Equity

Stock Incentive Plans

The Company has three share-based compensation plans: the MiMedx Group, Inc. Assumed 2006 Stock Incentive Plan (the “2006 Plan”), the MiMedx Inc. 2007 Assumed Stock Plan (the “Assumed 2007 Plan”) and the MiMedx Group Inc. Amended and Restated Assumed 2005 Stock Plan (the “Assumed 2005 Plan”) which provide for the granting of qualified incentive and non-qualified stock options, stock appreciation awards and restricted stock awards to employees, directors, consultants and advisors. The awards are subject to a vesting schedule as set forth in each individual agreement. The Company intends to use only the 2006 Plan to make future grants. The number of assumed options under the Assumed 2005 Plan and Assumed 2007 Plan outstanding at March 31, 2015 totaled 195,000. On July 28, 2014, the Company's shareholders approved 4,000,000 additional shares to be made available under the 2006 Plan, bringing the maximum number of shares of common stock that can be issued under the 2006 Plan to 26,500,000 at March 31, 2015.

Activity with respect to the stock options is summarized as follows:



	Number of Shares		Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding at January 1, 2015	16,474,227		$	3.43
Granted	57,600		9.55
Exercised	(760,156	)	1.68
Unvested options forfeited	(140,996	)	6.43
Outstanding at March 31, 2015	15,630,675		3.51		7.1	$	107,655,519
Vested at March 31, 2015	10,940,415		2.51		6.6	$	86,267,905
Vested or expected to vest at March 31, 2015 (a)	15,419,100		$	3.47	7.1	$	106,858,970


(a)	Includes forfeiture adjusted unvested shares.

The intrinsic value of the options exercised during the three months ended March 31, 2015, was approximately $6,402,516.

Following is a summary of stock options outstanding and exercisable at March 31, 2015:



	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number outstanding	Weighted-Average Remaining Contractual Term (in years)	Weighted- Average Exercise Price		Number Exercisable	Weighted- Average Exercise Price
$0.50 - $0.76	441,429	4.1	$	0.72	441,429	$	0.72
$0.87 - $1.35	5,544,494	6.4	1.20		5,519,492	1.20
$1.40 - $2.29	1,361,717	4.7	1.64		1,240,048	1.65
$2.33 - $3.75	1,668,922	7.4	2.77		1,015,730	2.78
$3.95 - $5.99	3,246,711	8.1	5.18		1,790,263	5.1
$6.02 - $9.13	3,184,802	8.5	7.06		933,453	7.07
$9.22- $10.99	182,600	9.7	10.13		—	—
	15,630,675	7.1	$	3.51	10,940,415	$	2.51

Total unrecognized compensation expense related to granted stock options at March 31, 2015, was approximately $12,426,694 and will be charged to expense ratably through February 2018.

The fair value of options granted by the Company is estimated on the date of grant using the Black-Scholes-Merton option-pricing model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. Expected volatilities are based on historical volatility of peer companies and other factors estimated over the expected term of the options. The term of employee options granted is derived using the “simplified method,” which computes expected term as the mid point between the weighted average time to vesting and the contractual maturity. The simplified method was used due to the Company's lack of sufficient historical data to provide a reasonable basis upon which to estimate the expected term due to the limited period of time its equity shares have been publicly traded. The term for non-employee options is generally based upon the contractual term of the option. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term or contractual term as described.

The assumptions used in calculating the fair value of options using the Black-Scholes-Merton option-pricing model are set forth in the following table:



	Three Months Ended March 31,
	2015	2014
Expected volatility	56.8- 58.1%	64.1 - 64.5%
Expected life (in years)	6.0	6.0
Expected dividend yield	—	—
Risk-free interest rate	1.57% - 1.66%	1.69% - 1.96%

The weighted-average grant date fair value for options granted during the three months ended March 31, 2015, was approximately $5.13.

Restricted Stock Awards

Activity with respect to restricted stock awards is summarized as follows:



	Number of Shares		Weighted-Average Grant Date Fair Value
Unvested at January 1, 2015	1,228,898		$7.16
Granted	1,290,858		9.52
Vested	(232,691	)	6.54
Forfeited	(715	)	7.24
Unvested at March 31, 2015	2,286,350		$8.56

As of March 31, 2015, there was approximately $17,989,017 of total unrecognized stock-based compensation related to time-based, nonvested restricted stock. That expense is expected to be recognized on a straight-line basis over a weighted-average period of 2.6 years, which approximates the remaining vesting period of these grants. All shares noted above as unvested are considered issued and outstanding at March 31, 2015.

For the three months ended March 31, 2015 and 2014, the Company recognized stock-based compensation as follows (in thousands):



	Three Months Ended March 31,
	2015		2014
Cost of sales	$	95	$	97
Research and development	186		160
Selling, general and administrative	3,652		2,115
	$	3,933	$	2,372

Warrants

As of March 31, 2015, the Company had 42,400 common stock warrants with an exercise price of $1.09 outstanding representing compensation to consultants and advisors in connection with previous debt offerings. The warrants expire in December 2016 and are classified as equity.

Treasury Stock

On May 12, 2014, the Company announced that its Board of Directors had authorized the repurchase of up to $10,000,000 of its common stock from time to time, through December 31, 2014. On December 12, 2014, the Board extended this program until December 31, 2015. On January 5, 2015, the Board increased the authorization under the program to $20,000,000. The timing and amount of future repurchases, if any, will depend upon the Company's stock price, economic and market conditions, regulatory requirements, and other corporate considerations. The Company may initiate, suspend or discontinue purchases under the stock repurchase program at any time.

For the three months ended March 31, 2015, the Company purchased 1,359,753 shares of its common stock for an aggregate purchase price of approximately $12,254,000 before brokerage commissions of approximately $41,000. As of March 31, 2015, the Company had approximately $2,162,000 remaining under the repurchase program.

Additionally, for the three months ended March 31, 2015, the Company reissued 1,369,108 shares from the Treasury for restricted stock grants and stock option exercises with an aggregate carrying value of $9,310,268.