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15. STOCK OPTIONS AND WARRANTS | 12 Months Ended
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Dec. 31, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
STOCK OPTIONS AND WARRANTS | On August 10, 2011, the Company’s Board of Directors approved and caused the Company to adopt the Envision Solar International, Inc. 2011 Stock Incentive Plan (the “Plan”), which authorizes the issuance of up to 30,000,000 shares of the Company’s common stock pursuant to the exercise of stock options or other awards granted under the Plan. In 2008, the Board approved the 2008 equity Incentive Plan, which authorizes 6,108,571 shares under the plan. Exercise rights may not expire more than three months after the date of termination of the employee but may expire in less time as stipulated in the individual grant notice. For disability or death, the optionee or estate will generally have up to twelve months to exercise their options. For certain options the Company may have rights of first refusal for a stipulated period of time, under a separate stock restriction agreement, whereby if the holder exercise the options and then desires to sell the underlying shares, the Company has the right to repurchase such shares at a price to which the holder has agreed to sell them to a third party. Stock Options The Company follows the provisions of ASC Topic 718, “Compensation – Stock Compensation.” ASC Topic 718 establishes standards surrounding the accounting for transactions in which an entity exchanges its equity instruments for goods or services. ASC Topic 718 focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions, such as options issued under the Company’s Stock Option Plans. The Company’s stock option compensation expense was $15,833 and $457,152 for the years ended December 31, 2015 and 2014, respectively, and there was $19,139 of total unrecognized compensation cost related to unvested options granted under the Company’s options plans as of December 31, 2015. This stock option expense will be recognized through March 2019. The fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model. This model incorporates certain assumptions for inputs including a risk-free market interest rate, expected dividend yield of the underlying common stock, expected option life and expected volatility in the market value of the underlying common stock. From January 1, 2014 through December 31, 2014, the Company issued 600,000 fully vested stock options under the plans with a total valuation of $87,224. Of these stock options, 200,000 have a 5 year term while the remaining 400,000 have a 10 year term. From January 1, 2015 through December 31, 2015, the Company issued 150,000 stock options under the plans which all vest over 4 years, have a term of 10 years, and a total valuation of $18,483. We used the following assumptions for options granted in fiscal 2015 and 2014:
| 2015 | 2014
Expected volatility | 169.62% | 138.71%
Expected term | 7 Years | 3-5.5 Years
Risk-free interest rate | 0.66% | 1.52%
Expected dividend yield | None | None
The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company’s stock options and warrants have characteristics different from those of its traded stock, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of such stock options. The risk free interest rate is based upon quoted market yields for United States Treasury debt securities with a term similar to the expected term. The expected dividend yield is based upon the Company’s history of having never issued a dividend and management’s current expectation of future action surrounding dividends. Expected volatility was based on historical data for the trading of our stock on the open market. The expected lives for such grants were based on the simplified method for employees and directors. All options qualify as equity pursuant to ASC 815-40-25, “Contracts in Entity’s Own Equity.” Option activity for the years ended December 31, 2015 and 2014 under the 2008 and 2011 Plans are as follows:
|  | Number of Options |  |  | Weighted Average Exercise Price |
Outstanding at December 31, 2013 |  |  | 24,049,862 |  |  | $ | 0.30 |
Granted |  |  | 600,000 |  |  |  | 0.19 |
Exercised |  |  | – |  |  |  | – |
Forfeited |  |  | 9,262,855 |  |  |  | 0.33 |
Expired |  |  | – |  |  |  | – |
Outstanding at December 31, 2014 |  |  | 15,387,007 |  |  | $ | 0.28 |
Granted |  |  | 150,000 |  |  |  | 0.13 |
Exercised |  |  | – |  |  |  | – |
Forfeited |  |  | 200,000 |  |  |  | 0.22 |
Expired |  |  | – |  |  |  | – |
Outstanding at December 31, 2015 |  |  | 15,337,007 |  |  | $ | 0.28 |
Exercisable at December 31, 2015 |  |  | 15,195,688 |  |  | $ | 0.28 |
Weighted average grant date fair value |  |  |  |  |  | $ | 0.12 |
The following table summarizes information about employee stock options outstanding at December 31, 2015:
