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Stockholders' Equity | 9 Months Ended
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Sep. 30, 2017
Stockholders' Equity [Abstract] |
Stockholders' Equity |
5. | Stockholders’ Equity
Common Stock 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 nine and three months ended September 30, 2017, the Company has recognized expense of $230,000 and $76,667, respectively, in connection with these agreements. For the nine and three months ended September 30, 2016, the Company has recognized expense of $230,000 and $76,667, respectively. As of September 30, 2017 and December 31, 2016, the unamortized portion of these service agreements are $76,667 and $306,667, respectively. 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. During 2017, the Company purchased an additional 190,200 shares of outstanding Company common stock for a price per share of $0.24 to $0.45. As of the September 30, 2017, a total of 515,200 shares are being held by the Company valued at cost is $163,701 and are included in treasury stock in the consolidated balance sheet. In January 2017, the Company issued 1,183,490 shares of common stock pursuant to a conversion of Immudyne PR equity contributions of $272,203 into equity of Immudyne, Inc. by the noncontrolling interest. In January 2017, the Company issued 217,391 shares of common stock in relation to issuance of a $210,000 note payable. In the first quarter of 2017, the Company commenced an offering to sell up to 4,000,000 shares of common stock at a price of $0.23 per share and warrants to purchase up to 2,000,000 shares of common stock excisable any time prior to the secondary anniversary of the issuance. The warrants are paired with the stock on the basis of one warrant for every two shares of stock purchased. During the first quarter of 2017, the Company received subscriptions in the amount of 2,817,156 shares and issued 1,408,578 warrants and proceeds in the amount of $647,944. In March 2017, the Company issued 755,179 shares of common stock for the conversion of the outstanding balance of three notes payable totaling $499,802 (see Note 3). On April 24, 2017, the Company, issued 217,390 shares of common stock pursuant to a stock subscription agreement and the Company issued 108,696 warrants with an exercise price of $0.40 per share for the stated consideration and satisfaction of obligation to pay $50,000 on the 180-day anniversary of the execution of the Sole and Exclusive License, Royalty, and Advisory Agreement dated September 1, 2016 with Pilaris Laboratories, LLC. The fair value of the shares and warrants issued were determined to be $131,103, of which $81,103 was included in general and administrative expense as loss on settlement of other payables. During the second quarter of 2017 the Company received subscriptions in the amount of 110,000 shares and issued 55,000 warrants and proceeds in the amount of $25,300. On June 1, 2017, the Company entered into an agreement with a consultant to provide services, with a six month term, and issued 125,000 shares of common stock as compensation. The shares were valued at $45,000 and the Company is recognizing the expense over the term of the agreement. For the three months ending September 30, 2017, $22,500 has been expensed and included in compensation and related expenses on the consolidated statement of operations. In July 2017, the Company and JLS Ventures entered into a separate three year incentivized second amendment to a Service Agreement effective July 1, 2017. As compensation, the Company issued 900,000 shares of common stock valued at $270,000. In July 2017, Mark McLaughlin, the Company’s President and Chief Executive Officer, exercised 1,500,000 warrants on a cashless basis and was issued 1,140,000 shares of common stock. In July 2017, Mark McLaughlin exercised 1,000,000 options on a cashless basis and was issued 800,000 shares of common stock. In July 2017, Mark McLaughlin exercised 339,473 options on a cashless basis and was issued 271,579 shares of common stock. In August 2017, the Company issued 100,000 shares of common stock valued at $40,000 to Acorn Management Partners L.L.C. (“Acorn”) for financial advisory, strategic business planning and other investor relation services. The Company is recognizing the expense over the term of the agreement. For the three months ending September 30, 2017, $26,667 has been expensed and included in compensation and related expenses on the consolidated statement of operations. In August 2017, the Company issued 50,000 shares of common stock valued at $20,000 to BV Global Fulfillment, LLC (“BV Global”) for fulfillment services. Noncontrolling Interest On April 1, 2016, the Company increased its ownership in Immudyne PR to 78.1667% decreasing the minority interest from 66.7% to 21.8333% resulting in a