STOCKHOLDERS’ EQUITY

9 Months Ended

Sep. 30, 2015

Equity [Abstract]

STOCKHOLDERS’ EQUITY

NOTE 8.   STOCKHOLDERS’ EQUITY

Common Stock

The following tables summarize the changes in outstanding shares of the Company’s common stock during the nine months ended September 30, 2015:

		Transaction Value	Number of Shares
December 31, 2014			12,499,933
Issued for services	$	114,693	50,000
Issued to Infinity Capital upon uplisting of the Company’s stock		2,966,500	1,000,000
Issued to Full Circle via cashless exercises		3,683,270	760,263
Issued to Full Circle for cash consideration		86,171	25,000
Issued in settlement of converted 12% Convertible Notes and accrued interest		321,123	64,225
September 30, 2015			14,399,421

Employee Stock Options

On October 29, 2014, the Board authorized the adoption of the Company’s 2014 Equity Incentive Plan (the “Incentive Plan”), which is designed to provide an additional incentive to executives, employees, directors and key consultants, aligning the long term interests of participants in the Incentive Plan with those of the Company and the Company’s stockholders. The Incentive Plan provides that up to 10 million shares of the Company’s common stock may be issued under the Plan.  On June 26, 2015, the Company’s stockholders ratified the Incentive Plan.

Share-based compensation costs for award grants to employees and directors (“Employee Awards”) are recognized on a straight-line basis over the service period for the entire award, with the amount of compensation cost recognized at any date equaling at least the portion of the award that is vested.    The Company recognized expense for Employee Awards of $591,856 and $1,161,197, respectively, for the three and nine months ended September 30, 2015.  No Employee Awards were granted prior to 2015.

The fair value of each option grant is estimated on the date of grant using Black-Scholes.  We use historical data to estimate the expected price volatility.  We estimate forfeiture rates based on expected turnover of employees by category.  The risk-free interest rate is based on the United States Treasury yield curve in effect at the time of grant for the estimated life of the option.  The following summarizes the Black-Scholes assumptions used for Employee Awards granted during the nine months ended September 30, 2015:

Exercise price	$ 2.10 – 3.75
Stock price on date of grant	$ 3.70 -- 3.75
Volatility	126 – 133 %
Risk-free interest rate	1.0 – 1.1 %
Expected option life (years)	3.0 – 10.0
Dividend yield	--

The following summarizes Employee Awards activity:

	Number of Shares	Weighted-average Exercise Price per Share	Weighted-average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding at December 31, 2014	--
Granted	1,017,500	$  2.99	3.8
Outstanding at September 30, 2015	1,017,500	$  2.99	3.8	$ --
Exercisable at September 30, 2015	397,500	$  3.02	3.7	$ --

As of September 30, 2015, there was approximately $997,307 of total unrecognized compensation expense related to unvested Employee Awards, which is expected to be recognized over a weighted-average period of 0.9 years.

Warrants for Consulting Services

As needed, the Company may issue warrants to third parties in exchange for consulting services.  Stock-based compensation costs for award grants to third parties for consulting services (“Consulting Awards”) are recognized on a straight-line basis over the service period for the entire award, with the amount of compensation cost recognized at any date equaling at least the portion of the award that is vested.  Service Awards are revalued at each reporting date until fully vested, which may generate an expense or benefit.  The Company recognized expense (benefit) for Consulting Awards of $(1,395) and $16,059, respectively, for the three and nine months ended September 30, 2015.  No Consulting Awards were granted prior to 2015.

On April 24, 2015, the Company entered into a one-year contract with an individual to provide consulting services to raise capital. The Company granted to this individual warrants to purchase 20,000 shares of the Company’s common stock at an exercise price of $3.75 per share with a term of two years.

On April 27, 2015, the Company entered into a one-year contract with a company to provide investor relations services. The Company granted to this company warrants to purchase 20,000 shares of the Company’s common stock at an exercise price of $3.49 per share with a term of two years.

On July 1, 2015, the Company entered into a one-year contract with an individual to provide management consulting services.  The Company granted warrants to purchase 25,000 shares of the Company’s common stock at an exercise price of $.88 per share with a term of three years.

The fair value of each warrant grant is estimated using Black-Scholes. We use historical data to estimate the expected price volatility. The risk-free interest rate is based on the United States Treasury yield curve in effect at the time of grant for the estimated life of the option. The following summarizes the Black-Scholes assumptions used for Consulting Awards granted during the nine months ended September 30, 2015:

	Grant Date	September 30, 2015
Volatility	125 – 170 %	154 %
Risk-free interest rate	0.5 – 1.1 %	0.6 %
Expected option life (years)	2.0 – 3.0	2.0 – 3.0
Dividend yield	--	--

The following summarizes Consulting Awards activity:

	Number of Shares	Weighted-average Exercise Price per Share	Weighted-average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding at December 31, 2014	150,000	$  4.40	1.2	$  --
Granted	65,000	$  3.03	2.0
Outstanding at September 30, 2015	215,000	$  3.99	1.5	$  --
Exercisable at September 30, 2015	150,000	$  4.40	1.2	$  --

As of September 30, 2015, there was approximately $30,349 of total unrecognized expense related to unvested Consulting Awards, which is expected to be recognized over a weighted-average period of 4.2 years.

IPG Acquisition Warrants

In connection with the IPG APA, the Company issued to IPG 500,000 fully-vested warrants to purchase a) 250,000 shares of the Company’s common stock at $4.50 per share, (the “IPG $4.50 Warrants”), and b) 250,000 shares of the Company’s common stock at $5.00 per share (the “IPG $5.00 Warrants”) (collectively, the “IPG Warrants”). The IPG Warrants are subject to customary adjustments in the event of reclassification of the Company, consolidation of the Company, merger, subdivision of shares of the Company’s common stock, combination of shares of the Company’s common stock or payment of dividends in the form of the Company’s common stock. The IPG Warrants expire three years after their initial issuance date.  On the date of grant, the IPG $4.50 Warrants and the IPG $5.00 Warrants had fair values of approximately $421,000 and $412,000, respectively, based on the Black-Scholes, which was included in the purchase price of IPG.

The following summarizes the Black-Scholes assumptions used for IPG Warrants:

Volatility	134 %
Risk-free interest rate	1.0 %
Expected option life (years)	3.0
Dividend yield	--

Warrants with Debt

The fair value of each warrant grant is estimated using Black-Scholes.  We use historical data to estimate the expected price volatility.  The risk-free interest rate is based on the United States Treasury yield curve in effect at the time of grant for the estimated life of the option.  The following summarizes the Black-Scholes assumptions used for warrants granted for debt during the nine months ended September 30, 2015:

Volatility	127 – 132 %
Risk-free interest rate	0.4 – 0.5 %
Expected option life (years)	1.5
Dividend yield	--

The following summarizes warrants issued with debt activity:

	Number of Shares	Weighted-average Exercise Price per Share	Weighted-average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding at December 31, 2014	600,000	$  4.40	1.1
Cancelled	(600,000)	$  4.40	1.1
Granted	554,500	$  1.13	1.2
Outstanding at September 30, 2015	554,500	$  1.13	1.2	$  16,475
Exercisable at September 30, 2015	554,500	$  1.13	1.2	$  16,475