Options Outstanding |  | Options Exercisable
Range of Exercise Price |  | Number Outstanding at December 31, 2015 |  | Weighted Average Remaining Contractual Life |  | Weighted Average Exercise Price |  | Aggregate Intrinsic Value |  | Number Exercisable at December 31, 2015 |  | Weighted Average Exercise Price |  | Aggregate Intrinsic Value
$ | 0.13-1.31 |  | 15,337,007 |  | 4.45 Years |  | $ | 0.28 |  | $ | – |  | 15,195,688 |  | $ | 0.28 |  | $ | –
|  |  | 15,337,007 |  | 4.45 Years |  | $ | 0.28 |  | $ | – |  | 15,195,688 |  | $ | 0.28 |  | $ | –
As the Company’s stock price was lower than the weighted average exercise price at December 31, 2015, there is no aggregate intrinsic value of the options. Options exercisable have a weighted average remaining contractual life of 4.41 years as of December 31, 2015. Warrants 2015 There was no new warrant activity during 2015. 2014 During the year ended December 31, 2014, pursuant to a private placement, the Company issued 20,186,725 warrants to purchase common stock which is based on the number of units sold in the private offering. These warrants have an exercise price of $0.15 per share and expire 3 years from the date of issuance. As a part of the Company’s private placement, the Company effectively issued 428,499 warrants in the twelve months ended December 31, 2014 to the placement agents. These warrants, valued at $68,124, are exercisable for 3 years at an exercise price of $0.25 per share. The Company estimated the fair value of the warrants utilizing the Black-Scholes pricing model. The assumptions used in the valuation of 106,667 of these warrants include volatility of 138.71%, expected dividends of 0.0%, a discount rate of 1.52%, and expected term of 3 years. The assumptions used in the valuation of 66,666 of these warrants include volatility of 172.66%, expected dividends of 0.0%, a discount rate of 0.66%, and expected term of 3 years. The assumptions used in the valuation of 95,166 of these warrants include volatility of 171.32%, expected dividends of 0.0%, a discount rate of 0.66%, and expected term of 3 years. The assumptions used in the valuation of 160,000 of these warrants include volatility of 172.22%, expected dividends of 0.0%, a discount rate of 0.66%, and expected term of 3 years. There was no financial statement accounting effect for the issuance of these warrants as their fair value has been charged to Additional Paid-in-Capital as an offering cost and was offset by a credit to Additional Paid-in-Capital for their fair value when recording the issuance of these warrants. As a fee to extend the term of the Gemini Master Fund convertible debt, the Company issued 1,500,000 common stock purchase warrants valued at $193,625 using the Black-Scholes valuation methodology, each with a three year term and $0.20 strike price, to the holder which was recorded as debt discount and will be amortized over the remaining term of the note. The assumptions used in the valuation of these options include volatility of 140.80%, expected dividends of 0.0%, a discount rate of 1.52%, and expected term of 3 years. (See Note 10) As an inducement to Gemini Master Fund to convert the principal debt amount discussed above, the Company agreed to issue 3,727,778 common stock purchase warrants, each with a strike price of $0.20 and a three year term. These warrants were valued at $482,300 using the Black-Scholes valuation methodology and were expensed at the date of the transaction. The assumptions used in the valuation of these options include volatility of 140.80%, expected dividends of 0.0%, a discount rate of 1.52%, and expected term of 3 years. (See Note 10) During the twelve months ended December 31, 2014, 6,475,101 warrants had expired. Warrant activity for the years ended December 31, 2015 and 2014 are as follows:
|  | Number of Warrants |  |  | Weighted Average Exercise Price |
Outstanding at December 31, 2013 |  |  | 9,851,540 |  |  | $ | 0.23 |
Granted |  |  | 25,843,002 |  |  |  | 0.16 |
Exercised |  |  | – |  |  |  | – |
Forfeited |  |  | – |  |  |  | – |
Expired |  |  | (6,475,101 | ) |  |  | 0.20 |
Outstanding at December 31, 2014 |  |  | 29,219,441 |  |  | $ | 0.18 |
Granted |  |  | – |  |  | $ | – |
Exercised |  |  | – |  |  |  | – |
Forfeited |  |  | – |  |  |  | – |
Expired |  |  | – |  |  |  | – |
Outstanding at December 31, 2015 |  |  | 29,219,441 |  |  | $ | 0.18 |
Exercisable at December 31, 2015 |  |  | 29,219,441 |  |  | $ | 0.18 |
Weighted average grant date fair value |  |  |  |  |  | $ | – |
Warrants exercisable have a weighted average remaining contractual life of 1.47 years as of December 31, 2015.

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=51659978&loc=d3e25284-112666 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 + Details
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