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Stockholders' Equity | 12 Months Ended
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Dec. 31, 2016
Stockholders' Equity [Abstract] |
Stockholders' Equity |
7. | Stockholders’ Equity
In May 2015, the Company purchased and retired 120,000 shares of outstanding Company common stock from an investor for $10,800. In July 2015, the Company granted 300,000 options valued at $7,500 to a shareholder in conjunction with the issuance of a $75,000 note payable. The options are fully vested and expire in three years. In December 2015, the Company satisfied the $75,000 note payable through the issuance of 441,177 shares of Company common stock. In December 2015, the Company satisfied $10,200 of notes payable to a director through the issuance of 60,000 shares of Company common stock. The Company issued 40,800 options valued at $1,000 to the director in conjunction with this transaction. The options are fully vested and expire in three years. In December 2015, the Company satisfied $84,868 of royalties payable to the Company’s President through the issuance of 499,225 shares of Company common stock (see note 8). In conjunction with this transaction, the Company issued 339,473 options valued at $13,000 to the President of the Company at an exercise price of $0.10 per share. The options are fully vested and expire in 3 years. On April 1, 2016, the Company entered into two agreements with two consultants to provide services over a nine- month period in exchange for 2,300,000 shares of common stock. The Company calculated a fair value of $690,000 based on the market price of the shares on the date of the agreements. During the third quarter of 2016, the Company and the consultants renegotiated the agreements by extending the service requirement to December 31, 2017. For the year ended December 31, 2016, the Company has recognized expense of $383,333 in connection with these agreements. On September 1, 2016, the Company issued 200,000 shares of common stock for $46,000. In connection with this issuance the Company issued 100,000 warrants with an exercise price of $0.50 per share. These warrants are fully vested and expire in two years. In August 2016, the Company issued 125,000 shares of common stock pursuant to sale of two promissory notes in the Offering. In September 2016, the Company issued 62,500 shares of common stock pursuant to the sale of one promissory note in the Offering. In October 2016, the Company issued 62,500 shares of common stock pursuant to the sale of two promissory notes in the Offering. In November 2016, the Company issued 434,782 shares of common stock pursuant to a conversion of an equity contribution into Immudyne PR by the noncontrolling interest. In connection with this issuance the Company issued 217,391 warrants with an exercise price of $0.40 per share. These warrants are fully vested and expire in two years. In December 2016, the Company received proceeds of $30,000 from exercises of options at $0.10 per share. The Company issued 300,000 shares of common stock pursuant to these exercises. On December 23, 2016, the Company issued 75,000 shares of common stock for $17,250. In connection with this issuance the Company issued 37,500 warrants with an exercise price of $0.50 per share. These warrants are fully vested and expire in two years. During 2016, the Company purchased 325,000 shares of outstanding Company common stock through an exchange for a price per share of $0.23 to $0.29. As of the December 31, 2016, these shares being held by the Company valued at cost is $87,053 and are included in treasury stock in the consolidated balance sheet. Additional Paid-In Capital Noncontrolling Interest On April 1, 2016, the Company increased its ownership in Immudyne PR from to 78.16667% decreasing the minority interest from 66.7% to 21.83% resulting in a charge to noncontrolling interest and additional paid-in-capital of $91,612. In 2016, the net change in loans, contributions and distributions by other members of Immudyne PR resulted an increase in noncontrolling interests of $119,894. For the years ended December 31, 2016 and 2015, the net income (loss) of Immudyne PR attributed the Company amounted to $(115,749) and $(97,240), respectively. Service-Based Stock Options In October 2015 the Company issued 110,000 service-based options valued at $2,800 to two consultants at exercise prices of $0.20 per share. The options are fully vested and expire in 