STOCKHOLDERS' EQUITY | NOTE 16 STOCKHOLDERS EQUITY Preferred Stock On July 18, 2017, the Board of Directors adopted a resolution creating a series of Preferred Shares, designated as the Series A Preferred Shares. We subsequently issued 2,000 shares of our Series A preferred stock for $2,200 to certain of our officers and to each director. Warrants: The following table summarizes our warrants outstanding as of September 30, 2018 and December 31, 2017: September 30, December 31, 2018 2017 Number of Shares Weighted Average Exercise Price Number of Shares Weighted Average Exercise Price Warrants outstanding, beginning of period 1,209,025 $ 0.21 $ 1,551,356 $ 0.18 Warrants issued to consultants 75,006 0.95 132,669 Warrants exercised (475,000 ) Warrants outstanding, end of period 1,284,031 $ 0.31 1,209,025 $ 0.21 Warrants exercisable, end of period 1,284,031 $ 0.31 1,209,025 $ 0.21 The weighted-average remaining contractual life for warrants outstanding and exercisable at September 30, 2018, is 3.63 years, and the aggregate intrinsic value of warrants outstanding and exercisable at September 30, 2018 is $0. 666,667 warrants issued during the year ended December 31, 2017 were valued utilizing the Black Scholes option pricing model and the following range of assumptions on the date of valuation: Stock price $ 0.16 - $2.18 Exercise price $ 0.18 Risk free interest rate 1.01% - 1.37 % Expected term (years) 5 Expected volatility 322% - 504 % Expected dividends 0 % 75,006 warrants issued during the nine months ended September 30, 2018 were valued utilizing the Black Scholes option pricing model and the following range of assumptions on the date of valuation: Stock price $ 0.16 - $2.18 Exercise price $ 0.18 Risk free interest rate 1.01% - 1.37 % Expected term (years) 5 Expected volatility 322% - 504 % Expected dividends 0 % Stock Options On February 28, 2018, we awarded 6,000,000 stock options to various employees under our 2017 Stock Incentive Plan. Of these options, 5,125,000 were fully vested at the time of grant with the remaining 875,000 vesting quarterly through December 31, 2019. The awarded options give the option holder the right to purchase shares of our common stock at $1.08 per share during the ten-year term of the option. We calculated the fair value of each option to be approximately $0.91 per option utilizing the Black Scholes option pricing model and the following range of assumptions on the date of valuation: Stock price $ 1.05 Exercise price $ 1.08 Risk free interest rate 2.8 % Expected term (years) 5-10 Expected volatility 197 % Expected dividends 0 % The total grant-date fair value of these options was approximately $6,146,000. Stock-based compensation expense related to these stock options included in operating expenses for the nine months ended September 30, 2018 was approximately $5,584,498. On June 29, 2018, we awarded 14,195,000 stock options to various employees under our 2018 Stock Incentive Plan. Of these options, 13,250,000 were fully vested at the time of grant with the remaining 945,000 vesting quarterly through July 1, 2022. The awarded options give the option holder the right to purchase shares of our common stock at $0.705 per share during the ten-year term of the option. We calculated the fair value of each option to be approximately $0.59 per option utilizing the Black Scholes option pricing model and the following range of assumptions on the date of valuation: Stock price $ 0.71 Exercise price $ 0.95 Risk free interest rate 2.68 - 2.79 % Expected term (years) 5 Expected volatility 210% - 214 % Expected dividends 0 % The total grant-date fair value of these options was approximately $9,711,400. Stock-based compensation expense related to these stock options included in operating expenses for the nine months ended September 30, 2018 was approximately $9,104,999. The following table summarizes our stock options outstanding as of both September 30, 2018 and December 31, 2017, respectively: Number of Weighted Weighted Stock options outstanding at January 1, 2017 3,680,000 8.9 $ 0.28 Issued 3,957,500 9.9 0.64 Exercised (1,000,000 ) Expired Stock options outstanding at December 31, 2017 6,637,500 8.7 $ 0.57 Stock options exercisable at December 31. 2017 6,637,500 8.7 $ 0.57 Stock options outstanding at December 31, 2017 6,637,500 Issued 20,195,000 9.5 $ 0.83 Exercised Expired Stock options outstanding at September 30, 2018 26,832,500 9.4 $ 0.75 Stock options exercisable at September 30, 2018 25,080,000 9.5 $ 0.74 The total price to exercise all outstanding stock options is $10,259,575. The weighted-average remaining contractual life for stock options outstanding and exercisable at September 30, 2018 is 9.2 years, and the aggregate intrinsic value of options outstanding and exercisable at September 30, 2018 is $0.75. On July 25, 2018, we repriced the exercise price per share from $1.08 to $0.58 per share for the stock options to purchase 6,000,000 shares of our common stock that were granted on March 28, 2018 and repriced the exercise price per share from $0.705 to $0.58 per share for the stock options to purchase 14,195,000 of our common stock that were granted on June 29, 2018. No adjustment to shared-based compensation in the consolidated financial statements for the three and nine months ended September 30, 2018 was necessary as a result of the repricing of the stock options. On August 17, 2018, we repriced the exercise price per share (i) from $0.70 to $0.43 for per share for stock options to purchase 600,000 shares of our common stock that were granted on January 1, 2015 (ii) from 0.56 to $0.43 for per share for stock options to purchase 2,900,000 shares of our common stock that were granted on January 12, 2016 (iii) from $0.92 to $0.43 for 57,500 per share for stock options to purchase 57,500 shares of our common stock that were granted on July 27, 2017 (iv) from $0.875 to $0.43 per share for stock options to purchase 1,000,000 shares of our common stock that were granted on December 8, 2017 (v) from $.058 to $0.43 per share for stock options to purchase 6,000,000 shares of our common stock that were granted on March 28, 2018 and (vi) from $0.58 to $0.43 per share for stock options to purchase 14,195,000 of our common stock that were granted on June 29, 2018. No adjustment to shared-based compensation in the consolidated financial statements for the three and nine months ended September 30, 2018 was necessary as a result of the repricing of the stock options. |