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STOCKHOLDERS' EQUITY | 3 Months Ended
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Mar. 31, 2019
Stockholders' Equity: |
STOCKHOLDERS' EQUITY | NOTE 11 – STOCKHOLDERS’ EQUITY Preferred Stock At March 31, 2019, we had 10,000,000 shares of preferred stock, par value $0.001, authorized for issuance, of which no shares of preferred stock were issued or outstanding. Common Stock At March 31, 2019, we had 350,000,000 shares of Common Stock authorized for issuance, of which 241,221,840 shares of Common Stock were issued and outstanding. Issuances During the Three Months Ended March 31, 2019 During the three months ended March 31, 2019, certain individuals exercised stock options to purchase 276,383 shares of Common Stock for $100,107 in cash. Also, during the same period, stock options to purchase 12,097 shares of Common Stock were exercised pursuant to the options’ cashless exercise provisions, wherein 11,834 shares of Common Stock were issued. Issuances During the Three Months Ended March 31, 2018 During the three months ended March 31, 2018, certain individuals exercised stock options to purchase 144,791 shares of Common Stock for $44,057 in cash. Also, during the same period, stock options to purchase 10,000 shares of Common Stock were exercised pursuant to the options’ cashless exercise provisions, wherein 9,841 shares of Common Stock were issued. Warrants to Purchase Common Stock As of March 31, 2019, we had warrants outstanding to purchase an aggregate of 1,832,571 shares of Common Stock with a weighted-average contractual remaining life of approximately 2.70 years, and exercise prices ranging from $0.24 to $8.20 per share, resulting in a weighted average exercise price of $2.62 per share. The valuation methodology used to determine the fair value of our warrants is the Black-Scholes Model. The Black-Scholes Model requires the use of a number of assumptions, including volatility of the stock price, the risk-free interest rate, dividend rate and the term of the warrant. During the three months ended March 31, 2019, we granted warrants to purchase 75,000 shares of Common Stock to outside consultants at an exercise price of $5.63. The fair value for these warrants was determined by using the Black-Scholes Model on the date of the grant using a term of 5 years; volatility of 60.8%; risk free rate of 2.52%; and dividend yield of 0%. The grant date fair value of the warrants was $3.00 per share. The warrants are vesting ratably over a 12-month period and have an expiration date of February 12, 2024. During the three months ended March 31, 2018, we granted warrants to purchase 175,000 shares of Common Stock to outside consultants at an exercise price of $5.16. The fair value for these warrants was determined by using the Black-Scholes Model on the date of the grant using a term of 5 years; volatility of 62.1%; risk free rate of 2.36%; and dividend yield of 0%. The grant date fair value of the warrants was $2.79 per share. The warrants are vesting ratably over a 12-month period and have an expiration date of March 15, 2023. During the three months ended March 31, 2019 and 2018, we recorded $85,716 and $91,475, respectively, as share-based compensation expense in the accompanying consolidated financial statements related to warrants. As of March 31, 2019, total unrecognized estimated compensation expense related to the unvested portion of these warrants was approximately $196,000, which is expected to be recognized over a weighted-average period of 0.9 years. During the three months ended March 31, 2019, warrants to purchase 1,250,000 shares of Common Stock were exercised pursuant to the options’ cashless exercise provisions, wherein 471,184 shares of Common Stock were issued. During the three months ended March 31, 2018, no warrants were exercised. Options to Purchase Common Stock In 2009, we adopted the 2009 Long Term Incentive Compensation Plan, or the 2009 Plan, to provide financial incentives to employees, directors, advisers, and consultants of our company who are able to contribute towards the creation of or who have created stockholder value by providing them stock options and other stock and cash incentives, or the Awards. The Awards available under the 2009 Plan consist of stock options, stock appreciation rights, restricted stock, restricted stock units, performance stock, performance units, and other stock or cash awards as described in the 2009 Plan. There are 25,000,000 shares of Common Stock authorized for issuance thereunder. Generally, the options vest annually over four years or as determined by our board of directors, upon each option grant. Options may be exercised by paying the price for shares or on a cashless exercise basis after they have vested and prior to the specified expiration date provided and applicable exercise conditions are met, if any. The expiration date is generally ten years from the date the option is issued. As of March 31, 2019, there were non-qualified stock options to purchase 15,128,745 shares of Common Stock outstanding under the 2009 Plan. As of March 31, 2019, there were 44,300 shares of Common Stock available to be issued under 2009 Plan. In 2012, we adopted the 2012 Stock Incentive Plan, or the 2012 Plan, a non-qualified plan that was amended in August 2013. The 2012 Plan was designed to serve as an incentive for retaining qualified and competent key employees, officers, directors, and certain consultants and advisors of our company. The Awards available under the 2012 Plan consist of stock options, stock appreciation rights, restricted stock, restricted stock units, performance stock, performance units, and other stock or cash awards as described in the 2012 Plan. Generally, the options vest annually over four years or as determined by our board of directors, upon each option grant. Options may be exercised by paying the price for shares or on a cashless exercise basis after they have vested and prior to the specified expiration date provided and applicable exercise conditions are met, if any. The expiration date is generally ten years from the date the option is issued. There are 10,000,000 shares of Common Stock authorized for issuance thereunder. As of March 31, 2019, there were non-qualified stock options to purchase 6,318,974 shares of Common Stock outstanding and 1,040,000 restricted stock awards under the 2012 Plan. As of March 31, 2019, there were 2,392,833 shares of Common Stock available to be issued under 2012 Plan. The valuation methodology used to determine the fair value of stock options is the Black-Scholes Model. The Black-Scholes Model requires the use of a number of assumptions including volatility of the stock price, the risk-free interest rate, and the expected life of the stock options. The assumptions used in the Black-Scholes Model for options granted during the three months ended March 31, 2019 and 2018 are set forth in the table below.