10 years. In November 2015 the Company cancelled 100,000 shares of company common stock and 200,000 fully vested service-based options issued to two consultants. In November 2015 the Company issued 500,000 shares of common stock valued at $65,000 to a consultant. Also in 2015, the Company extended the expiration date of 500,000 options held by a director one year from 2015 to 2016 and 1,500,000 warrants held by the Company’s President two years from 2015 to 2017. The fair value of these modifications amounted to $55,000. In May 2016, the Company issued 175,000 service-based options valued at $40,829 to two consultants at exercise prices of $0.20 per share. The options are fully vested and expire in 10 years. In July 2016, the Company issued 50,000 service-based options valued at $12,397 to a consultant with an exercise price of $0.20 per share. The options are fully vested and expire in 10 years. In November 2016, the Company issued 50,000 service-based options valued at $9,980 to a consultant with an exercise price of $0.50 per share. The options are fully vested and expire in 2 years. Accordingly, stock based compensation for the years ended December 31, 2016 and 2015 included $63,206 and $22,300, respectively, related to such service-based stock options. A Summary of the outstanding service-based options are as follows:
|  |  | Number of Options |
| Balance at December 31, 2014 |  |  | 10,435,000 |
| Cancelled |  |  | (200,000 | )
| Issued |  |  | 790,273 |
| Balance at December 31, 2015 |  |  | 11,025,273 |
| Exercised |  |  | 300,000 |
| Expired |  |  | 50,000 |
| Cancelled |  |  | (250,000 | )
| Issued |  |  | 275,000 |
| Balance at December 31, 2016 |  |  | 10,700,273 |
All outstanding options are exercisable and have a cashless exercise provision, and certain options provide for accelerated vesting provisions and modifications, as defined, if the Company is sold or acquired. The intrinsic value of options outstanding and exercisable at December 31, 2016 and 2015 amounted to $704,794 and $33,605, respectively. The intrinsic value of options exercised during the year ending December 31, 2016 was $54,000. The significant assumptions used to determine the fair values of options issued, using a Black-Scholes option-pricing model are as follows:
| Significant assumptions: |  |  |
| Risk-free interest rate at grant date |  |  | 0.71% - 1.88 | %
| Expected stock price volatility |  |  | 217.4% - 248.4 | %
| Expected dividend payout |  |  | — |
| Expected option life-years |  |  | 2 to 3 | years
| Weighted average grant date fair value |  | $ | 0.22 |
| Forfeiture rate |  |  | 0 | %
The following is a summary of outstanding service-based options at December 31, 2016:
| Exercise Price |  | Number of Options |  |  | Weighted Average Remaining Contractual Life |
| $0.10 |  |  | 1,380,273 |  |  |  | 1 year |
| $0.20 - $0.25 |  |  | 8,120,000 |  |  |  | 5 years |
| $0.40 - $0.50 |  |  | 1,200,000 |  |  |  | 5 years |
| Total |  |  | 10,700,273 |  |  |  |  |
Performance-Based Stock Options The Company had granted performance-based options to purchase 4,400,000 shares of common stock at exercise prices of $0.40 to $0.80. The options expire at various dates between 2021 and 2026 and are exercisable upon the Company achieving annual sales revenue of $5,000,000 and $10,000,000. The fair value of these performance-based options aggregated $169,035 to be expensed over the implicit service period commencing once management believes the performance criteria will be met. In October 2016, the Company cancelled 287,500 of these service-based options valued at $17,999 to two consultants. The fair value of these performance-based options as of year ended December 31, 2016 aggregated $151,036. The performance criteria for options exercisable upon the Company achieving annual sales revenue of $5,000,000, with a fair value amounting to $120,867, was met during the year ended December 31, 2016. Accordingly, stock based compensation expense for the year ended December 31, 2016 includes $120,867 related to such options. At December 31, 2016, the unearned compensation for all the performance based options is $30,169. Warrants The following is a summary of outstanding and exercisable warrants:
|  |  | Number of Shares |  |  | Weighted Average Exercise Price |  |  | Year of Expiration |
| Balance at December 31, 2014 |  |  | 3,772,720 |  |  |  | 0.29 |  |  |  | 2015 - 2016 |
| Expired |  |  | (2,022,720 | ) |  |  | 0.40 |  |  |  | 2015 |
