8. Stock Based Compensation

12 Months Ended

Dec. 31, 2015

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

Stock Based Compensation

During the years ended December 31, 2015 and 2014 the Company approved the issuance of stock options to certain employees, officers, directors, and service provider at the sole discretion of the Board of Directors.

Intrinsic Value Options

As of December 31, 2015, the Company had granted option awards prior to the Company being public. Upon completion of the merger in 2013 the Company converted prior granted awards into eXp Realty International Corporation under the 2013 Stock Option Plan. As such, the Company has been and will continue to account for those awards based on the intrinsic value method and re-measure the intrinsic value at each reporting date through the date of exercise or other settlement. The Company will continue to do so for these previously granted awards unless an award is modified, repurchased, or cancelled. The final measure of compensation cost is recognized at the intrinsic value of the instrument at the date it is settled. Compensation cost for each period until settlement is based on the change in the intrinsic value of the instrument in each reporting period.

The Company’s currently issued stock options under this plan vest over periods ranging from 0 to 4 years and are exercisable for a period of 10 years.

The Company’s stock option activity under this method of accounting is as follows:

	Options			Weighted Average Price		Intrinsic Value
Balance, December 31, 2013		7,674,000		$	0.14	$	0.16
Granted		–			–		–
Exercised		–			–		–
Forfeited		(462,521	)		–		–
Balance, December 31, 2014		7,211,479			0.15		0.17
Granted		–			–		–
Exercised		–			–		–
Forfeited		(267,979	)		–		–
Balance, December 31, 2015		6,943,500		$	0.14	$	0.68
Exercisable at December 31, 2015		4,551,660			0.13		0.69
Vested at December 31, 2015		6,483,390		$	0.14	$	0.68

The following table summarizes information about stock options outstanding under this method of accounting at December 31, 2015:

OUTSTANDING								VESTED
		Weighted		Remaining						Weighted		Remaining
		Average		Contractual		Aggregate				Average		Contractual		Aggregate
		Exercise		Life		Intrinsic				Exercise		Life		Intrinsic
Options		Price		in Years		Value		Options		Price		in Years		Value
	5,411,753	$	0.13		6.70	$	3,716,070		5,203,518	$	0.13		6.70	$	3,573,082
	808,748	$	0.14		7.00	$	551,027		685,350	$	0.14		7.00	$	466,952
	315,000	$	0.15		7.00	$	212,100		315,000	$	0.15		7.00	$	212,100
	33,000	$	0.20		7.00	$	20,460		24,727	$	0.20		7.00	$	15,331
	375,000	$	0.27		7.28	$	207,500		254,795	$	0.27		7.28	$	140,986

For the year ended December 31, 2015 the Company’s stock options under this method of accounting had an intrinsic value between $0.55 and $0.69 as compared to the year ended December 31, 2014 which had an intrinsic value between $0.03 and $0.17. The Company recognized a stock option expense of $3.50 million, which consists of a $3.37 million change in intrinsic value and $132 thousand in vesting costs for the year ended December 31, 2015. The Company recognized a stock option expense of $97 thousand, which consists of a $0 in intrinsic value and $97 thousand in vesting costs for the year ended December 31, 2014.

Traditional Stock Options

As of December 31, 2015, the Company has also granted stock option awards under both the 2013 Stock Option Plan and 2015 Equity Incentive Plan since being public. As such, the Company has elected to account for fair value using the Black-Scholes option-pricing model. Expected volatility has been determined using the historical stock price. The expected term of options represents the period of time that options granted are expected to be outstanding giving consideration to vesting schedule. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected term of the stock options. The Company has not paid and does not anticipate paying dividends on its common stock; therefore, the expected dividend yield is assumed to be zero.

The Company’s currently issued stock options utilizing this method of accounting vest 25% each year over 4 years and are exercisable for a period of 10 years.

The Company’s stock option activity under this method of accounting is as follows:

	Options		Weighted Average Price		Intrinsic Value
Balance, December 31, 2013	$	–	$	–	$	–
Granted		–		–		–
Exercised		–		–		–
Forfeited		–		–		–
Balance, December 31, 2014		–		–		–
Granted		337,750		–		–
Exercised		–		–		–
Forfeited		–		–		–
Balance, December 31, 2015		337,750	$	0.56	$	0.26
Exercisable at December 31, 2015		–		–		–
Vested at December 31, 2015		–	$	–	$	–

The following table summarizes information about stock options outstanding under this method of accounting at December 31, 2015:

OUTSTANDING									VESTED
		Weighted		Remaining							Weighted		Remaining
		Average		Contractual		Aggregate					Average		Contractual		Aggregate
		Exercise		Life		Intrinsic					Exercise		Life		Intrinsic
Options		Price		in Years		Value			Options		Price		in Years		Value
	157,750	$	0.30		9.00	$	82,030			–	$	–		–	$	–
	20,000	$	0.50		9.27	$	6,400			–	$	–		–	$	–
	100,000	$	0.80		9.94	$	2,000			–	$	–		–	$	–
	60,000	$	0.84		9.54	$	(1,200	)		–	$	–		–	$	–

For the year ended December 31, 2015 the Company’s stock options under this method of accounting had an intrinsic value between ($0.02) and $0.52 as compared to the year ended December 31, 2014 which had no outstanding options under this plan. The Company recognized a stock option expense under this plan of $20 thousand and zero for the years ended December 31, 2015 and December 31, 2014, respectively.