired	—		—
Warrants outstanding at September 30, 2015	6,039	$	82.79

Additional information regarding Warrants outstanding at September 30, 2015 is as follows:



			Weighted	Weighted
			Average	Average
Exercise		Number	Remaining	Exercise
Price		Outstanding	Life in Years	Price
$	82.79	6,039	0.67	$	82.79

The outstanding warrants are immediately exercisable into 6,039 shares of common stock at September 30, 2015 and expire in June 2016.

Motorola Investment

On September 15, 2014, Motorola invested $10.0 million to purchase 500,000 Class B Units of the Company’s subsidiary, PDV Spectrum Holding Company, LLC (at a price equal to $20.00 per unit). The Company owns 100% of the Class A Units in this subsidiary. Motorola has the right at any time to convert its 500,000 Class B Units into 500,000 shares of the Company’s common stock. The Company also has the right to force Motorola’s conversion of these Class B Units into shares of its common stock on the occurrence of certain corporate events or at its election after September 15, 2016. Motorola is not entitled to any assets, profits or distributions from the operations of the subsidiary. In addition, Motorola’s conversion ratio from Class B Units to shares of the Company’s common stock is fixed on a one-for-one basis, and is not dependent on the performance or valuation of either the Company or the subsidiary. The Class B Units have no redemption or call provisions and can only be converted into shares of the Company’s common stock. Management has determined that this investment does not meet the criteria for temporary equity or non-controlling interest due to the limited rights that Motorola has as a holder of Class B Units, and accordingly has presented this investment as part of its permanent equity within Additional Paid-in Capital in the accompanying consolidated financial statements.