NOTE 7. STOCKHOLDERS’ EQUITY

Share-based expense consisted of the following:


		Three months ended June 30,				Six months ended June 30,
		2017		2016		2017		2016
Employee Awards	$	721,094	$	381,441	$	2,130,489	$	834,062
Consulting Awards		--		37,416		25,440		47,516
Feinsod Agreement		--		82,648		--		165,296
DB Option Agreement		--		--		--		55,100
	$	721,094	$	501,505	$	2,155,929	$	1,101,974

Employee Stock Options

On October 29, 2014, the Board authorized the adoption of, and on June 26, 2015, our stockholders ratified, our 2014 Equity Incentive Plan (the “Incentive Plan”). The Incentive Plan provides for the issuance of up to 10 million shares of our common stock, and is designed to provide an additional incentive to executives, employees, directors and key consultants, aligning our long term interests with participants. In April 2016, we filed a Registration Statement on Form S-8 (the “Registration Statement”), which automatically became effective in May 2016. The Registration Statement relates to 10,000,000 shares of our common stock, which are issuable pursuant to, or upon exercise of, options that have been granted or may be granted under our Incentive Plan.

Share-based compensation costs for award grants to employees and directors (“Employee Awards”) are recognized on a straight-line basis over the service period for the entire award, with the amount of compensation cost recognized at any date equaling at least the portion of the award that is vested. The following summarizes the Black-Scholes assumptions used for Employee Awards granted:


	Three months ended
	June 30, 2017	March 31, 2017
Exercise price	$ 1.92	$ 2.41 – 3.00
Stock price on date of grant	$ 1.92	$ 2.41 – 3.00
Volatility	145 %	148 -- 153 %
Risk-free interest rate	1.8 %	1.7 – 1.9 %
Expected life (years)	5.0	4.0 – 5.0
Dividend yield	--	--

The following summarizes Employee Awards activity:


	Number of Shares		Weighted-average Exercise Price per Share	Weighted-average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at December 31, 2016	8,818,400	$	1.04
Granted	522,000		2.18
Exercised	(281,491)		0.75
Forfeited	(490,500)		1.04
Outstanding at June 30, 2017	8,568,409		1.12	2.3	$	6,021,971

Exercisable at June 30, 2017	4,908,359	$	1.14	2.0	$	3,296,177

Based on our estimated forfeiture rates, we expect 3,649,026 Employee Awards will vest. As of June 30, 2017, there was approximately $1,430,774 of total unrecognized compensation expense related to unvested Employee Awards, which is expected to be recognized over a weighted-average period of three months.

Warrants for Consulting Services

As needed, we may issue warrants to third parties in exchange for consulting services. Stock-based compensation costs for award grants to third parties for consulting services (“Consulting Awards”) are recognized on a straight-line basis over the service period for the entire award, with the amount of compensation cost recognized at any date equaling at least the portion of the award that is vested. Consulting Awards are revalued at each reporting date until fully vested, which may generate an expense or benefit.

No Consulting Award warrants were issued during the six months ended June 30, 2017.

Stock for Consulting Services

During the six months ended June 30, 2017, we issued 8,000 shares to a third party for marketing services.

Warrants with Debt

The following summarizes warrants issued with debt:


	Number of Shares		Weighted-average Exercise Price per Share	Weighted-average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at December 31, 2016	9,025,843	$	0.63
Exercised	(3,180,713)	$	0.55
Outstanding and exercisable at June 30, 2017	5,845,130	$	0.66	2.3	$	7,642,373