8. Stock Options and Warrants
|3 Months Ended|
Mar. 31, 2017
|Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]|
|Stock Options and Warrants||
The Company periodically issues stock options and warrants to employees and non-employees in capital raising transactions, for services and for financing costs. Options vest and expire according to terms established at the grant date.
Options vest according to the terms of the specific grant and expire from 2 to 10 years from date of grant. The weighted-average, remaining contractual life of employee and non-employee options outstanding at March 31, 2017 was 5.7 years. Stock option activity for the period January 1, 2017 up to March 31, 2017, was as follows:
The weighted average exercise prices, remaining contractual lives for options granted, exercisable, and expected to vest as of March 31, 2017 were as follows:
During the three-month period ending March 31, 2017 the Company granted options to purchase 6,500,000 shares of common stock to members of the Company’s Board of Directors. The options are exercisable at $0.05 per share, vest monthly over a twelve-month period, and expire ten years from the date granted. Total fair value of these options at grant date was $325,000 using the Black-Scholes Option Pricing model with the following assumptions: life of 5 years; risk free interest rate of 1.94%; volatility of 123% and dividend yield of 0%.
In March 2017, as a result of the resignation of the Company’s CEO and a member of the Board of Directors, the Company agreed to modify the vesting term of 2.5 million options granted to them in January 2017 and fully vested those options resulting in an incremental charge of $126,000. There were no other changes in the remaining terms of the original grant.
During the three-month periods ended March 31, 2017 and 2016, the Company recognized compensation costs based on the fair value of options that vested of $231,000 and $100,000 respectively.
At March 31, 2017, the Company’s closing stock price was $0.07 per share. The aggregate intrinsic value of the options outstanding at March 31, 2017 was $130,000. Future unamortized compensation expense on the unvested outstanding options at March 31, 2017 is $182,000 to be recognized through December 2017.
The following table summarizes certain information about the Company’s stock purchase warrants activity for the period starting January 1, 2017 up to March 31, 2017.
The weighted average exercise prices, remaining contractual lives for warrants granted, exercisable, and expected to vest as of March 31, 2017 were as follows:
In the three-month period ending March 31, 2017, pursuant to terms of convertible notes issued, the Company granted warrants to purchase 2,211,000 shares of common stock with an exercise price of $0.05 per share, vesting immediately upon grant and expiring one year from the date of grant (see Note 5).
During the three periods ended March 31, 2017 and 2016, the Company recognized compensation costs of $4,000 and $27,000, respectively, based on the fair value of warrants granted in prior years for services and vested during the period.
At March 31, 2017, the aggregate intrinsic value of the warrants outstanding was $44,000. Future unamortized compensation expense on the unvested outstanding warrants at March 31, 2017 is approximately $3,000 to be recognized through July 2018.
The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.
Reference 1: http://www.xbrl.org/2003/role/presentationRef