10.	Stock-Based Compensation

On March 5, 2015, the Company’s Board of Directors approved the RestorGenex Corporation 2015 Equity Incentive Plan (the “2015 Equity Plan”), and on June 17, 2015, the Company’s stockholders approved the 2015 Equity Plan. The 2015 Equity Plan allows for the issuance of up to a maximum of 2,500,000 shares of common stock in connection with the grant of stock-based awards, including stock options, restricted stock, restricted stock units, stock appreciation rights and other types of awards as deemed appropriate. In addition, the Company has granted several non-plan options.

As of December 31, 2015, a total of 3,004,848 and 2,500,000 were authorized under non-plan options and the 2015 Equity Plan, respectively, and the Company had 0 and 2,493,350 shares of common stock available under the non-plan options and 2015 Equity Plan. Options are granted with exercise prices equal to the fair value of the common stock on the date of grant.

The Company recognizes the fair value of stock-based awards granted in exchange for employee and non-employee services as a cost of those services. The Company recognizes stock-based compensation expense for option awards on a straight-line basis over the vesting period.

The following table summarizes the stock option compensation expense for employees and non-employees recognized in the Company’s consolidated statements of operations for the period:

	December 31, 2015		December31, 2014
Research and development	$	597,554	$	526,331
General and administrative		1,497,532		1,080,616

Total stock-based compensation expense	$	2,095,086	$	1,606,947

The Company estimates the fair value of stock options using the Black-Scholes option pricing model. The Black-Scholes option pricing model requires the input of estimates, including the expected life of stock options, expected stock price volatility, the risk-free interest rate and the expected dividend yield. The Company calculates the expected life of stock options using the “simplified method” described in Staff Accounting Bulletin (“SAB”) Topic 14,

Share-Based Payment

, where the expected term of awards granted is based on the midpoint between the vesting date and the end of the contractual term, as we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. The expected stock price volatility assumption was estimated based upon historical volatility of the common stock of a group of the Company’s peers that are publicly traded. The use of this assumption was based upon the Company repositioning itself as a specialty biopharmaceutical company in the fourth quarter of 2013. The risk-free interest rate was determined using U.S. Treasury rates with terms consistent with the expected life of the stock options. Expected dividend yield is not considered, as the Company has never paid dividends and currently has no plans of doing so during the term of the options. The Company estimates forfeitures at the time of grant and revises those estimates in subsequent periods if actual forfeitures differ from those estimates.

The Company uses historical data when available to estimate pre-vesting option forfeitures, and records stock-based compensation expense only for those awards that are expected to vest. The weighted-average fair value of the Company’s options granted to employees was $1.90 and $3.71 per share, in 2015 and 2014, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model using the following weighted-average assumptions:

	2015		2014
Risk-free interest rate		1.84%	1.82%	-	2.03%
Expected life in years		6.0		6.0
Expected volatility		68%	70%	-	71%
Expected dividend yield		—		—

Stock options outstanding that have vested or are expected to vest as of December 31, 2015 were as follows:

	Shares of Common Stock		Weighted- Average Per Share Exercise Price		Weighted- Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value
Vested		1,861,953	$	4.22		6.7	$	-
Expected to vest		1,149,545		3.69		8.5		-
Total		3,011,498	$	4.01		7.4	$	-

The aggregate intrinsic value amounts represent the difference between the exercise price and $1.00, the fair value of our common stock on December 31, 2015, for in-the-money options.

A summary of the Company’s employee stock option activity is as follows:

	Outstanding							Exercisable
	Number of Shares			Weighted- Average Per Share Exercise Price		Weighted- Average Remaining Contractual life (in years)		Number of Shares		Weighted- Average Per Share Exercise Price		Weighted- Average Remaining Contractual life (in years)
Outstanding at January 1, 2014		389,436		$	11.77		3.9		367,110	$	11.10		3.9
Granted		3,287,181			3.71
Exercised		—			—
Forfeited or expired		(28,370	)		33.99
Outstanding at December 31, 2014		3,648,247		$	5.44		8.8		1,072,111	$	9.49		7.2
Granted		6,650			1.90
Exercised		—			—
Forfeited or expired		(643,399	)		6.28
Outstanding at December 31, 2015		3,011,498		$	4.01		7.4		1,861,952	$	4.22		6.7

The completion of the Merger on January 8, 2016, as discussed in note 17, constituted a “change in control” under the Company’s non-plan option agreements thereby resulting in automatic acceleration of vesting of all options outstanding as of the effective time of the Merger and such options remaining exercisable for the remainder of their terms.

As of December 31, 2015, the Company had $2,675,669 of total unrecognized compensation cost related to unvested stock-based compensation arrangements granted to employees. That cost was recognized in January 2016 due to the acceleration of vesting triggered by the Merger as explained above. Per share exercise prices for options outstanding at December 31, 2015 and 2014, ranged from $1.90 to $54.00.