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Note 7 - Stockholders' Equity (Deficit)
 6 Months Ended
Jun. 30, 2016
Notes to Financial Statements  
Stockholders' Equity Note Disclosure [Text Block]
NOTE 7 -
STOCKHOLDERS’
EQUITY (DEFICIT)
 
On June 17, 2016, Atrinsic, Inc. (the “Company”) held a Special Meeting of Stockholders (the “Special Meeting”). At the Special Meeting, the Company’s stockholders approved a third amendment and restatement (the “Third Amendment and Restatement”) to the Company’s Amended and Restated Certificate of Incorporation, effective July 27, 2016 (the “Effective Time”), to effect a one-for-15,463.7183 reverse split of the Company’s common stock (the “Reverse Stock Split”). Pursuant to the Reverse Stock Split, at the Effective Time, each 15,463.7183 shares of common stock owned by a stockholder were combined into one new share of common stock, with any fractional shares that would otherwise be issuable as a result of the Reverse Stock Split being rounded up to the nearest whole share. The Third Amendment and Restatement also effected (i) a reduction in the Company’s authorized shares of common stock from 100 billion shares to 100 million shares, (ii) an increase in the par value of the Company’s common stock from $0.000001 per share to $0.0001 per share and (iii) a reduction in the Company’s authorized shares of preferred stock from 5 billion shares to 20 million shares.    
 
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 2,592,229 options outstanding as of June 30, 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
 
 1.01%
-
2.43% 
 
Expected life in years
 
  
5
 
Expected volatility
 
 85%
-
129%
  
                   
  
                                   
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
    1,301,084     $ 1.25          
Expired
     (416,599 )                
Outstanding June 30, 2016
    2,592,229             $ 1.04  
 
 
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 0.18 shares and a final installment of 2,778 shares. The terms of the option grant also include full vesting acceleration upon a change of control. The Company recognized compensation expense related to this issuance $10,220 and $5,192 for the six and three months ended June 30, 2016 and March 31, 2016, respectively.
 
On April 15, 2016 the Board determined at the Compensation Committee meeting of the Board of Directors that each board member will be compensated an option grant of 40,000 options per year, plus 5,000 options for serving as the Chair of a committee. Options shall have 10-year expiration dates, 24-month vesting cycles, and a strike price of $1.25 per share, or more in future time periods to match the fair market value of the company’s common stock. The aggregate amount granted was 175,000 options.
 
On April 15, 2016 the Board granted 1,008,299 options to employees and consultants. Options shall have 10-year expiration dates, 12 to 48 month vesting cycles, and a strike price of $1.25 per share, or more in future time periods to match the fair market value of the company’s common stock.
 
During the quarter 17,785 options were granted to former Atrinsic executives, Options shall have 3-year expiration dates, and a strike price of $1.25 per share, or more in future time periods to match the fair market value of the company’s common stock.
 
The total number of options granted and vested during the six month period ended June 30, 2016 was 1,301,084 and 133,229, respectively. The exercise price for theses 1,301,084 options was $1.25 per share.
 
The Company recognized compensation expense related to options issued of $176,892 during the six month period ended June 30, 2016.
 
On June 17, 2016, the company adopted a new option plan, the 2016 equity compensation plan. This plan replaces and supersedes the 2006 equity compensation plan. Details of this plan can be found with the Company’s Form 8-K filed June 20, 2016.
 
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. These warrants to purchase 423,291 shares of Series B Preferred Stock have been recorded as derivative liabilities. See Note 6.
 
 
A summary of warrant issuances are as follows:
 
 
 
 
Number
 
 
Exercise
Price
 
 
Weighted Average
Exercise Price
 
Warrants
 
 
 
 
 
 
 
 
 
 
 
 
                         
Outstanding January 1, 2016
    3,403,367             $ 1.05  
Granted
    423,291     $ 1.25          
Outstanding June 30, 2016
    3,826,658             $ 1.07