STOCKHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2016

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

NOTE 8.   STOCKHOLDERS’ EQUITY

Share-based expense consisted of the following:

		Three months ended September 30,				Nine months ended September 30,
		2016		2015		2016		2015
Employee Awards	$	740,844	$	695,788	$	1,574,906	$	1,319,355
Consulting Awards		103,869		24,196		151,385		41,650
Feinsod Agreement		27,504		143,725		192,800		3,606,794
DB Option Agreement		--		--		55,100		--
	$	872,217	$	863,709	$	1,974,191	$	4,967,799

Employee Stock Options

On October 29, 2014, the Board authorized the adoption of and on June 26, 2015, our stockholders ratified our 2014 Equity Incentive Plan (the “Incentive Plan”).  The Incentive Plan provides for the issuance of up to 10 million shares of our common stock, and is designed to provide an additional incentive to executives, employees, directors and key consultants, aligning our long term interests with participants.  In April 2016, we filed a Registration Statement on Form S-8 (the “Registration Statement”), which automatically became effective in May 2016.  The Registration Statement relates to 10,000,000 shares of our common stock, which are issuable pursuant to, or upon exercise of, options that have been granted or may be granted under our 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 following summarizes the Black-Scholes assumptions used for Employee Awards granted during the nine months ended September 30, 2016:

Exercise price	$ 0.61 -- 1.01
Stock price on date of grant	$ 0.63 -- 1.01
Volatility	146 -- 153 %
Risk-free interest rate	0.71 – 0.90 %
Expected life (years)	3.0
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, 2015	2,509,000	$	1.49
Granted	6,440,800		0.76
Forfeited	(263,350)		0.75
Outstanding at September 30, 2016	8,686,450		0.97	2.8	$	8,918,000
Exercisable at September 30, 2016		$	1.65	2.3	$	883,960

As of September 30, 2016, there was approximately $3,658,000 of total unrecognized compensation expense related to unvested Employee Awards, which is expected to be recognized over a weighted-average period of eight months.

Warrants for Consulting Services

As needed, we 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.  Consulting Awards are revalued at each reporting date until fully vested, which may generate an expense or benefit.

The following summarizes the Black-Scholes assumptions used for Consulting Awards granted during the nine months ended September 30, 2016:

Exercise price	$ 0.60 -- 1.20
Stock price on valuation date	$ 1.91
Volatility	146 -- 150 %
Risk-free interest rate	0.77 – 1.14 %
Expected life (years)	2.2 – 4.8
Dividend yield	--

The following summarizes Consulting Awards:

	Number of Shares		Weighted-average Exercise Price per Share	Weighted-average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at December 31, 2015	252,500	$	3.62
Granted	55,000		1.01
Outstanding at September 30, 2016	307,500		3.15	1.3	$	64,525
Exercisable at September 30, 2016	300,000	$	3.22	1.2	$	54,700

As of September 30, 2016, there was approximately $2,600 of total unrecognized expense related to unvested Consulting Awards, which is expected to be recognized over a weighted-average period of three months.

IPG Acquisition Warrants

In connection with the IPG APA, we issued to IPG 500,000 fully-vested warrants to purchase a) 250,000 shares of our common stock at $4.50 per share, (the “IPG $4.50 Warrants”), and b) 250,000 shares of our 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 our reclassification, consolidation, merger, subdivision of shares of our common stock, combination of shares of our common stock or payment of dividends in the form of the our common stock. The IPG Warrants expire three years after their initial issuance date.

As of September 30, 2016, all of the IPG Warrants are outstanding and exercisable.

Warrants with Debt

The following summarizes warrants issued with debt:

	Number of Shares		Weighted-average Exercise Price per Share	Weighted-average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at December 31, 2015	597,200	$	1.41
Granted	9,759,000		0.56
Outstanding at September 30, 2016	10,356,200		0.61	3.0	$	13,564,795
Exercisable at September 30, 2016	10,356,200	$	0.61	3.0	$	13,564,795

DB Option Agreement warrants

In order to extend the DB Option Agreement with Infinity Capital, in March 2016 we granted Infinity Capital warrants to purchase 100,000 shares of our common stock at an exercise price of $0.67 per share with a five year life.  The fair value of $55,100 is included in equity-based expense.  The following summarizes the Black-Scholes assumptions used to estimate the fair value of the DB Option Agreement warrants:

Stock price on date of grant	$ 0.61
Volatility	150 %
Risk-free interest rate	1.2 %
Expected life (years)	5.0
Dividend yield	--

2013 Warrants

Between July 11, 2013 and September 19, 2013, we issued 973,000 shares of our common stock and 973,000 fully-vested warrants (the “2013 Warrants”) for cash consideration of $1.00 per share. Each 2013 Warrant entitled the holder to purchase one share of our common stock at a price of $10.00 per share. The 2013 Warrants expired unexercised on August 1, 2016.