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Note 7 - Stockholders' Equity (Deficit)
 3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Stockholders' Equity Note Disclosure [Text Block]
NOTE 7 -
STOCKHOLDERS’
EQUITY (DEFICIT)
 
Stock-Based Compensation
 
In connection with the Merger, all of the issued and outstanding options to purchase shares of Protagenic common stock converted, on a 1 for 1 basis, into options (the “
New Options
”), to purchase shares of our Series B Preferred Stock. The New Options will be administered under Protagenic’s 2006 Employee, Director and Consultant Stock Plan (the “
2006 Plan
”), which the Company assumed and adopted.
 
The Plan is authorized to issue up to 2,000,000 stock options. In accordance with the Plan, the Company can grant to certain employees, directors or consultants options to purchase shares of the Company’s common stock which vest automatically or ranging from a one-year period to a five-year period. The shares are exercisable over a period of ten years from the date of grant. The Plan provides that qualified options be granted at an exercise price equal to the fair market value at the date of grant.
 
 
There were 1,391,145 options outstanding as of March 31, 2016. The fair value of each stock option granted was estimated using the Black Scholes assumptions and or factors as follows:
 
Expected dividend yield
       0%    
Risk free interest rate
     1.20% - 2.43%  
Expected life in years
       5%    
Expected volatility
     85%  - 156%  
                     
The following is an analysis of the stock option grant activity under the Plan:
 
 
 
Number
 
 
Exercise
Price
 
 
Weighted Average
Exercise Price
 
Stock Options
 
 
 
 
 
 
 
 
 
 
 
 
                         
Outstanding January 1, 2016
    1,707,744             $ 0.84  
Granted
    100,000     $ 1.25          
Expired
     (416,599 )                
Outstanding March, 31, 2016
    1,391,145             $ 1.01  
 
 
On February 12, 2016, the Company issued 100,000 options (on a post-Reverse Split basis) under the 2006 Plan to its Chief Financial Officer as a sign-on bonus. These options have an exercise price of $1.25 per share, a ten-year term and vest over a three-year period in 35 monthly installments of 2,778 shares and a final installment of 2,770 shares. The terms of the option grant also include full vesting acceleration upon a change of control. The Company recognized compensation expense related to options issued to employees and consultants of $102,908 and $24,801 during the three month periods ended March 31, 2016 and 2015, respectively.
 
Warrants:
 
In connection with the Merger, all of the issued and outstanding warrants to purchase shares of Protagenic common stock, converted, on a 1 for 1 basis, into new warrants (the “
New Warrants
”) to purchase shares of our Series B Preferred Stock.
 
Simultaneous with the Merger and the Private Offering, New Warrants to purchase 3,403,367 shares of Series B Preferred Stock at an average exercise price of approximately $1.05 per share were issued to holders of Protagenic warrants; additionally, holders of $665,000 of our debt and $35,000 of accrued interest exchanged such debt for five-year warrants to purchase 295,945 shares of Series B Preferred Stock at $1.25 per share. Placement Agent Warrants to purchase 127,346 shares of Series B Preferred Stock at an exercise price of $1.25 per share were issued in connection with the Private offering.
 
A summary of warrant issuances are as follows:
 
 
 
 
 
 
 
Exercise
 
 
Weighted Average
 
 
 
Number
 
 
Price
 
 
Exercise Price
 
Warrants
 
 
 
 
 
 
 
 
 
 
 
 
                         
Outstanding January 1, 2016
    3,403,367             $ 1.05  
Granted
    423,291     $ 1.25          
Outstanding March 31, 2016
    3,826,658             $ 1.07