Common Stock | NOTE 13 – COMMON STOCK A) Stock Issued for cash During 2019, the Company sold an aggregate of 163,750 units of its securities to 1 accredited investor in a private placement exempt from registration under the Securities Act in reliance on exemptions provided by Section 4(a)(2) and Rule 506(b) of Regulation D resulting in gross proceeds to the Company of $58,950. Each unit, which was sold at a purchase price of $0.40, consisted of one share of common stock and one five-year warrant to purchase one share of common stock at an exercise price of $0.65 per share. Spartan Capital, served as placement agent for the Company in this offering. As compensation for its services, the Company paid Spartan Capital commissions and other fees totaling $6,550, and issued Spartan Capital Placement Agents Warrants to purchase an aggregate of 16,375 shares of our common stock, including the cash commission and Placement Agent Warrants issued pursuant to the final closing on January 9, 2019 included in the Company’s consolidated statement of changes in shareholders’ equity for the year ended December 31, 2019. During 2019, the Company sold an aggregate of 2,570,860 units of its securities to 20 accredited investors in two private placements exempt from registration under the Securities Act in reliance on exemptions provided by Section 4(a)(2) and Rule 506(b) of Regulation D resulting in gross proceeds to the Company of $1,285,530. A total of 1,270,000 units were sold under the first private placement dated February 14, 2019 at a purchase price of $0.50 per share resulting in gross proceeds of $635,000. Each unit was sold at a purchase price of $0.50, and consisted of one share of common stock and one five-year warrant to purchase one share of common stock at an exercise price of $0.75 per share. On April 22, 2019 the Company amended the private placement to include a second warrant to purchase one share of common stock at an exercise price of $1.00 per share. 970,500 units were sold at a purchase price of $0.50 per unit resulting in gross proceeds of $485,250. We used $1,008,225 of the proceeds to issue 6% promissory notes to Inform, Inc as a part of the potential acquisition. On July 15, 2019 these two offerings were terminated and replaced with a private placement offering units at a purchase price of $0.50 consisting of one share of common stock, one five-year warrant to purchase one share of common stock at an exercise price of $0.75 per share, and a second warrant to purchase one share of common stock at an exercise price of $1.00 per share. A total of 330,360 units were sold under the private placement dated July 15, 2019 units at a purchase price of $0.50 per share resulting in gross proceeds of $165,280. We used $148,662 of the proceeds to issue 6% promissory notes to Inform, Inc as a part of the potential acquisition. The investors in the first offering dated February 14, 2019 were required to subscribe for the second warrant offered in the April 22, 2019 amendment in a private placement dated July 11, 2019 which terminated on July 31, 2019 with no ability to extend. A total of 980,000 warrants were issued to eleven investors in the first private placement who subscribed for the second warrant. Three investors did not subscribe for the second warrant. During 2019, the Company sold an aggregate of 750,000 units of its securities to 3 accredited investors in a private placement exempt from registration under the Securities Act in reliance on exemptions provided by Section 4(a)(2) and Rule 506(b) of Regulation D resulting in gross proceeds to the Company of $300,000. Each unit, which was sold at a purchase price of $0.40, consisted of one share of common stock and one five-year warrant to purchase one share of common stock at an exercise price of $0.65 per share. During 2018, the Company sold an aggregate of 14,836,250 units of its securities to 106 accredited investors in a private placement exempt from registration under the Securities Act in reliance on exemptions provided by Section 4(a)(2) and Rule 506(b) of Regulation D resulting in gross proceeds to the Company of $5,934,500. Each unit, which was sold at a purchase price of $0.40, consisted of one share of common stock and one five-year warrant to purchase one share of common stock at an exercise price of $0.65 per share. Spartan Capital, served as placement agent for the Company in this offering. As compensation for its services, the Company paid Spartan Capital commissions and other fees totaling $793,450, and issued Spartan Capital Placement Agents Warrants to purchase an aggregate of 1,483,625 shares of our common stock, including the cash commission and Placement Agent Warrants issued pursuant to the final closing on November 30, 2018 included in the Company’s consolidated statement of changes in shareholders’ equity for the year ended December 31, 2018. We used $1.0 million of these proceeds from this