charge to noncontrolling interest and additional paid-in-capital of $91,612. For the nine months ended September 30, 2017, the net loss of Immudyne PR attributed to the noncontrolling interest amounted to $41,752. For the nine months ended September 30, 2016, the net income of Immudyne PR attributed to the noncontrolling interest amounted to $6,439. For the three months ended September 30, 2017, the net income of Immudyne PR attributed to the noncontrolling interest amounted to $27,172. For the three months ended September 30, 2016, the net income of Immudyne PR attributed to the noncontrolling interest amounted to $8,955. Service-Based Stock Options 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. In February 2017, the Company issued 500,000 service-based options valued at $113,522 to a director with an exercise price of $0.20 per share. The options are fully vested and expire in 10 years. In July 2017, the Company issued 75,000 service-based options valued at $30,438 to Brunilda McLaughlin as additional compensation in an employment agreement. These options have an exercise price of $0.35 per shares, are fully vested, and expire in 10 years. In July 2017, the Company issued 300,000 service-based options valued at $121,753 to three directors with an exercise price of $0.35 per share. The options are fully vested and expire in 10 years. The Company is recognizing the expense over the term of the agreements. For the three months ending September 30, 2017, $10,146 has been expensed and included in compensation and related expenses on the consolidated statement of operations. In July 2017, the Company issued 125,000 service-based options valued at $49,219 to a consultant with an exercise price of $0.40 per share. The options are fully vested and expire in 5 years. In July 2017, the Company issued Mark McLaughlin a ten year option to buy 750,000 shares at $0.35 vesting one-third or 250,000 shares upon signing, and 250,000 shares on July 1, 2018 and 250,000 shares on July 1, 2019. Once the options are fully vested, they expire in 10 years. The options vested at September 30, 2017 are valued at $101,461. Accordingly, stock based compensation expense for the nine months ended September 30, 2017 and 2016 included $406,247 and $40,829, respectively, related to such service-based stock options. Stock based compensation expense for the three months ended September 30, 2017 and 2016 included $292,725 and $40,829, 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, 2016 |  |  | 10,700,273 |
| Issued |  |  | 1,250,000 |
| Exercised |  |  | (1,339,473 | )
| Balance at September 30, 2017 |  |  | 10,610,800 |
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 service based options outstanding and exercisable at September 30, 2017 and December 31, 2016 amounted to $2,079,564 and $704,794, respectively. Service-Based Stock Options (continued) The significant assumptions used to determine the fair values of options issued in 2017, using the Black-Scholes option-pricing model are as follows:
| Significant assumptions: |  |  |
| Risk-free interest rate at grant date |  |  | 1.49% -1.55 | %
| Expected stock price volatility |  |  | 214% - 217 | %
| Expected dividend payout |  |  | — |
| Expected option life-years |  |  | 3 years |
| Weighted average grant date fair value |  | $ | 0.23 - 0.43 |
| Forfeiture rate |  |  | 0 | %
The following is a summary of outstanding service-based options at September 30, 2017:
| Exercise Price |  | Number of Options |  |  | Weighted Average Remaining Contractual Life
| $0.10 |  |  | 40,800 |  |  | 1 year
| $0.20 - $0.25 |  |  | 8,620,000 |  |  | 5 years
| $.35 |  |  | 625,000 |  |  | 10 years
| $0.40 |  |  | 1,325,000 |  |  | 4 years
| Total |  |  | 10,610,800 |  |  |
Performance-Based Stock Options Vested The Company granted performance-based options to purchase 2,925,000 shares of common stock at exercise prices of $0.40. The options expire at various dates between 2021 and 2026 and are exercisable upon the Company achieving annual sales revenue of $5,000,000. During the year ended December 31, 2016, the Company cancelled 287,500 of these service-based options issued to two consultants, valued at $12,457. During 2016, the Company met the performance criteria and accordingly, recorded stock based compensation expense of $165,241 and $513,804 for the three and nine months ended September 30, 2016, respectively. Unvested In February 2017, the Company granted performance-based options to purchase 250,000 shares of common stock at exercise prices of $0.40. The options expire in 2027 and are exercisable upon the Company achieving annual sales revenue of $5,000,000. The options are valued at $55,439. During 2017, the Company is expected to meet the performance criteria and accordingly, recorded stock based compensation expense of $27,719 for the three and nine months ended September 30, 2017, respectively. The Company granted performance-based options to purchase 900,000 shares of common stock at exercise price of $0.80. The options expire at various dates between 2021 and 2027 and are exercisable upon the Company achieving annual sales revenue of $10,000,000. During 2017, these unvested options were cancelled. In July 2017, the Company granted performance-based options to purchase 6,000,000 shares of common stock with an exercise prices of $0.35 per share. The options expire in 10 years and are exercisable upon cash received by Immudyne, Inc. from Immudyne PR between $4,000,000 and $7,000,000. The aggregate fair value of these performance-based options is $2,446,739. In the third quarter of 2017, the Company granted performance-based options to purchase 3,150,000 shares of common stock with an exercise prices of $0.25 per share. The options expire in 10 years and are exercisable upon the company achieving pre-tax earnings benchmarks between $4,000,000 and $7,000,000. The aggregate fair value of these performance-based options is $1,284,538. 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, 2016 |  |  | 1,954,891 |  |  | $ | 0.19 |  |  | 2017 - 2019
| Issued |  |  | 2,566,367 |  |  |  | 0.40 |  |  | 2019 - 2020
| Exercised |  |  | (1,500,000 | ) |  |  | 0.12 |  |  |
| Balance at September 30, 2017 |  |  | 3,021,258 |  |  |  | 0.40 |  |  | 2017 - 2020
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. 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. In January 2017, the Company issued 591,745 warrants with an exercise price of $0.40 per share, in relation to an issuance of common stock for the conversion of an equity contribution into Immudyne PR by the noncontrolling interest. These warrants are fully vested and expire in two years. In March 2017, the Company issued 403,348 warrants with an exercise price of $0.40 per share, in relation to an issuance of common stock for the conversion of debt. These warrants are fully vested and expire in two years. In the first quarter of 2017, the Company issued 1,408,578 warrants with an exercise price of $0.40 per share, in relation to a sale of common stock. These warrants are fully vested and expire in two years. In April 2017, the Company issued 55,000 warrants with an exercise price of $0.40 per share, in relation to a sale of common stock. These warrants are fully vested and expire in two years. In April 2017, the Company issued 108,696 warrants with an exercise price of $0.40 per share, in relation to an issuance of common stock for conversion of a payable. These warrants are fully vested and expire in three years. The fair value of warrants granted during the period ended September 30, 2017, was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:
| Expected volatility |  |  | 125% - 214% |
| Risk free interest rate |  |  | 1.31% - 2.57% |
| Expected dividend yield |  |  | - |
| Expected term (in years) |  |  | 0.9 - 8.1 |
| Weighted average grant date fair value |  |  | $0.12 - 0.45 |
As of December 31, 2016, certain of the Company’s stock options, stock warrants and convertible debt instruments were accounted for as derivative liabilities due to insufficient authorized shares of common stock to settle outstanding contracts. At December 31, 2016, the Company estimated the fair value of these stock options, stock warrants and embedded conversion features using the Black-Scholes option pricing model (“Black-Scholes”) to be $192,254, based on Level 2 valuation inputs. On September 21, 2017, the Company obtained majority shareholder approval and amended its Articles of Incorporation to increase the number of shares of its authorized common stock, therefore the derivative liability is no longer applicable. Stock Based Compensation The total stock based compensation expense related Service-Based Stock Options and Performance-Based Stock Options and Warrants amounted to $142,045 and $40,829 for the nine months ended September 30, 2017 and 2016, respectively. For the three months ended September 30, 2017 and 2016, total stock based compensation amounted to $28,523 and $40,829, respectively. Such amounts are included in compensation and related expenses in the accompanying statement of operations. Common stock issued for services amounted to $319,313 and $230,000 for the nine months ended September 30, 2017 and 2016, respectively. For the three months ended September 30, 2017 and 2016, common stock issued for services amounted to $158,480 and $-0-, respectively. Such amounts are included in compensation and related expenses in the accompanying statement of operations.

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- Definition The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI http://asc.fasb.org/topic&trid=2208762 + Details
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