|  | Three Months Ended March 31, 2019 |  |  | Three Months Ended March 31, 2018 |
Risk-free interest rate |  |  | 2.54 | % |  |  | 2.38-2.60 | %
Volatility |  |  | 61.85 | % |  |  | 63.59-64.04 | %
Term (in years) |  |  | 6.25 |  |  |  | 6-6.25 |
Dividend yield |  |  | 0.00 | % |  |  | 0.00 | %
A summary of activity under the 2009 and 2012 Plans and related information follows:
|  | Number of Shares Underlying Stock Options |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Life in Years |  |  | Aggregate Intrinsic Value |
Balance at December 31, 2018 |  |  | 20,872,824 |  |  | $ | 4.93 |  |  |  | 5.94 |  |  | $ | 12,239,876 |
Granted |  |  | 907,000 |  |  | $ | 5.63 |  |  |  |  |  |  |  |  |
Exercised |  |  | (288,480 | ) |  | $ | 0.35 |  |  |  |  |  |  | $ | 1,315,238 |
Expired/Forfeited |  |  | (43,625 | ) |  | $ | 5.69 |  |  |  |  |  |  |  |  |
Balance at March 31, 2019 |  |  | 21,447,719 |  |  | $ | 5.02 |  |  |  | 5.93 |  |  | $ | 19,747,182 |
Vested and Exercisable at March 31, 2019 |  |  | 16,995,263 |  |  | $ | 4.78 |  |  |  | 5.16 |  |  | $ | 19,747,182 |
Unvested at March 31, 2019 |  |  | 4,452,456 |  |  | $ | 5.93 |  |  |  | 8.83 |  |  | $ | 0 |
At March 31, 2019, our outstanding stock options had exercise prices ranging from $0.10 to $8.92 per share. The weighted average grant date fair value per share of options granted was $3.35 and $3.11 during the three months ended March 31, 2019 and 2018, respectively. Share-based compensation expense for options recognized in our results of operations for the three months ended March 31, 2019 and 2018 ($2,143,239 and $1,659,883, respectively) is based on vested awards. At March 31, 2019, total unrecognized estimated compensation expense related to unvested options granted prior to that date was approximately $12,942,820 which may be adjusted for future changes in forfeitures. This cost is expected to be recognized over a weighted-average period of 2.30 years. No tax benefit was realized due to a continued pattern of operating losses. Restricted Stock Restricted stock awards granted under our 2009 and 2012 Plans entitle the holder to receive, at the end of vesting period, a specified number of shares of our Common Stock. Share-based compensation expense is measured by the market value of our Common Stock on the day of the grant. The shares vest ratably over the period specified in the grant. There is no partial vesting and any unvested portion is forfeited. On December 13, 2018, we granted 1,040,000 restricted stock units to certain executive employees which will vest at the end of the third year. The grant date fair value was $4.06 per unit. During the three months ended March 31, 2019 we recorded $346,414 in share-based compensation expense related to restricted stock units. At March 31, 2019, total unrecognized estimated compensation expense related to unvested restricted stock units was approximately $3,800,000, which may be adjusted for future changes in forfeitures. This cost is expected to be recognized over a weighted-average period of 2.7 years. At March 31, 2019, 1,040,000 restricted stock awards remained outstanding. Cash-Settled Stock Appreciation Rights (SARs) On July 1, 2018, we issued cash-settled SARs to certain consultants and employees. The SARs plan year begins on July 1 and ends on or immediately following June 30, 2019. SARs are granted with a grant price equal to the market value of a share of our Common Stock on the date of grant. Cash-settled SARs provide for the cash payment of the excess of the fair market value of our Common Stock on June 30, 2019 over the grant price. Cash-settled SARs have no effect on dilutive shares or shares outstanding as any appreciation of our Common Stock over the grant price is paid in cash and not in Common Stock. Cash settled SARs are recorded in our consolidated balance sheets as a liability until the date of exercise. The fair value of each SAR award is estimated using the Black-Scholes valuation model. In accordance with ASC Topic 718, “Stock Compensation,” the fair value of each SAR award is recalculated at the end of each reporting period and the liability and expense adjusted based on the new fair value and the percent vested. At March 31, 2019, we had 97,000 SARs outstanding and the liability related to SAR calculation was approximately $11,579.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI http://asc.fasb.org/topic&trid=2208762 + Details
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