final closing for the payment of the fees due Spartan Capital under the terms of the Consulting Agreement and M&A Advisory Agreement described in Note 11, and are using the balance for general working capital. Under the terms of the agreement the Company agreed to file a resale registration agreement within 120 days after the final closing of the offering covering the common stock shares issuable upon exercise of the Private Placement Warrants included in the Units. The Company did not file the resale registration agreement timely and has an obligation $3,260 per day that the filing is delinquent. B) Stock issued for services In February 2019, the Company issued 7,000 shares of our common stock to consultants for services rendered based on the fair value of the date of grant, or $1.00 a share valued at $7,000. In July 2019, the Company issued 22,167 shares of our common stock to a consultant for services rendered based on the fair value of the date of grant, or $1.79 a share valued at $39,750. In November 2019, the Company issued 63,000 shares of our common stock to a consultant for services rendered based on the fair value of the date of grant, or $1.50 a share valued at $94,455. In September 2018, the Company issued 10,000 shares of common stock to a consultant for services rendered based on the fair value at the date of grant, or $0.75 a share valued at $7,500. C) Stock issued for acquisitions On September 19, 2017, the Company issued 1,100,233 shares of its common stock in connection the acquisition of the BMLLC - (See Note 3). The common shares were valued at $429,092 or $0.85 per share, based on the fair value on the date of issuance. On August 15, 2019, the Company issued 12,354,640 shares of its common stock in connection to the acquisition of S&W Media. The common shares were values at $19,409,278 or $1.57 per share. On November 18, 2019, the Company acquired MediaHouse and agreed to issue 22,180,781 shares of common stock in the transaction. Although the transaction was recorded as of November 18, 2019, due to complications associated with the identification of the shareholders to receive the shares, the shares were not issued prior to December 31, 2019 and were issued in 2020. Accordingly, the shares are included within the shares outstanding, but not as issued as of December 31, 2019. The shares are valued at $45,952,684 or $1.64 per share. D) Stock issued for dividends In January 2018, the Company issued 100,000 shares of its common stock as dividends to the holder of its Series A preferred stock. Stock Option Compensation The Company accounts for stock option compensation issued to employees for services in accordance with ASC Topic 718, “Compensation – Stock Compensation”. Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. Stock options issued to consultants and other non-employees as compensation for services provided to the Company are accounted for based on the fair value of the services provided or the estimated fair market value of the option, whichever is more reliably measurable in accordance with FASB ASC 505, Equity, , On April 20, 2011, the Company’s board of directors and majority stockholder adopted the 2011 Stock Option Plan (the “2011 Plan”), to be effective on January 3, 2011. The Company has reserved for issuance an aggregate of 900,000 shares of common stock under the 2011 Plan. The maximum aggregate number of shares of Company stock that shall be subject to Grants made under the Plan to any individual during any calendar year shall be 180,000 shares. On April 1, 2013, the Company’s board of directors and majority stockholder adopted the 2013 Stock Option Plan (the “2013 Plan”), to be effective on April 1, 2013. The Company has reserved for issuance an aggregate of 900,000 shares of common stock under the 2013 Plan. As of December 31, 2019, 9,000 shares were remaining under the 2011 Plan for future issuance. As of December 31, 2019, 25,000 shares were remaining under the 2013 Plan for future issuance. On May 22, 2015, the Company’s board of directors and majority stockholder adopted the 2015 Stock Option Plan (the “2015 Plan”), to be effective on May 22, 2015. The Company has reserved for issuance an aggregate of 1,000,000 shares of common stock under the 2015 Plan. As of December 31, 2019, 420,000 shares were remaining under the 2015 Plan for the future issuance. On November 7, 2019, the Company’s board of directors and majority stockholder adopted the 2019 Stock Option Plan (the “2019 Plan”), to be effective on November 7, 2019. The Company has reserved for issuance an aggregate of 5,000,000 shares of common stock under the 2019 Plan. As of December 31, 2019, 4,884,273 shares were remaining under the 2015 Plan for the future issuance. The purpose of the 2011 Plan, 2013 Plan, 2015 Plan, and 2019 Plan (the “Plans” are to provide an incentive to attract and retain directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons