Quarterly report pursuant to Section 13 or 15(d)

11. Stock Options

11. Stock Options
6 Months Ended
Jun. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock Options

The Company has adopted the provisions of ASC 718 - Compensation which requires companies to measure the cost of employee services received in exchange for equity instruments based on the grant date fair value of those awards and to recognize the compensation expense over the requisite service period during which the awards are expected to vest.


On December 29, 2008, the Company adopted the Pacific Entertainment Corporation 2008 Stock Option Plan (the “Plan”), which provides for the issuance of qualified and non-qualified stock options to officers, directors, employees and other qualified persons. The Plan is administered by the Board of Directors of the Company or a committee appointed by the Board of Directors. The number of shares of the Company’s common stock initially reserved for issuance under the Plan was 110,000. On September 2, 2011, the stockholders holding a majority of the Company’s outstanding common stock adopted an amendment to the Company’s 2008 Stock Option Plan to increase the number of shares of common stock issuable under the plan to 500,000.


On September 18, 2015, the Company adopted the Genius Brands International, Inc. 2015 Incentive Plan (the “2015 Plan”). The 2015 Plan was approved by our stockholders in September 2015. The 2015 Plan as approved by the stockholders authorized the issuance up to an aggregate of 450,000 shares of common stock. On December 14, 2015, the Board of Directors voted to amend the 2015 Plan to increase the total number of shares that can be issued under the 2015 Plan by 3,880,000 from 450,000 shares to 4,330,000 shares. The increase in shares available for issuance under the 2015 Plan was approved by stockholders on February 3, 2016.


The following table summarizes the changes in the Company’s stock option plan during the six months ended June 30, 2016:


    Options Outstanding Number of Shares     Exercise Price per Share     Weighted Average Remaining Contractual Life     Aggregate Intrinsic Value     Weighted Average Exercise Price per Share  
Balance at December 31, 2015     4,223,208       $0.94 - $4.00       4.94 years     $ 58,512     $ 2.70  
Options Granted                                      
Options Exercised                                      
Options Cancelled     165,879       $0.94 - $4.00                          
Options Expired                                      
Balance at June 30, 2016     4,057,329               4.44 years     $ 636,872     $ 2.70  
Exercisable December 31, 2015     300,061       $0.94       4.80 years     $ 58,512     $ 0.94  
Exercisable June 30, 2016     300,061       $0.94       4.30 years     $ 369,074     $ 0.94  


During the year ended December 31, 2015, the Company granted options to purchase 4,223,208 shares of common stock to officers, directors, employees, and consultants. These stock options generally vest between one and three years, while a portion vested upon grant. The fair value of these options was determined to be $2,402,395 using the Black-Scholes option pricing model based on the following assumptions:


Exercise Price $0.94 - $4.00
Dividend Yield 0%
Volatility 134% - 137%
Risk-free interest rate 0.89% - 1.25%
Expected life of options 2.5 - 3.5 years


During the three months ended March 31, 2016, the Company recognized stock based compensation expense of $564,985. During the three months ended March 31, 2016, the Company adjusted the calculation of stock based compensation expense to (i) align with the graded vested of the majority of the options granted in 2015, (ii) make adjustments in certain accounting estimates utilized in the Black Scholes model, and (iii) reflect the accurate number of options granted in 2015. As such, included in the total stock based compensation expense recognized in this first quarter of 2016 is $220,564 of true-up expenses from prior periods. The Company has assessed these adjustments individually and in aggregate and considers them immaterial to the current and prior periods.


During the three months ended June 30, 2016, the Company recognized $312,977 in stock compensation expense. During the three and six months ended June 30, 2015, the Company did not recognize any stock based compensation expense.