XML 90 R22.htm IDEA: XBRL DOCUMENT
v3.20.1

Stock Based Compensation | 9 Months Ended
--- | ---
Sep. 30, 2018
Share-based Payment Arrangement [Abstract] |
Stock Based Compensation | 15. Stock Based Compensation Common Stock Options On March 28, 2018, the Board approved an increase in the number of shares of the Company’s common stock reserved for grant pursuant to the 2016 Stock Incentive Plan (the “2016 Plan”) from 3,000,000 shares to 5,000,000 shares. In August 2018, the Company increased the authorized number of shares of common stock under the 2016 Plan from 5,000,000 shares to 10,000,000 shares. The Company’s shareholders approved the increase in the number of shares authorized under the 2016 Plan on April 3, 2020. The 2016 Plan is administered by the Board, and there were no grants prior to the formation of the 2016 Plan. Shares subject to an award that lapse, expire, are forfeited or for any reason are terminated unexercised or unvested will automatically again become available for issuance under the 2016 Plan. Common stock options issued under the 2016 Plan may have a term of up to ten years and may have variable vesting provisions. At September 30, 2018, options to acquire 9,693,831 shares of the Company’s common stock had been granted under the 2016 Plan, and options to acquire 306,169 shares of common stock remain available for future grant. The estimated fair value of the stock based awards is recognized as compensation expense over the vesting period of the award. The fair value of the common stock option awards is 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 value of common stock options granted during the nine months ended September 30, 2018 were calculated using the Black-Scholes option-pricing model utilizing the following assumptions:
Risk-free interest rate |  | 2.27% to 2.91 | %
Expected dividend yield |  |  | 0.00 | %
Expected volatility |  |  | 108.34% to 130.08 | %
Expected life |  |  | 3-6 years |
A summary of the common stock option activity during the nine months ended September 30, 2018 is as follows:
|  |  |  |  |  |  |  | Weighted |
|  |  |  |  |  |  |  | Average |
|  |  |  |  | Weighted |  |  | Remaining |
|  | Number |  |  | Average |  |  | Contractual |
|  | of |  |  | Exercise |  |  | Life |
|  | Shares |  |  | Price |  |  | (in Years) |
Common stock options outstanding at January 1, 2018 |  |  | 2,176,637 |  |  | $ | 1.25 |  |  |  | 9.25 |
Granted |  |  | 8,131,750 |  |  |  | 0.84 |  |  |  |  |
Exercised |  |  | (125,000) |  |  |  | 0.20 |  |  |  |  |
Forfeited |  |  | (435,285) |  |  |  | 1.57 |  |  |  |  |
Expired |  |  | (54,271) |  |  |  | 1.60 |  |  |  |  |
Common stock options outstanding at September 30, 2018 |  |  | 9,693,831 |  |  |  | 0.63 |  |  |  | 9.58 |
Common stock options exercisable at September 30, 2018 |  |  | 1,264,995 |  |  |  | 1.31 |  |  |  | 8.69 |
The aggregate grant date fair value of common stock options granted during the nine months ended September 30, 2018 was $5,549,585. The aggregate intrinsic value as of September 30, 2018 and December 31, 2017 was none and $1,573,000, respectively. In conjunction with the Recapitalization, the Company assumed 175,000 fully-vested common stock options having an exercise price of $0.17 per share and an expiration date of May 15, 2019. Of those options, 125,000 were exercised in June 2018 on a cashless basis resulting in the issuance of 106,154 net shares of common stock. The exercise prices of common stock options outstanding and exercisable are as follows as of September 30, 2018:
|  | Options |  |  | Options |
Exercise |  | Outstanding |  |  | Exercisable |
Price |  | (Shares) |  |  | (Shares) |
