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 December 31, 2015, totaled 70,000. The maximum number of shares of common stock that can be issued under the 2006 Plan total 26,500,000 at December 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	75,100		$	9.66
Exercised	(2,220,881	)	$	2.08
Unvested options forfeited	(239,322	)	$	6.66
Vested options expired	(69,495	)	$	2.61
Outstanding at December 31, 2015	14,019,629		$	3.62	6.5	$	80,740,577
Vested at December 31, 2015	10,951,694		$	2.80	6.2	$	71,955,234
Vested or expected to vest at December 31, 2015 (a)	13,917,122		$	3.60	6.5	$	80,496,150


(a)	Includes forfeiture adjusted unvested shares.

The intrinsic value of the options exercised during the years ended December 31, 2015, 2014 and 2013 were approximately $17,181,000, $10,566,000, and $8,864,000, respectively.

The intrinsic value of options vested during the years ended December 31, 2015, 2014 and 2013 were approximately $10,044,000, $6,615,000, and $3,351,000, respectively.

Following is a summary of stock options outstanding and exercisable at December 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	3.4	$	0.72	441,429	$	0.72
$0.87 - $1.35	4,783,304	5.7	1.19		4,783,304	1.19
$1.40 - $2.45	1,641,928	5.1	1.93		1,641,928	1.93
$2.66 - $3.99	957,454	6.8	3.05		907,452	3.00
$4.19 - $6.38	3,552,323	7.4	5.35		2,229,386	5.32
$6.45- $9.78	2,527,525	8.1	7.29		914,703	7.18
$9.90 - $10.99	115,666	8.9	10.43		33,492	10.50
	14,019,629	6.5	$	3.62	10,951,694	$	2.80

A summary of the status of the Company’s unvested stock options as of December 31, 2015 is presented below:



Unvested Stock Options	Number of Shares		Weighted- Average Grant Date Fair Value
Unvested at January 1, 2015	7,193,577		$	3.08
Granted	75,100		$	5.15
Cancelled	(239,322	)	$	3.79
Vested	(3,961,420	)	$	2.53
Unvested at December 31, 2015	3,067,935		$	3.81

Total unrecognized compensation expense at December 31, 2015, was approximately $6,241,000 and will be charged to expense through March 2017.

The fair value of the options granted was 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 midpoint 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:



	Year ended December 31,
	2015	2014	2013
Expected volatility	54.35 - 58.14%	58.14 - 64.50%	61.41 - 64.77%
Expected life (in years)	6	6	6
Expected dividend yield	—	—	—
Risk-free interest rate	1.51 - 1.68%	1.64 - 1.96%	0.85 - 1.88%

The weighted-average grant date fair value for options granted during the years ended December 31, 2015, 2014 and 2013 were approximately $5.15, $4.18 and $3.08, respectively.

Restricted Stock Awards

Following is summary information for restricted stock awards for the year ended December 31, 2015. Shares vest over a one to three year period. As of December 31, 2015, there was approximately $16,606,000 of total unrecognized stock-based compensation related to time-based, non-vested restricted stock. That expense is expected to be recognized on a straight-line basis over a weighted-average period of 2.1 years.

Additionally, during the twelve months ended December 31, 2015, 5,172 shares of common stock valued at approximately $57,000 were issued under the 2006 Plan to a consultant in return for services performed.



	Number of Shares		Weighted-Average Grant Date Fair Value
Unvested at January 1, 2015	1,228,898		$	7.16
Granted	1,974,259		$	9.80
Vested	(517,883	)	$	6.90
Forfeited	(72,007	)	$	9.77
Unvested at December 31, 2015	2,613,267		$	9.14

For the years ended December 31, 2015, 2014, and 2013 the Company recognized stock-based compensation as follows (in thousands):



	Year Ended December 31,
	2015		2014		2013
Cost of sales	$	352	$	322	$	279
Research and development	790		660		417
Selling, general and administrative	15,754		10,471		5,314
	$	16,896	$	11,453	$	6,010

Warrants

On November 18, 2015, 42,400 common stock warrants representing the balance remaining from those granted in connection with equity share purchases by investors as an additional incentive for providing long - term equity capital to the Company and as additional compensation to consultants and advisors were exercised at an exercise price of $1.09. The warrants were granted at negotiated prices in connection with the equity share purchases and at the market price of the common stock in other instances. The warrants were issued for terms of five years.

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 year ended December 31, 2015, the Company purchased approximately 4,610,000 shares of its common stock for an aggregate purchase price of approximately $40,143,000 exclusive of commissions of approximately $136,000. As of December 31, 2015, the Company had approximately $14,274,000 remaining under the repurchase program.