STOCK OPTIONS AND WARRANTS | NOTE 12 – STOCK OPTIONS AND WARRANTS During 2008, the Board of Directors (“Board”) of the Company adopted the 2008 Equity Incentive Plan (“2008 Plan”) that was approved by the stockholders. Under the 2008 Plan, the Company was authorized to grant options to purchase up to 25,000,000 shares of common stock to any officer, other employee or director of, or any consultant or other independent contractor who provides services to the Company. The 2008 Plan was intended to permit stock options granted to employees under the 2008 Plan to qualify as incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended (“Incentive Stock Options”). All options granted under the 2008 Plan, which are not intended to qualify as Incentive Stock Options are deemed to be non-qualified options (“Non-Statutory Stock Options”). As of March 31, 2019, options to purchase 9,811,667 shares of common stock have been issued and are unexercised, and 0 shares are available for grants under the 2008 Plan. The 2008 Plan expired on March 3, 2019. During 2013, the Board adopted the 2013 Equity Incentive Plan (“2013 Plan”), which was approved by stockholders at the 2013 annual meeting of stockholders. Under the 2013 Plan, the Company is authorized to grant awards of stock options, restricted stock, restricted stock units and other stock-based awards of up to an aggregate of 5,000,000 shares of common stock to any officer, employee, director or consultant. The 2013 Plan is intended to permit stock options granted to employees under the 2013 Plan to qualify as Incentive Stock Options. All options granted under the 2013 Plan, which are not intended to qualify as Incentive Stock Options are deemed to be Non-Statutory Stock Options. As of March 31, 2019, under the 2013 Plan grants of restricted stock and options to purchase 4,905,000 shares of common stock have been issued and are outstanding or unexercised, and 95,000 shares of common stock remain available for grants under the 2013 Plan. The 2013 Plan is administered by the Board or its compensation committee, which determines the persons to whom awards will be granted, the number of awards to be granted, and the specific terms of each grant, including the vesting thereof, subject to the terms of the 2013 Plan. In connection with Incentive Stock Options, the exercise price of each option may not be less than 100% of the fair market value of the common stock on the date of the grant (or 110% of the fair market value in the case of a grantee holding more than 10% of the outstanding stock of the Company). Prior to January 1, 2014, volatility in all instances presented is the Company’s estimate of volatility that is based on the volatility of other public companies that are in closely related industries to the Company. Beginning January 1, 2014, volatility in all instances presented is the Company’s estimate of volatility that is based on the historical volatility of the Company’s stock. On January 9, 2019, the Company issued options to purchase an aggregate of 500,000 shares of the Company’s common stock to four employees and a consultant. The options have an exercise price of $0.90, vest immediately and have a term of 5 years, with a fair value of $72,576 in total, which was expensed immediately. On January 21, 2019, the Company issued options to purchase 50,000 shares of the Company’s common stock to a consultant. The options have an exercise price of $0.90, vest immediately and have a term of 2 years, with a fair value of $7,562, which was expensed immediately. On February 1, 2019, the Company issued options to purchase 25,000 shares of the Company’s common stock to a consultant. The options have an exercise price of $0.90, vest immediately and have a term of 2 years, with a fair value of $3,593 in total. These options were issued to satisfy a ZS obligation in the amount of $15,000 and resulted in forgiveness of debt of $11,607. The following table presents the weighted-average assumptions used to estimate the fair values of the stock options granted by REGO during the three months ended March 31, 2019: 2019 Risk Free Interest Rate 2.57% Expected Volatility 170.0% Expected Life (in years) 2 to 5 Dividend Yield 0% Weighted average estimated fair value of options during the period $ 0.15 The following table summarizes the activities for REGO’s stock options for the three months ended March 31, 2019: Options Outstanding Weighted - Average Remaining Aggregate Weighted- Contractual Intrinsic Number of Average Term Value Shares Exercise Price (in years) (in 000's) (1) Balance December 31, 2018 12,925,000 $ 0.66 3.3 4 Granted 575,000 0.90 Expired/cancelled (183,333 ) 0.91 - - Balance March 31, 2019 13,316,667 $ 0.67 3.1 27 Exercisable at March 31, 2019 9,758,333 $ 0.58 3.1 $ 27 Exercisable at March 31, 2019 and expected to vest thereafter 13,316,667 $ 0.67 3.1 $ 27 (1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the closing stock price of $0.20 for REGO’s common stock on March 31, 2019. For the three months ended March 31, 2019 and 2018, Rego expensed $194,715 and $133,756 with respect to options. In accordance with