Quarterly report pursuant to Section 13 or 15(d)

8. Stock Options and Warrants

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8. Stock Options and Warrants
6 Months Ended
Jun. 30, 2018
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]  
Stock Options and Warrants

  8. Stock Options and Warrants

 

The Company periodically issues stock options and warrants to directors, 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

 

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 June 30, 2018 was 5.4 years. Stock option activity for the period January 1, 2018 up to June 30, 2018, was as follows:

 

      Options     Weighted
Avg. Exercise
Price
 
  January 1, 2018       35,397,675     $ 0.23  
  Granted       2,083,335       0.18  
  Exercised       (179,710 )      
  Forfeited              
  June 30, 2018       37,301,300     $ 0.22  

 

The weighted average exercise prices, remaining contractual lives for options granted, exercisable, and expected to vest as of June 30, 2018 were as follows:

 

          Outstanding Options       Exercisable Options  
  Option
Exercise Price
Per Share
      Shares       Life
(Years)
      Weighted
Average Exercise
Price
      Shares       Weighted
Average Exercise
Price
 
  $ 0.05 - $ 0.99       37,150,854       5.4     $ 0.22       33,809,187     $ 0.21  
  $ 1.00 - $ 1.99       150,446       5.1     $ 1.18       150,446     $ 1.18  
          37,301,300       5.4     $ 0.22       33,959,633     $ 0.22  

 

During the six-month period ending June 30, 2018, and pursuant to the Company’s Board Compensation policy approved by the Board June 19, 2015, the Company granted options to purchase 2,083,335 shares of common stock to members of the Company’s Board of Directors. The options are exercisable at $0.18 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 $313,000 using the Black-Scholes Option Pricing model with the following assumptions: life of 5 years; risk free interest rate of 1.7%; volatility of 118% and dividend yield of 0%.

 

During the six-month periods ended June 30, 2018 and 2017, the Company recognized compensation costs based on the fair value of options that vested of $245,000 and $535,000 respectively, which is included in Operating expenses in the Company’s statement of operations. During the three-month periods ended June 30, 2018 and 2017, the Company recognized compensation costs based on the fair value of options that vested of $102,000 and $300,000 respectively, which is included in Operating expenses in the Company’s statement of operations.

 

At June 30, 2018, the Company’s closing stock price was $0.12 per share. The aggregate intrinsic value of the options outstanding at June 30, 2018 was $520,000. Future unamortized compensation expense on the unvested outstanding options at June 30, 2018 is $209,000 to be recognized through May 2019.

 

Warrants

 

The following table summarizes certain information about the Company’s stock purchase warrants activity for the period starting January 1, 2018 up to June 30, 2018.

 

      Warrants     Weighted Avg.
Exercise Price
 
  January 1, 2018       17,622,437     $ 0.09  
  Granted       2,189,688       0.08  
  Exercised       (12,517,773 )     0.05  
  Cancelled       (2,287,997 )     0.05  
  June 30, 2018       5,006,355     $ 0.21  

 

The weighted average exercise prices, remaining contractual lives for warrants granted, exercisable, and expected to vest as of June 30, 2018 were as follows:

 

          Outstanding Warrants       Exercisable Warrants  
  Warrant Exercise Price Per Share       Shares       Life
(Years)
      Weighted
Average Exercise Price
      Shares       Weighted
Average Exercise Price
 
  $ 0.05 - $ 0.99       5,006,355       2.1     $ 0.21       4,956,355     $ 0.21  
  $ 1.00 - $ 1.99                                
          5,006,355       2.1     $ 0.21       4,956,355     $ 0.21  

 

In the six-month period ending June 30, 2018, pursuant to terms of convertible notes issued, the Company granted warrants to purchase 2,189,688 shares of common stock with an exercise price of $0.08 per share, vesting immediately upon grant and expiring one year from the date of grant (see Note 5).

 

During the six-month period ended March 31, 2018, warrants to acquire 12,217,773 shares of common stock were exercised resulting in net proceeds to the Company of $634,000.

 

At June 30, 2018, the aggregate intrinsic value of the warrants outstanding was $77,000.