NOTE 7. STOCKHOLDERS’ EQUITY

Share-based expense consisted of the following:


		Three months ended March 31,
		2017		2016
Employee Awards	$	1,409,395	$	452,621
Consulting Awards		25,440		10,100
Feinsod Agreement		–		82,648
DB Option Agreement		–		55,100
	$	1,434,835	$	600,469

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 three months ended March 31, 2017:


Exercise price	$ 2.41 – 3.00
Stock price on date of grant	$ 2.41 – 3.00
Volatility	148 – 153 %
Risk-free interest rate	1.7 – 1.9 %
Expected life (years)	4.0 – 5.0
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, 2016	8,818,400	$	1.04
Granted	277,400		2.48
Exercised	(116,000)		1.02
Forfeited	(131,650)		0.71
Outstanding at March 31, 2017	8,848,150		1.09	2.4	$	6,557,028

Exercisable at March 31, 2017	4,776,500	$	1.07	2.2	$	3,887,165

Based on our estimated forfeiture rates, we expect 4,052,292 Employee Awards will vest. As of March 31, 2017, there was approximately $1,904,753 of total unrecognized compensation expense related to unvested Employee Awards, which is expected to be recognized over a weighted-average period of five 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.

No Consulting Award warrants were issued during the three months ended March 31, 2017.

Stock for Consulting Services

During the three months ended March 31, 2017, we issued 8,000 shares to a third party for marketing services.

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, 2016	9,025,843	$	0.63
Exercised	(2,164,286)	$	0.56
Outstanding and exercisable at March 31, 2017	6,861,557	$	0.64	2.5	$	12,224,080