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Stockholders' Equity

3 Months Ended

Mar. 31, 2018

Equity [Abstract]

Stockholders' Equity

NOTE 5 - Stockholders’ Equity

Common Stock

Effective February 15, 2017, our Articles of Incorporation were amended to provide for a reverse stock split of the outstanding shares of our common stock on a 1-for-2 basis (the “Reverse Stock Split”), and a corresponding decrease in the number of shares of our common stock that we are authorized to issue (the “Share Decrease”). Pursuant to the Share Decrease, the number of authorized shares of common stock decreased from 15,000,000 to 7,500,000 shares of common stock.

The effects of this stock split have been retroactively reflected to all periods presented.

Effective March 5, 2018, the Articles of Incorporation were again amended to increase the authorized number of shares of common stock to 15,000,000.

In 2017, the Company issued 40,934 shares of common stock to directors at an average value of $2.09 per share, or $85,408. Also in 2017, 7,750 shares previously issued to a director and 750 shares previously issued to an employee, with a combined carrying value of $9,830, were forfeited .

Ronald Fisher, the Company’s Vice President of Business Development, continues to be entitled to receive performance-based stock and cash bonuses under his Employment Offer Letter Agreement if certain milestones are satisfied by December 31, 2018, so long as Mr. Fisher remains an employee of the Company as of the date the applicable milestone is satisfied.

In January 2018, the Company issued 23,256 shares of common stock to directors valued at $1.72 per share, or $40,000.

Deferred Compensation

In previous years and in the three months ended March 31, 2018, the Company issued to various employees, directors, and contractors shares of the Company’s common stock, subject to restrictions, pursuant to the 2013 Equity Incentive Plan (the “2013 Plan”). Such shares were valued at the fair value at the date of issue. The fair value was expensed as compensation over the vesting period and recorded as a reduction of stockholders’ equity. During the three months ended March 31, 2018 and March 31, 2017, $21,217 and $53,762 , respectively of the unvested compensation cost related to these issues was recognized.

As of March 31, 2018 and December 31, 2017, the balance of unvested compensation to be recognized was $50,359 and $31,576, respectively and is recorded as prepaid stock compensation as of those dates.

Preferred Stock

The Company is authorized to issue 10,000,000 shares of preferred stock, $0.001 par value. No shares of preferred stock were issued and outstanding at March 31, 2018 or December 31, 2017.

Stock Options

As of March 31, 2018, an aggregate of 750 shares and 257,124 shares of common stock were reserved for issuance under the 2011 and the 2013 Plans, respectively.

On February 21, 2018, the Company granted Mark Cola, an officer of the company, ten-year options under the 2013 Plan to purchase an aggregate of 123,500 shares of common stock, with the options having an exercise price of $1.49 per share, to vest and become exercisable ratably over 17 monthly installments on the 15th day of each month commencing on March 15, 2018, subject in each case to Mr. Cola’s continuing employment.

On February 26, 2018, the Company granted nine employees ten-year options under the 2013 Equity Incentive Plan to purchase an aggregate of 70,188 shares of common stock, with each option having an exercise price of $1.56 per share, and with vesting periods ranging from 3 to 4 years beginning February 26, 2019.

During the three months ended March 31, 2018, options to purchase 2,938 shares of common stock vested, and $140,305 of compensation cost was recognized. As of March 31, 2018, there were options to purchase 493,626 shares issued and outstanding under the 2013 Plan. Of this amount, there are vested options exercisable for 116,505 shares of common stock. As of March 31, 2018, the Company had 257,124 shares reserved for future grant under its plans and there were no options exercised during the quarter ended March 31, 2018.

The Company generally grants stock options to employees and directors at exercise prices equal to the fair market value of the Company’s stock on the dates of grant. Stock options are typically granted throughout the year and generally vest over four years of service and expire ten years from the date of the award, unless otherwise specified. The Company recognizes compensation expense for the fair value of the stock options over the requisite service period for each stock option award.

Total share-based compensation expense included in the condensed statements of operations for the three months ended March 31, 2018 and 2017 is $161,522 and $139,632, of which $140,305 and $86,909 is related to stock options, respectively. There was no capitalized share-based compensation cost as of March 31, 2018 and 2017.

The fair value of share-based awards was estimated using the Black-Scholes model with the following weighted-average assumptions for the three months ended March 31, 2018 and 2017:

		2018				2017
Dividend yield			0.00				0.00
Risk-free interest rate			2.86-2.94	%			.79-2.32	%
Expected volatility			137.2-137.3	%			67.3-139.5	%
Expected life (in years)			10				10

Warrants

At March 31, 2018, the Company had outstanding warrants to purchase a total of 1,645,500 shares of common stock, 1,621,500 warrants at an exercise price of $4.00 per share, which if not exercised, will expire on February 21, 2022, and 24,000 warrants at an exercise price of $2.00 per share which, if not exercised, will expire on October 17, 2019.