Equity

Stock Incentive Plans

The Company has three share-based compensation plans: the MiMedx Group, Inc. Assumed 2006 Stock Incentive Plan (the “Assumed 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 Assumed 2006 Plan to make future grants. The number of assumed options under the Assumed 2005 Plan and Assumed 2007 Plan outstanding at March 31, 2016 totaled 70,000. The maximum number of shares of common stock that can be issued under the Assumed 2006 Plan was 26,500,000 at March 31, 2016.

During the three months ended March 31 2016, 20,406 shares of common stock valued at approximately $173,000 were issued under the Assumed 2006 Plan to a consultant in return for services performed.

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, 2016	14,019,629		$	3.62
Granted	—		$	—
Exercised	(608,717	)	$	1.87
Unvested options forfeited	(120,563	)	$	6.05
Vested options expired	(12,497	)	$	6.34
Outstanding at March 31, 2016	13,277,852		$	3.69	6.3	$	67,341,642
Vested at March 31, 2016	11,714,483		$	3.24	6.1	$	64,456,036
Vested or expected to vest at March 31, 2016 (a)	13,210,155		$	3.67	6.3	$	67,231,821


(a)	Includes forfeiture adjusted unvested shares.

The intrinsic value of the options exercised during the three months ended March 31, 2016, was approximately $4,440,694.

Following is a summary of stock options outstanding and exercisable at March 31, 2016:



	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	3.2	$	0.72	441,429	$	0.72
$0.87 - $1.35	4,431,970	5.4	1.19		4,431,970	1.19
$1.40 - $2.45	1,460,924	4.7	1.92		1,460,924	1.92
$2.66 - $3.99	894,120	6.6	3.06		894,120	3.06
$4.19 - $6.38	3,426,178	7.2	5.35		2,897,570	5.26
$6.45 - $9.78	2,512,065	7.9	7.29		1,556,144	7.24
$9.90- $10.99	111,166	8.6	10.44		32,326	10.51
	13,277,852	6.3	$	3.69	11,714,483	$	3.24

Total unrecognized compensation expense related to granted stock options at March 31, 2016, was approximately $4,501,863 and will be charged to expense ratably over a weighted average period through April 2017.

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,
	2016	2015
Expected volatility	n/a	56.8 - 58.1%
Expected life (in years)	n/a	6.0
Expected dividend yield	n/a	—
Risk-free interest rate	n/a	1.57% - 1.66%

Their were no options granted during the three months ended March 31, 2016.

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, 2016	2,613,267		$9.14
Granted	1,576,579		8.18
Vested	(644,903	)	8.42
Forfeited	(45,263	)	8.87
Unvested at March 31, 2016	3,499,680		$8.84

As of March 31, 2016, there was approximately $24,965,395 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 2.3 years, which approximates the remaining vesting period of these grants. All shares noted above as unvested are considered issued and outstanding at March 31, 2016.

For the three months ended March 31, 2016 and 2015, the Company recognized stock-based compensation as follows (in thousands):



	Three Months Ended March 31,
	2016		2015
Cost of sales	$	96	$	95
Research and development	205		186
Selling, general and administrative	4,314		3,652
	$	4,615	$	3,933

Treasury Stock

On May 12, 2014, our Board of Directors authorized the repurchase of up to $10 million of our common stock from time to time, through December 31, 2014. The Board subsequently extended the program until December 31, 2016. In December 2014, the Board increased the authorization to $20 million and further increased the authorization in 2015 to $60 million. The timing and amount of repurchases 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, 2016, the Company purchased 415,252 shares of its common stock for a purchase price of approximately $3,518,000, before brokerage commissions of approximately $12,000 bringing the total amount spent under the program to approximately $49,244,000 since inception. As of March 31, 2016, the Company had approximately $10,756,000 remaining under the repurchase program. In addition, the Company purchased during the quarter 81,594 shares surrendered by employees to satisfy tax withholding obligations upon vesting of restricted stock.

Additionally, for the three months ended March 31, 2016, the Company reissued 2,529,444 shares from the Treasury for common and restricted stock grants and stock option exercises, net of forfeitures, and the acquisition of Stability Inc. with an aggregate carrying value of approximately $20,746,000.