into our development and financial success. Under the 2015 Plan, the Company is authorized to issue incentive stock options intended to qualify under Section 422 of the Code, non-qualified stock options, stock appreciation rights, performance shares, restricted stock and long-term incentive awards. The Company’s board of directors will administer the 2011 Plan until such time as such authority has been delegated to a committee of the board of directors. The material terms of each option granted pursuant to the 2011 Plan by the Company shall contain the following terms: (i) that the purchase price of each share purchasable under an incentive option shall be determined by the Committee at the time of grant, (ii) the term of each option shall be fixed by the Committee, but no option shall be exercisable more than 10 years after the date such option is granted and (iii) in the absence of any option vesting periods designated by the Committee at the time of grant, options shall vest and become exercisable in terms and conditions, consistent with the Plan, as may be determined by the Committee and specified in the Grant Instrument. The Company estimates the fair value of share-based compensation utilizing the Black-Scholes option pricing model, which is dependent upon several variables such as the expected option term, expected volatility of our stock price over the expected option term, expected risk-free interest rate over the expected option term, expected dividend yield rate over the expected option term, and an estimate of expected forfeiture rates. The Company believes this valuation methodology is appropriate for estimating the fair value of stock options granted to employees and directors, which is subject to ASC Topic 718 requirements. These amounts are estimates and thus may not be reflective of actual future results, nor amounts ultimately realized by recipients of these grants. The Company recognizes share-based compensation expense on a straight- line basis over the requisite service period for each award. The following table summarizes the assumptions the Company utilized to record compensation expense for stock options granted during the year ended December 31, 2019: Assumptions: 2019 Expected term (years) 6.25 Expected volatility 89 % Risk-free interest rate 1.78 - 1.99 % Dividend yield 0 % Expected forfeiture rate 0 % The expected life is computed using the simplified method, which is the average of the vesting term and the contractual term. The expected volatility is based on an average of similar public company’s historical volatility, as the Company’s common stock is quoted in the over the counter market on the OTCQB Tier of the OTC Markets, Inc. The risk-free interest rate is based on the U.S. Treasury yields with terms equivalent to the expected term of the related option at the time of the grant. Dividend yield is based on historical trends. While the Company believes these estimates are reasonable, the compensation expense recorded would increase if the expected life was increased, a higher expected volatility was used, or if the expected dividend yield increased. During the year ended December 31, 2019, the Company issued 220,727 common stock options. No options were granted during the year ended December 31, 2018. The Company recorded $45,674 and $24,128 of stock option expense for the year ended December 31, 2019 and December 31, 2018 respectively. The stock option expense for year ended December 31, 2019 and 2018 has been recognized as a component of general and administrative expenses in the accompanying consolidated financial statements. As of December 31,2019, there were total unrecognized compensation costs related to non-vested share-based compensation arrangements of $235,198 to be recognized through December 2023. A summary of the Company’s stock option activity during the years ended December 31, 2019 and 2018 is presented below: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Balance Outstanding, December 31, 2017 2,027,000 0.42 5.5 73,770 Granted — — — — Exercised — — — — Forfeited (230,000 ) 0.22 2.58 122,496 Expired — — — — Balance Outstanding, December 31, 2018 1,797,000 $ 0.44 5.1 $ 4,584,340 Granted 220,727 1.69 9.8 — Exercised — — — — Forfeited — — — — Expired — — — — Balance Outstanding, December 31, 2019 2,017,727 $ 0.58 4.5 $ 3,039,218 Exercisable at December 31, 2019 1,755,500 $ 0.43 3.6 $ 2,498,350 Summarized information with respect to options outstanding under the two option plans at December 31, 2019 is as follows: Options Outstanding Options Exercisable Range or Exercise Price Number Outstanding Remaining Average Contractual Life (In Years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercise Price 0.14 - 0.24 540,000 1.3 $ 0.14 540,000 $ 0.14 0.25 - 0.49 351,000 3.2 $ 0.28 351,000 $ 0.28 0.50 - 0.85 906,000 5.6 $ 0.68 864,500 $ 0.68 1.64 – 1.75 220,727 9.7 $ 1.71 - $ — 2,017,727 4.5 $ 0.58 1,755,500 $ 0.43 |