FASB ASC 505-50, Equity – Equity-Based Payments to Non-Employees Compensation—Stock Compensation—Awards Classified as Equity As of March 31, 2019, there was $285,635 of unrecognized compensation cost related to outstanding stock options. This amount is expected to be recognized over a weighted-average period of 0.8 years. To the extent the actual forfeiture rate is different from what we have estimated, stock-based compensation related to these awards will be different from the Company’s expectations. The difference between the stock options exercisable at March 31, 2019 and the stock options exercisable and expected to vest relates to management’s estimate of options expected to vest in the future. The following table summarizes the activities for REGO’s unvested stock options for the three months ended March 31, 2019: Unvested Options Weighted - Average Grant Number of Date Fair Shares Value Balance December 31, 2018 3,625,000 $ 0.13 Granted 575,000 0.15 Expired/cancelled (66,667 ) 0.25 Vested (575,000 ) 0.15 Balance March 31, 2019 3,558,333 $ 0.16 The following table summarizes the activities for REGO’s warrants for the three months ended March 31, 2019: Remaining Aggregate Weighted- Contractual Intrinsic Number of Average Term Value Shares Exercise Price (in years) (in 000's) (1) Balance at December 31, 2018 3,052,020 $ 0.90 1.3 $ - Granted 175,000 0.90 2.0 - Balance at March 31, 2019 3,227,020 $ 0.90 1.1 $ - Exercisable at March 31, 2019 3,227,020 $ 0.90 1.1 $ - Exercisable at March 31, 2019 and expected to vest thereafter 3,227,020 $ 0.90 1.1 $ - (1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $0.20 for Rego’s common stock on March 31, 2019. All warrants were vested on the date of grant. The following table summarizes the activities for ZS’s stock options for the three months ended March 31, 2019: Options Outstanding Weighted - Average Remaining Aggregate Weighted- Contractual Intrinsic Number of Average Term Value Shares Exercise Price (in years) (in 000's) (1) Balance December 31, 2018 2,400,000 $ 5.00 4.6 $ - Balance March 31, 2019 2,400,000 $ 5.00 4.3 $ - Exercisable at March 31, 2019 2,400,000 $ 5.00 4.3 $ - Exercisable at March 31, 2019 and expected to vest thereafter 2,400,000 $ 5.00 4.3 $ - (1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the value of $4.00 for ZS’s common stock on March 31, 2019. For the three months ended March 31, 2019, ZS expensed $28,051 with respect to options. The following table summarizes the activities for ZS’s warrants for the three months ended March 31, 2019: Remaining Aggregate Weighted- Contractual Intrinsic Number of Average Term Value Shares Exercise Price (in years) (in 000's) (1) Balance December 31, 2018 83,334 $ 3.00 2.9 $ - Balance March 31, 2019 83,334 $ 3.00 2.6 $ - Exercisable at March 31, 2019 83,334 $ 3.00 2.6 $ - Exercisable at March 31, 2019 and expected to vest thereafter 83,334 $ 3.00 2.6 $ - (1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the value of $4.00 for ZS’s common stock on March 31, 2019. For the three months ended March 31, 2019, ZS expensed $0 with respect to warrants. The following table summarizes the activities for ZBS’s stock options for the three months ended March 31, 2019: Remaining Aggregate Weighted- Contractual Intrinsic Number of Average Term Value Shares Exercise Price (in years) (in 000's) (1) Balance December 31, 2018 100,000 $ 5.00 1.7 $ - Balance March 31, 2019 100,000 $ 5.00 1.4 $ - Exercisable at March 31, 2019 100,000 $ 5.00 1.4 $ - Exercisable at March 31, 2019 and expected to vest thereafter 100,000 $ 5.00 1.4 $ - (1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the value of $0.01 for ZBS’s common stock on March 31, 2019. For the three months ended March 31, 2019, ZBS expensed $0 with respect to options. The following table summarizes the activities for ZCS’s stock options for the three months ended March 31, 2019: Remaining Aggregate Weighted- Contractual Intrinsic Number of Average Term Value Shares Exercise Price (in years) (in 000's) (1) Balance December 31, 2018 2,200,000 $ 5.00 4.8 $ - Balance March 31, 2019 2,200,000 $ 5.00 4.6 $ - Exercisable at March 31, 2019 2,200,000 $ 5.00 4.6 $ - Exercisable at March 31, 2019 and expected to vest thereafter 2,200,000 $ 5.00 4.6 $ - (1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the value of $0.01 for ZCS’s common stock on March 31, 2019. For the three months ended March 31, 2019, ZCS expensed $0 with respect to options. The following table summarizes the activities for ZPS’s stock options for the three months ended March 31, 2019: Remaining Aggregate Weighted- Contractual Intrinsic Number of Average Term Value Shares Exercise Price (in years) (in 000's) (1) Balance December 31, 2018 100,000 $ 5.00 1.7 $ - Balance March 31, 2019 100,000 $ 5.00 1.4 $ - Exercisable at March 31, 2019 100,000 $ 5.00 1.4 $ - Exercisable at March 31, 2019 and expected to vest thereafter 100,000 $ 5.00 1.4 $ - (1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the value of $0.01 for ZPS’s common stock on March 31, 2019. For the three months ended March 31, 2019, ZPS expensed $0 with respect to options. |