NAV Model Part One: Share Calculation. The first thing we're going to do in the comprehensive NAV model is to calculate the fully diluted shares outstanding. We never perform a valuation without doing a fully diluted shares calculation because all valuation is based on fully-diluted shares. The first thing we have to do here is take a look at our options outstanding. We have three different kinds of options. We have employee options, we have an A chart of options, we have performance awards, and we have restricted stock units. The A chart of options are the only ones that have an exercise price. We need to use the treasury stock method formula to calculate the dilution factor, and that's going to be the market price, which is in my assumptions, minus strike price over the market price times the number of options. We can also wrap this as a max so that if the options fall out of the money, we won't get any negative dilution.

I'll just check that by testing my exercise price and that works. Now, the performance awards in the restricted stock units they have a zero exercise price. They're actually going to be fully dilutive securities. We could prove that by putting the formula in and showing that with a zero exercise price, the options convert at their face option value. So I will sum up my total dilutive shares and now I can add that to my shares outstanding.

And I have my fully diluted shares.