| Stock Options and Warrants | NOTE
8 – STOCK OPTIONS AND WARRANTS Stock Purchase Options On March 21, 2018, the Company’s
Board of Directors voted to grant to sixteen individuals options to purchase up to an aggregate of 1,500,000 shares of the Company’s
common stock. The terms of the options are as follows: the options vest one-third on the first anniversary of the date of grant;
one-third on the second anniversary of the date of grant; and one-third on the third anniversary of the date of grant; the options
have a contractual life of eight years from the date of grant; and the exercise price is $0.65, which was the market price of
the options on the date of the grant. Included in the grants were options to purchase up to 250,000 shares to the Company’s
President and Chief Executive Officer, and options to purchase up to 250,000 shares to the Company’s Chief Technical Officer.
The options were not issued pursuant to a stock option or stock incentive plan. On April
6, 2018, the Company’s Board of Directors approved the grant of 250,000 shares of the Company’s common stock to the
newest member of the Board of Directors. The terms of the options are as follows: the options vest one-third on the first anniversary
of the date of grant; one-third on the second anniversary of the date of grant; and one-third on the third anniversary of the
date of grant; the options have a contractual life of eight years from the date of grant; and the exercise price is $0.65. On June 13,
2018, the Company’s Board of Directors approved the grant of 60,000 options to purchase shares of the Company’s common
stock, to a consultant in exchange for services. The options granted had an exercise price of $0.45 per share. One-sixth of the
options shall vest each month for six months, the first one-sixth will vest in June 2018 and the last one-sixth will vest in November
2018. The grants expire on the eighth anniversary of the date of grant. On June 28,
2018, the Company’s Board of Directors approved the grant of an aggregate of 600,000 options to purchase shares of the Company’s
common stock, consisting of grants of 25,000 options to 24 employees and consultants to the Company who had been instrumental
in helping the Company get to the point of the initial launch. The options granted had an exercise price of $0.42 per share, and
vest one-third on each of the first, second, and third anniversaries of the date of grant, and expire on the eighth anniversary
of the date of grant. On June 28,
2018, the Company’s Board of Directors approved the grant of an aggregate of 250,000 options to purchase shares of the Company’s
common stock, consisting of grants of 125,000 options to two Board Members of the Company. The options granted had an exercise
price of $0.42 per share, and vest one-third on each of the first, second, and third anniversaries of the date of grant, and expire
on the eighth anniversary of the date of grant. As the
holders of the Company’s outstanding options are employees and non-employees, the values attributable to non-employee
options are re-measured on a quarterly basis and amortized over the service period and until they fully vest over a 3-year
vesting period. Stock options issued to employees are valued on the date of issuance and amortized over the service period
until they fully vest over a 3-year vesting period. The Company believes that the fair value of the stock options is more
reliably measurable than the fair value of the services received. The fair value of the non-employee stock options granted
was re-measured at each reporting date using the Black-Scholes valuation model. As of June 30, 2018, the Company re-measured
the unvested options at a value of $2,097,912 to be recognized over the vesting period. The Company recorded $142,914 and $214,805 of
stock-based compensation expense in the three and six months ended June 30, 2018, respectively. The Company recorded $862,384
and $1,051,538 of stock-based compensation expense in the three and six months ended June 30,
2017, respectively. The
following table summarizes the changes in options outstanding of the Company during the six months ending June 30, 2018:
Number
of Options Weighted
Average Exercise
Price per Share
Outstanding,
December 31, 2017 1,382,351 $ 0.30
Granted 2,660,000 $ 0.55
Exercised (296,865 ) $ 0.11
Cancelled (25,000 ) $ 0.65
Outstanding,
June 30, 2018 3,720,486 $ 0.49
Exercisable,
June 30, 2018 930,403 $ 0.35 As of June 30, 2018, the Company
had $ 1,490,285 Stock Purchase Warrants During
the six months ended June 30, 2018, the Company did not issue any warrants. The
following table summarizes the changes in warrants outstanding during the six months ended June 30, 2018 :
Number
of Warrants Weighted
Average Exercise
Price per Share
Outstanding,
December 31, 2017 6,553,860 $ 0.45
Outstanding,
June 30, 2018 6,553,860 $ 0.45
Exercisable,
June 30, 2018 – – The
warrants are contractually exercisable two years after the grant date and expire four years after the grant date. There is a 30-day
mandatory exercise period triggered by the Company’s stock trading on a national exchange at a price of more than $2.50
per share for 30 consecutive trading days. If warrants are not exercised within 30 days of the mandatory exercise period termination,
the warrants will be forfeited. |