| Balance at December 31, 2015 |  |  | 1,750,000 |  |  |  | 0.16 |  |  |  | 2016 - 2017 |
| Issued |  |  | 454,891 |  |  |  | 0.42 |  |  |  | 2018 - 2019 |
| Expired |  |  | (250,000 | ) |  |  | 0.40 |  |  |  | 2016 |
| Balance at December 31, 2016 |  |  | 1,954,981 |  |  |  | 0.19 |  |  |  | 2017 - 2019 |
In September 2016, the Company issued 100,000 warrants with an exercise price of $0.50 per share, in relation to a sale of common stock. These warrants are fully vested and expire in two years. In September 2016, the Company issued 100,000 warrants with exercise prices between $0.20 and $0.50 per share, for consulting services. These warrants are fully vested and expire in three years. The fair value of these warrants are $20,585 and is included in compensation and related expenses in the accompanying statement of operations. In December 2016, the Company issued 37,500 warrants with an exercise price of $0.50 per share, in relation to a sale of common stock. These warrants are fully vested and expire in two years. In December 2016, the Company issued 217,391 warrants with an exercise price of $0.40 per share, in relation to an issuance of common stock. These warrants are fully vested and expire in two years. Warrants outstanding and exercisable amounted to 1,954,891 and 1,750,000 at December 31, 2016 and 2015, respectively. The weighted average exercise price of warrants outstanding at December 31, 2016 is $0.19. The warrants expire at various time between December 2017 and September 2019. The fair value of options and warrants granted (or extended) during the years ended December 31, 2016 and 2015, was estimated on the date of grant (or extension) using the Black-Scholes option-pricing model with the following weighted-average assumptions:
|  |  | 2016 |  |  | 2015 |
| Expected volatility |  |  | 203 | % |  |  | 50 | %
| Risk free interest rate |  |  | .88 | % |  |  | 2 | %
| Expected dividend yield |  |  | - |  |  |  | - |
| Expected option term (in years) |  |  | 2 - 3 |  |  |  | 1 - 5 |
| Weighted average grant date fair value |  | $ | 0.20 |  |  | $ | 0.03 |
Under ASC 815-40-05, Accounting for Derivative Financial Instruments Indexed to and Potentially Settled in a Company’s Own Stock, in the event the Company does not have a sufficient number of authorized and unissued shares of common stock to satisfy obligations for stock options, warrants and other instruments potentially convertible into common stock, the fair value of these instruments should be reported as a liability. Pursuant to the outstanding option, warrant and convertible debt agreements, there is currently no effective registration statement covering the shares of common stock underlying these agreements, which are currently subject to a cashless exercise whereby the holders, at their option, may surrender their options and warrants to the company in exchange for shares of common stock. The number of shares of common stock into which an option or a warrant would be exchangeable in such a cashless exercise depends on both the exercise price of the options or warrant and the market price of the common stock, each at or near the time of exercise. Because both of these factors are variable, it is possible that we could have insufficient authorized shares to satisfy a cashless exercise. In this scenario, if we were unable to obtain shareholder approval to increase the number of authorized shares, we could be obligated to settle such a cashless exercise with cash rather than by issuing shares of common stock. Further, ASC 815-40-05 requires that we record the potential settlement obligation at each reporting date using the current estimated fair value of these contracts s, with any changes in fair value being recorded through our statement of operations. We will continue to report the potential settlement obligation as a liability until such time as these contracts are exercised or expire or we are otherwise able to modify the warrant agreement to remove the provisions which require this treatment. Stock Based Compensation The total stock based compensation expense related Service-Based Stock Options, Performance-Based Stock Options and Warrants issued for service amounted to $587,991 and $142,300 for the years ended December 31, 2016 and 2015, respectively. Such amounts are included in compensation and related expenses ($587,991 in 2016 and $133,800 in 2015) and interest expense ($8,500 in 2015).

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