Under $1.00 |  |  | 6,111,500 |  |  |  | 45,832 |
$1.01 to $1.25 |  |  | 1,818,859 |  |  |  | 866,658 |
$1.26 to $1.50 |  |  | 45,000 |  |  |  | 1,949 |
$1.51 to $1.75 |  |  | 487,222 |  |  |  | 130,139 |
$1.76 to $2.00 |  |  | 1,055,000 |  |  |  | 190,417 |
$2.01 to $2.25 |  |  | 135,000 |  |  |  | - |
$2.26 to $2.50 |  |  | 41,250 |  |  |  | 30,000 |
|  |  | 9,693,831 |  |  |  | 1,264,995 |
Outstanding options for 8,428,836 shares of the Company’s common stock had not vested at September 30, 2018. At September 30, 2018, there was approximately $4,950,651 of total unrecognized compensation expense related to common stock options granted which is expected to be recognized over a weighted-average period of approximately 3.68 years. The intrinsic value of exercisable but unexercised in-the-money common stock options as of September 30, 2018 was approximately $45,833, based on a fair market value of $0.61 per share of the Company’s common stock on September 30, 2018. Channel Partner Warrants At September 30, 2018, Channel Partner Warrants to purchase 4,215,500 shares of the Company’s common stock had been issued, and warrants to purchase 900,992, after considering the reduction in the total warrants available of 2,000,000, shares of common stock remain available for future grant. Upon the performance condition being met under the terms of the Channel Partner Warrants, such warrant will be earned and issued, and once earned will vest over three years and expire five years from issuance. The warrants are revalued each reporting period to determine the amount to be recorded as an expense in the respective period. As the warrants vest, they are valued on each vesting date. Channel Partner Warrants with performance conditions that do not have sufficiently large disincentive for non-performance are measured at fair value that is not fixed until performance is complete. The estimated fair value of the equity-based awards is recognized as an expense at the vesting date of the award. The fair value of the warrant is estimated at the vesting date as calculated using the Black-Scholes option-pricing model. The Black-Scholes model requires various highly judgmental assumptions including expected volatility and warrant life. The fair value of Channel Partner Warrants issued during the nine months ended September 30, 2018 were calculated using the Black-Scholes option-pricing model utilizing the following assumptions:
Risk-free interest rate |  |  | 2.53% to 2.89 | %
Expected dividend yield |  |  | 0.00 | %
Expected volatility |  |  | 95.73% to 108.10 | %
Expected life |  |  | 3-5 years |
A summary of the Channel Partner Warrants activity during the nine months ended September 30, 2018 is as follows:
|  |  |  |  |  |  |  | Weighted |
|  |  |  |  |  |  |  | Average |
|  |  |  |  | Weighted |  |  | Remaining |
|  | Number |  |  | Average |  |  | Contractual |
|  | of |  |  | Exercise |  |  | Life |
|  | Shares |  |  | Price |  |  | (in Years) |
Channel Partner Warrants outstanding at January 1, 2018 |  |  | 1,303,832 |  |  | $ | 1.48 |  |  |  |  |
Issued |  |  | 295,000 |  |  |  | 1.74 |  |  |  |  |
Exercised |  |  | - |  |  |  | - |  |  |  |  |
Forfeited |  |  | (499,824) |  |  |  | 1.39 |  |  |  |  |
Channel Partner Warrants outstanding at September 30, 2018 |  |  | 1,099,008 |  |  |  | 1.50 |  |  |  | 3.82 |
Channel Partner Warrants exercisable at September 30, 2018 |  |  | 261,696 |  |  |  | 1.47 |  |  |  | 3.81 |
The exercise prices range from $1.32 to $2.25 per share. The intrinsic value of exercisable but unexercised in-the-money Channel Partner Warrants as of September 30, 2018 was none based on a fair market value of $0.61 per share on September 30, 2018 A summary of stock based compensation and equity-based expense charged to operations or capitalized during the three months and nine months ended September 30, 2018 and 2017 is as follows:
