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Stockholder’s Deficit
 3 Months Ended
Mar. 31, 2022
Equity [Abstract]  
Stockholder’s Deficit

9. Stockholder’s Deficit

 

Issuance of Common Stock for Directors and Employees

 

During the three months ended March 31, 2022, the Company granted 870,500 of shares to employees and directors with a fair value of $435,250. The shares vest over a two-year period. As of March 31, 2022, the Company issued 323,833 shares of common stock with a fair value of $173,535, or $0.54 per share, to members of the Company’ Board Directors and employees for services rendered. As of March 31, 2022, the aggregate amount of the unvested compensation was $261,714.

 

Issuance of Common Stock for Services

 

The Company did not issue shares for services during the three months ended March 31, 2022. During the three months ended March 31, 2021, the Company issued 381,896 shares of common stock with a fair value of $1,114,860, or $2.92 per share, to consultants for services rendered.

 

Issuance of Common Stock for Acquisition of GameIQ

 

During the three months ended March 31, 2022, the Company issued 600,000 shares of common stock with a fair value of $300,000, or $0.50 per share, as partial consideration paid on the acquisition of GameIQ (see Note 3).

 

Issuance of Common Stock for Public Offering

 

During the three months ended March 31, 2021, the Company received proceeds of $362,000 on the sale of 155,760 shares of common stock, at an average price of $2.32 per share, as part of a public offering.

 

 

Summary of Stock Options

 

A summary of stock options for the three months ended March 31, 2022, is as follows:

 

       Weighted 
   Number   Average 
   of   Exercise 
   Options   Price 
Balance outstanding, December 31, 2021   187,116    12.38 
Options granted   461,000    1.43 
Options exercised   -    - 
Options expired or forfeited   -    - 
Balance outstanding, March 31, 2022   648,116   $4.59 
Balance exercisable, March 31, 2022   368,944   $6.98 

 

On February 28, 2022, the Company, pursuant to the terms of its 2019 Stock Incentive Plan, approved options exercisable into 461,000 shares to be issued to its employees. Of the 461,000 stock options issued, 60,000 stock options had an exercise price of $1.00 per share, with vesting of 33% on date of issuance, and then 33% on each subsequent anniversary date. The remaining 400,000 stock options had an exercise price of $1.50 per share, with 160,000 stock options vesting on March 1, 2022, and 10,000 stock options vesting each month thereafter beginning on April 1, 2022.

 

The stock options are exercisable at a weighted average price of $1.25 per share with an average life to expiration of approximately seven years. The total fair value of these options at grant date was approximately $243,000, which was determined using a Black-Scholes-Merton option pricing model with the following average assumption: stock price of $0.53 per share, expected term of 4.50 years, volatility of 270%, dividend rate of 0%, and weighted average risk-free interest rate of 1.81%. The expected term represents the weighted-average period of time that share option awards granted are expected to be outstanding giving consideration to vesting schedules and historical participant exercise behavior; the expected volatility is based upon historical volatility of the Company’s common stock; the expected dividend yield is based on the fact that the Company has not paid dividends in the past and does not expect to pay dividends in the future; and the risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of measurement corresponding with the expected term of the share option award.

 

During the three months ended March 31, 2022, the Company recognized $101,000 of compensation expense relating to vested stock options. As of March 31, 2022, the aggregate amount of unvested compensation related to stock options was approximately $142,000 which will be recognized as an expense as the options vest in future periods through February 28, 2025.

 

The weighted average remaining contractual life of common stock options outstanding and exercisable at March 31, 2022 was 6.72 years. Based on a fair market value of $1.00 per share on March 31, 2022, there was no intrinsic value attributed to exercisable but unexercised common stock options at March 31, 2022.

 

Summary of Warrants

 

A summary of warrants for the three months ended March 31, 2022, is as follows:

 

       Weighted 
   Number   Average 
   of   Exercise 
   Warrants   Price 
Balance outstanding, December 31, 2021   20,667   $9.00 
Warrants granted   -    - 
Warrants exercised   -    - 
Warrants expired or forfeited   -    - 
Balance outstanding, March 31, 2022   20,667   $9.00 
Balance exercisable, March 31, 2022   20,667   $9.00 

 

The weighted average remaining contractual life of common stock warrants outstanding and exercisable at March 31, 2022 was 0.46 years. At March 31, 2022, all outstanding warrants are exercisable at $9.00 per common share. Based on a fair market value of $1.00 per share on March 31, 2022, there was no intrinsic value attributed to exercisable but unexercised common stock warrants at March 31, 2022.