NOTE 16. STOCK WARRANTS, OPTIONS AND GRANTS

Warrant activity. We have accounted for warrants as equity instruments in accordance with EITF 00-19 (ASC 815-40) Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock , and as such, will be classified in stockholders’ equity as they meet the definition of “…indexed to the issuer’s stock” in EITF 01-06 (ASC 815-40) The Meaning of Indexed to a Company’s Own Stock . In prior years, we estimated the fair value of the warrants using the Black-Scholes option pricing model based on assumptions at the time of issuance.

A summary of current warrant activity is as follows:

Stock options. For the nine months ended September 30, 2015 and 2014, we issued 412,500 and 202,083 stock options, respectively. Stock options issued to members of our Board of Directors were 200,000 and 108,333 for the nine months ended September 30, 2015 and 2014, respectively. Stock options issued to independent contractors were 112,500 and 93,750 for the nine months ended September 30, 2015 and 2014, respectively.  

During the nine months ended September 30, 2015, we issued 100,000 stock options to an employee, with a vesting period of three years.  The strike price was equal to the stock price at the date of the grant.

All stock options granted for the nine months ended September 30, 2015 and 2014 were calculated to have fair values of $72,580 and $30,554, respectively, using the Black-Scholes option pricing model with the following assumptions:

A summary of stock option activity is as follows:

Share based compensation. The cost of all stock options and stock grants issued have been classified as share based compensation for the nine months ended September 30, 2015 and 2014, respectively. Total share based compensation was $72,850 and $151,378 for the nine months ended September 30, 2015 and 2014, respectively.