|  | Restricted |  |  | Common |  |  | Channel |  |  |  |  |  |  |
|  | Stock |  |  | Stock |  |  | Partner |  |  | Financing |  |  |  |
|  | Awards |  |  | Options |  |  | Warrants |  |  | Warrants |  |  | Total |
During the three months ended September 30, 2018: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cost of revenue |  | $ | 1,972 |  |  | $ | - |  |  | $ | (1,630) |  |  | $ | - |  |  | $ | 342 |
Research and development |  |  | 28,216 |  |  |  | 65,798 |  |  |  | - |  |  |  | - |  |  |  | 94,014 |
General and administrative |  |  | 960,939 |  |  |  | 169,683 |  |  |  | - |  |  |  | - |  |  |  | 1,130,622 |
Total costs charged to operations |  |  | 991,127 |  |  |  | 235,481 |  |  |  | (1,630) |  |  |  | - |  |  |  | 1,224,978 |
Capitalized platform development |  |  | 334,749 |  |  |  | 27,744 |  |  |  | - |  |  |  | - |  |  |  | 362,493 |
Total stock based compensation |  | $ | 1,325,876 |  |  | $ | 263,225 |  |  | $ | (1,630) |  |  | $ | - |  |  | $ | 1,587,471 |
During the three months ended September 30, 2017: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cost of revenue |  | $ | - |  |  | $ | - |  |  | $ | 35,000 |  |  | $ | - |  |  | $ | 35,000 |
Research and development |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
General and administrative |  |  | 261,749 |  |  |  | 216,920 |  |  |  | - |  |  |  | - |  |  |  | 478,669 |
Total costs charged to operations |  |  | 261,749 |  |  |  | 216,920 |  |  |  | 35,000 |  |  |  | - |  |  |  | 513,669 |
Capitalized platform development |  |  | 243,484 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 243,484 |
Total stock based compensation |  | $ | 505,233 |  |  | $ | 216,920 |  |  | $ | 35,000 |  |  | $ | - |  |  | $ | 757,153 |
During the nine months ended September 30, 2018: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cost of revenue |  | $ | 1,972 |  |  | $ | - |  |  | $ | 153,447 |  |  | $ | - |  |  | $ | 155,419 |
Research and development |  |  | 28,216 |  |  |  | 67,088 |  |  |  | - |  |  |  | - |  |  |  | 95,304 |
General and administrative |  |  | 2,354,801 |  |  |  | 810,586 |  |  |  | - |  |  |  | - |  |  |  | 3,165,387 |
Total costs charged to operations |  |  | 2,384,989 |  |  |  | 877,674 |  |  |  | 153,447 |  |  |  | - |  |  |  | 3,416,110 |
Capitalized platform development |  |  | 1,366,161 |  |  |  | 142,728 |  |  |  | - |  |  |  | - |  |  |  | 1,508,889 |
Total stock based compensation |  | $ | 3,751,150 |  |  | $ | 1,020,402 |  |  | $ | 153,447 |  |  | $ | - |  |  | $ | 4,924,999 |
During the nine months ended September 30, 2017: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cost of revenue |  | $ | - |  |  | $ | - |  |  | $ | 115,000 |  |  | $ | - |  |  | $ | 115,000 |
Research and development |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
General and administrative |  |  | 801,743 |  |  |  | 408,432 |  |  |  | - |  |  |  | 32,335 |  |  |  | 1,242,510 |
Total costs charged to operations |  |  | 801,743 |  |  |  | 408,432 |  |  |  | 115,000 |  |  |  | 32,335 |  |  |  | 1,357,510 |
Capitalized platform development |  |  | 688,302 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 688,302 |
Total stock based compensation |  | $ | 1,490,045 |  |  | $ | 408,432 |  |  | $ | 115,000 |  |  | $ | 32,335 |  |  | $ | 2,045,812 |

X
- Definition The entire disclosure for share-based payment arrangement. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsSharebasedPaymentsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration