9. EQUITY INCENTIVE PLANS - OPTIONS

3 Months Ended

Mar. 31, 2016

Equity Incentive Plans - Options

9. EQUITY INCENTIVE PLANS - OPTIONS

NOTE 9  EQUITY INCENTIVE PLANS - OPTIONS

During the three months ended March 31, 2016, the Company granted options to purchase 691,250 shares at an average of $0.96 per share to 12 employees and consultants of the Company under the Company’s 2015 Equity Incentive Plan, with most vesting monthly over the course of one year. The fair market value of the options is $624,234.

Stock options outstanding and exercisable on March 31, 2016 are as follows:

Options Outstanding						Options Exercisable
				Weighted
				Average		Exercisable
Exercise		Number of		Remaining Life		Number of
Price		Options		In Years		Options
$	0.10		1,500,000		7.9		825,000
	0.50		959,211		9.0		925,876
	0.60		105,000		8.9		105,000
	0.80		160,000		9.7		66,660
	0.83		100,000		9.8		0
	0.90		1,955,000		9.6		1,155,785
	1.00		850,000		9.6		12,498
	1.06		381,250		9.9		113,534
			6,010,461		9.1		3,204,353

A summary of the stock option activity for the three months ended March 31, 2016:

				Weighted-Average
				Weighted-Average		Remaining
	Shares			Exercise Price		Contractual Term
Outstanding at December 31, 2015		5,225,000		$	0.59		9.3
Grants		691,250			0.97		9.8
Exercised		(105,789	)		0.5		8.7
Canceled		—			—		—
Outstanding at March 31, 2016		6,010,461			0.63		9.1
Exercisable at March 31, 2016		3,204,353			0.57		8.9

The aggregate intrinsic value of outstanding stock options was $3,659,062, based on options with an exercise price less than the Company’s stock price of $1.26 as of March 31, 2016, which would have been received by the option holders had those option holders exercised their options as of that date.

Option valuation models require the input of highly subjective assumptions. The fair value of stock-based payment awards was estimated using the Black-Scholes option model with a volatility figure derived from an index of historical stock prices of comparable entities until sufficient data exists to estimate the volatility using the Company’s own historical stock prices. Management determined this assumption to be a more accurate indicator of value. The Company accounts for the expected life of options based on the contractual life of options for non-employees.

The fair value of the granted options for the three months ended March 31, 2016 was determined using the Black Scholes option pricing model with the following assumptions:

Dividend yield:	0	%
Volatility	111.89% to 119.16	%
Risk free rate:	1.75% to 2.10	%
Expected life:
Estimated fair value of the Company’s common stock	$ 0.80 to $1.05	%
Estimated forfeiture rate	0	%