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Stockholders' Equity | 9 Months Ended
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Sep. 30, 2017
Equity [Abstract] |
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | 9. Stockholders’ Equity The Company has authorized 100,000,000 shares of common stock, $0.01 par value, of which 26,005,140 shares were issued and outstanding as of September 30, 2017. As of September 30, 2017, the Company’s Directors and Officers held 12,202,885 or 45.33% of the issued and outstanding shares. Restricted Stock Awards On August 11, 2016, management and employees of Subsidiary in conjunction with the incorporation on July 22, 2016, received 12,209,677 shares of common stock as adjusted for the Recapitalization exchange ratio of 4.13607. These shares are subject to a Company option to buy back the shares at the original cash consideration paid, which totaled $2,952 or approximately $0.0002 per share. A total of 7,966,070 shares were subject to the Company buy back right as of August 1, 2016, and 4,094,708 were made subject to the Company buy back right on November 4, 2016, in conjunction with the Recapitalization. The employees vest their ownership in these shares over a three-year period beginning August 1, 2016, with one-third vesting on August 1, 2017, and the balance monthly over the remaining two years. The fair value of these shares of Subsidiary stock was estimated on the date of the award using the exchange value used by Integrated and the Subsidiary to establish the relative voting control ratio in the Recapitalization (See Note 8 Recapitalization). Because these shares require continued service to the Company the estimated fair value is recognized as compensation expense over the vesting period of the award. On October 13, 2016, Subsidiary granted 62,041 shares of common stock to an employee. On October 16, 2016, an additional 245,434 shares of Subsidiary common stock were granted to a director. The fair value of these shares of Subsidiary stock was estimated on the date of the awards based on the quoted closing stock price on November 4, 2016, since the Recapitalization was pending. These shares are subject to a Company option to buy back the shares at the original cash consideration paid. As a condition of the Recapitalization, a total of 4,094,708 shares were required to be placed into an escrow arrangement for purposes of enforcement of the Company option to buy back shares for the balance of the three-year service period. A total of 4,381,003 shares, which includes 35% of the 4,094,708 shares added to the buyback option, are escrowed and subject to a performance condition requiring the Company to achieve certain operating metrics regarding monthly unique users by December 31, 2017. Pursuant to a negotiated schedule the performance condition can be satisfied in partial increments up to the full number of shares escrowed. The Company uses a Monte Carlo simulation model to determine the number of shares expected to be released from the performance condition escrow. Pursuant to FASB ASC 718, escrowed share arrangements in a capital raising transaction are considered to be compensatory, as such, the shares subject to these escrow provisions were re-measured as of November 4, 2016, the date of the Recapitalization. The estimated fair value of these shares was determined based on the quoted closing stock price on November 4, 2016. Because these shares require continued service to the Company the estimated fair value is recognized as compensation expense over the vesting period of the award. At December 31, 2016, it was estimated that 72.5% of the shares subject to the performance condition will be released. At September 30, 2017, the expected achievement of the performance condition was reevaluated and it was determined that the shares estimated to be released had increased to 100%. Restricted stock award activity for the period from July 22, 2016 (Inception) to September 30, 2017, including the reevaluation of the shares estimated to be release, was as follows:
|  |  |  |  |  |  | Weighted- |
|  |  |  | Shares |  |  | Average |
|  | Shares |  | Remeasured |  |  | Price |
Stock awards granted at Inception |  |  | 12,209,677 |  |  |  |  |  | $ | 0.20 |
Granted October 13, 2016 |  |  | 62,041 |  |  |  |  |  |  | 0.70 |
Granted October 16, 2016 |  |  | 245,434 |  |  |  |  |  |  | 0.70 |
Remeasurement at November 4, 2016 |  |  | - |  |  | 5,837,788 | * |  |  | 0.43 |
Vested |  |  | - |  |  |  |  |  |  | - |
Reevaluation of shares expected to be released as of March 31, 2017 |  |  | - |  |  | 1,007,633 | * |  |  | 0.06 |
Reevaluation of shares expected to be released as of June 30, 2017 |  |  | - |  |  | 197,145 | * |  |  | 0.01 |
Total at September 30, 2017 |  |  | 12,517,152 |  |  |  |  |  | $ | 0.48 |
Vested at September 30, 2017 |  |  | 4,504,180 |  |  |  |  |  | $ | 0.48 |
Expected to vest after September 30, 2017 |  |  | 8,012,972 |  |  |  |  |  | $ | 0.48 |
| * | The number of shares Remeasured as of November 4, 2016, March 31, 2017, June 30, 2017 and September 30, 2017 reflect the effect of the Monte Carlo simulation determination of the estimated number of shares expected to be released from the performance condition escrow. This estimate will be reevaluated at each quarter end until the final outcome of the performance condition is satisfied on December 31, 2017.
At September 30, 2017, total compensation cost related to restricted stock awards but not yet recognized was $3,372,000. This cost will be amortized on a straight-line method over a period of approximately 1.85 years. Stock Options On December 19, 2016, the Company’s Board of Directors approved the 2016 Stock Incentive Plan (“Plan”) and reserved 1,670,867 shares of common stock for issuance under the Plan, including options and restricted performance stock awards. On June 28, 2017, the Board of Directors approved an increase in the total number of shares reserved from 1,670,867 to 3,000,000. The Plan is administered by the Board of Directors, and there were no grants prior to the formation of the Plan. Shares of common stock that are issued under the Plan or subject to outstanding incentive awards will be applied to reduce the maximum number of shares of common stock remaining available for issuance under the Plan, provided, however, that that shares subject to an incentive award that expire will automatically become available for issuance. Options issued under the Plan may have a term of up to ten years and may have variable vesting provisions. The estimated fair value of stock-based awards is recognized as compensation expense over the vesting period of the award. The fair value of restricted stock awards is determined based on the number of shares granted and the quoted price of the Company’s common stock on the date of grant. The fair value of stock option awards are estimated at the grant date as calculated using the Black-Scholes option-pricing model. The Black-Scholes model requires various highly judgmental assumptions including expected volatility and option life. The fair values of our stock option grants were estimated with the following average assumptions: The fair value of stock options granted during the period ended September 30, 2017 were estimated with the following assumptions:
|  | First |  |  | Second |  |  |  | Third |
|  | Quarter |  |  | Quarter |  |  |  | Quarter |
Expected life in years |  |  | 6.0 |  |  |  | 5.9 |  |  |  | 6.0 |
Risk-free interest rate |  |  | 2.13 | % |  |  | 1.97 | % |  |  | 2.01 | %
Expected annual volatility |  |  | 114.20 | % |  |  | 117.87 | % |  |  | 115.13 | %
Dividend yield |  |  | 0.00 | % |  |  | 0.00 | % |  |  | 0.00 | %
For the six months ended September 30, 2017 stock option activity was as follows:
|  |  |  |  |  | Weighted |  |  |
|  |  |  |  |  | Average |  |  |
|  |  |  | Weighted |  | Remaining |  | Aggregate |
|  | Number of |  | Average |  | Contractual |  | Intrinsic |
|  | Shares |  | Exercise Price |  | Life (in years) |  | Value |
Outstanding at January 1, 2017 |  |  | 275,137 |  | $ | 0.48 |  |  | 5.15 |  |  |  |
Granted |  |  | 1,914,000 |  |  | 1.28 |  |  | 9.04 |  |  |  |
Exercised |  |  | (25,000) |  |  | .17 |  |  | 1.62 |  |  |  |
Forfeited |  |  | (95,000) |  |  | 1.41 |  |  | 9.64 |  |  |  |
Outstanding at September 30, 2017 |  |  | 2,069,137 |  | $ | 1.24 |  |  | 9.02 |  | $ | 170,218 |
Vested and expected to vest at September 30, 2017 |  |  | 2,069,137 |  | $ | 1.24 |  |  | 9.02 |  | $ | 170,218 |
Exercisable at September 30, 2017 |  |  | 309,967 |  | $ | 0.85 |  |  | 5.83 |  | $ | 147,000 |
As of September 30, 2017, the Company has granted 1,914,000 options under the Plan, of which 159,967 are vested. In the three and nine months ended September 30, 2017, the Company recorded stock-based compensation of $259,508 and $508,635, respectively related to the options granted under the Plan. Of the total stock-based compensation in the three months, $216,920 was expensed in General and Administrative expenses and $42,588 was capitalized as Website Development Costs. Of the total stock-based compensation in the nine months, $440,268 was expensed in General and Administrative expenses and $68,367 was capitalized as Website Development Costs. At September 30, 2017, total compensation cost related to stock options granted under the Plan but not yet recognized was $1,574,0 00. This cost will be amortized on a straight-line method over a period of approximately 1.67 years. The aggregate intrinsic value represents the difference between the exercise price of the underlying options and the quoted price of our common stock for the number of options that were in-the-money at September 30, 2017. In addition, the Company assumed 175,000 fully-vested options in connection with the Recapitalization with an exercise price of $0.17 per share which expire on May 15, 2019. During the quarter ended September 30, 2017, 25,000 of these options were cashless exercised into 21,680 common shares and 150,000 options are outstanding. The following table summarizes certain information about stock options for the nine months ended September 30, 2017:
Weighted average grant-date fair value for options granted during the year |  | $ | 1.28 |
Vested options in-the-money at September 30, 2017 |  |  | 150,000 |
Aggregate intrinsic value of options exercised during the year |  | $ | 27,750 |
The following table summarizes the common shares reserved for future issuance under the Plan:
Stock options outstanding under the Plan |  |  | 1,919,137 |
Stock options available for future grant |  |  | 1,080,863 |
|  |  | 3,000,000 |
Common Stock Warrants – Channel Partner Program On December 19, 2016, the Company’s Board of Directors approved a program to be administered by management that authorized the Company to issue up to 5,000,000 common stock warrants to provide equity incentive to its Channel Partners to motivate and reward them for their services to the Company and to align the interests of the Channel Partners with those of stockholders of the Company. The following table summarizes the activity in Channel Partner Warrants during the nine months ended September 30, 2017:
|  |  |  |  |  | Weighted |  |  |
|  |  |  |  |  | Average |  |  |
|  |  |  | Weighted |  | Remaining |  | Aggregate |
|  | Number of |  | Average |  | Contractual |  | Intrinsic |
|  | Shares |  | Exercise Price |  | Life (in years) |  | Value |
Outstanding at January 1, 2017 |  |  | 350,000 |  | $ | 1.05 |  |  | 4.75 |  |  |  |
Granted |  |  | 3,074,500 |  |  | 1.33 |  |  | 4.51 |  |  |  |
Exercised |  |  | - |  |  | - |  |  | - |  |  |  |
Forfeited |  |  | - |  |  | - |  |  | - |  |  |  |
Outstanding at September 30, 2017 |  |  | 3,424,500 |  | $ | 1.30 |  |  | 4.48 |  | $ | 120,000 |
Vested and expected to vest at September 30, 2017 |  |  | 1,556,000 |  | $ | 1.30 |  |  | 4.48 |  | $ | 55,000 |
Exercisable at September 30, 2017 |  |  | - |  |  | - |  |  | - |  |  | - |
In the nine months ended September 30, 2017, the Company issued 3,074,500 common stock warrants to Channel Partners. The warrants have a performance condition and vest over three years and expire in five years from issuance. The exercise prices range from $1.05 to $1.90 with a weighted average of $1.33. The performance conditions are generally based on the average number of unique visitors on the Channel operated by the Channel Partner generated during the period from July 1, 2017, to December 31, 2017, or the revenue generated during the period from issuance date through September 30, 2019. Equity grants with performance conditions that do not have sufficiently large disincentive for non-performance may be measured at fair value that is not fixed until performance is complete. The Company recognizes expense for equity based payments to non-employees as the services are received. The Company has specific objective criteria, such as the date of launch of a Channel on the Company’s platform, for determination of the period over which services are received and expense is recognized. The Company uses a Monte Carlo simulation model to determine the number of shares expected to be earned by Channel Partners based on performance obligations to be satisfied over a defined period which will commence at the launch of a Channel on the Company’s platform. As of September 30, 2017, the Company has estimated that 1,556,000 of Channel Partner Warrants will be earned. The Company recorded in Service Costs a total of $35,000 and $115,000 of stock-based compensation related to Channel Partner warrants in the three and nine months ended September 30, 2017, respectively. Other Warrants In accordance with the Investment Banking Advisory Agreement more fully described in Note 11 Related Parties, Integrated issued warrants to MDB Capital Group, LLC to purchase 1,169,607 shares of Parent common stock. The warrants have an exercise price of $0.20 per share and expire on November 4, 2021. The aggregate intrinsic value of the warrants at September 30, 2017, is $1,111,000 Common Stock – Private Placement of Common Stock On April 4, 2017, the Company completed a private placement of its common stock, selling 3,765,000 shares at $1.00 per share, for total gross proceeds of $3,765,000. In connection with the offering, the Company paid $188,250 and issued 162,000 shares of common stock to MDB Capital Group LLC, which acted as placement agent. The transaction costs of $446,000, including $201,000 of non-cash expenses, have been recorded as a reduction in paid-in capital. Stock-based Compensation The impact on our results of operations of recording stock-based compensation expense for the three months ended September 30, 2017 was as follows:
|  | Restricted |  |  |  | Channel |  |  |  |  |
|  | Stock at |  | Stock |  | Partner |  |  |  |  |
|  | Inception |  | Options |  | Warrants |  | Warrants |  | Total |
Service Costs |  | $ | - |  | $ | - |  | $ | 35,000 |  | $ | - |  | $ | 35,000 |
Research and development |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |
General and administrative |  |  | 261,749 |  |  | 216,920 |  |  | - |  |  |  |  |  | 478,669 |
|  | $ | 261,749 |  | $ | 216,920 |  | $ | 35,000 |  | $ | - |  | $ | 513,669 |
In addition, during the three months ended September 30, 2017, stock-based compensation totaling $243,484 during the application and development stage was capitalized for website development. The impact on our results of operations of recording stock-based compensation expense for the nine months ended September 30, 2017, was as follows:
|  | Restricted |  |  |  | Channel |  |  |  |  |
|  | Stock at |  | Stock |  | Partner |  |  |  |  |
|  | Inception |  | Options |  | Warrants |  | Warrants |  | Total |
Service Costs |  | $ | - |  | $ | - |  | $ | 115,000 |  | $ | - |  | $ | 115,000 |
Research and development |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |
General and administrative |  |  | 801,743 |  |  | 408,432 |  |  | - |  |  | 32,335 |  |  | 1,242,510 |
|  | $ | 801,743 |  | $ | 408,432 |  | $ | 115,000 |  | $ | 32,335 |  | $ | 1,357,510 |
In addition, during the nine months ended September 30, 2017, stock-based compensation totaling $688,302 during the application and development stage was capitalized for website development.

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- Definition The entire disclosure for accounts comprising shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income, and compensation-related costs for equity-based compensation. Includes, but is not limited to, disclosure of policies, compensation plan details, equity-based arrangements to obtain goods and services, deferred compensation arrangements, and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: 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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