Quarterly report pursuant to Section 13 or 15(d)

NOTE 9 - OPTIONS AND WARRANTS

v3.10.0.1
NOTE 9 - OPTIONS AND WARRANTS
9 Months Ended
Sep. 30, 2018
Disclosure Text Block Supplement [Abstract]  
Shareholders' Equity and Share-based Payments [Text Block]

NOTE 9 – OPTIONS AND WARRANTS


Options


On October 19, 2012, the Company’s Board of Directors approved the 2012 Equity Incentive Plan (“the “Plan) and terminated the Long-Term Incentive Plan (the “2011 Plan”). The Plan provides for the issuance of options to purchase up to 15,186,123 (as amended) shares of the Company’s common stock to officers, directors, employees and consultants of the Company (as amended). Under the terms of the Plan the Company may issue Incentive Stock Options as defined by the Internal Revenue Code to employees of the Company only and nonstatutory options. The Board of Directors of the Company or a committee thereof administers the Plan and determines the exercise price, vesting and expiration period of the grants under the Plan.


However, the exercise price of an Incentive Stock Option should not be less than 110% of fair value of the common stock at the date of the grant for a 10% or more stockholder and 100% of fair value for a grantee who is not 10% stockholder. The fair value of the common stock is determined based on the quoted market price or in absence of such quoted market price, by the administrator in good faith.


Additionally, the vesting period of the grants under the Plan will be determined by the administrator, in its sole discretion, with an expiration period of not more than ten years.


The following table presents information related to stock options at September 30, 2018:


 

Options Outstanding

   

Options Exercisable

 
                 

Weighted

         
                 

Average

   

Exercisable

 
 

Exercise

   

Number of

   

Remaining Life

   

Number of

 
 

Price

   

Options

   

In Years

   

Options

 
  $ 3.01-4.00       734,361       8.7       511,027  
    4.01-5.00       794,857       5.8       730,057  
    5.01-6.00       599,820       1.6       599,820  
 

6.01 and up

      1,229,092       4.1       1,229,092  
            3,358,130       5.1       3,069,996  

A summary of the stock option activity and related information for the 2012 Plan for the nine months ended September 30, 2018 is as follows:


 

 

 

 

 

 

 

 

Weighted-Average

 

 

 

 

 

 

 

 

 

Weighted-Average

 

 

Remaining

 

 

Aggregate

 

 

 

Shares

 

 

Exercise Price

 

 

Contractual Term

 

 

Intrinsic Value

 

Outstanding at December 31, 2017

 

 

3,404,131

 

 

$

5.28

 

 

 

5.2

 

 

$

27,045

 

Grants

 

 

346,000

 

 

$

4.38

 

 

 

10.0

 

 

$

-

 

Exercised

 

 

(140,001

 

 

(4.40

)

 

 

 

 

 

 

 

 

Canceled

 

 

(252,000

)

 

 

(3.90

 

 

 

 

 

 

 

 

Outstanding at September 30, 2018

 

 

3,358,130

 

 

$

5.32

 

 

 

5.1

 

 

$

2,241,976

 

Exercisable at September 30, 2018

 

 

3,069,996

 

 

$

5.43

 

 

 

4.9

 

 

$

1,816,566

 


The aggregate intrinsic value in the preceding tables represents the total pretax intrinsic value, based on options with an exercise price less than the Company’s stock price of $5.58 of September 30, 2018, which would have been received by the option holders had those option holders exercised their options as of that date.


Option valuation models require the input of highly subjective assumptions. The fair value of stock-based payment awards was estimated using the Black-Scholes option model with a volatility figure using the Company’s own historical stock prices. The Company accounts for the expected life of options based on the contractual life of options for non-employees.


For employees, the Company accounts for the expected life of options in accordance with the “simplified” method, which is used for “plain-vanilla” options, as defined in the accounting standards codification. The risk-free interest rate was determined from the implied yields of U.S. Treasury zero-coupon bonds with a remaining life consistent with the expected term of the options.  The fair value of stock-based payment awards during the nine months ended September 30, 2018 and 2017 was estimated using the Black-Scholes pricing model.


On February 15, 2018, the Company granted 20,000 options to purchase the Company stock in connection with the services rendered at the exercise price of $3.55 per share for a term of ten years with vesting immediately.


On May 4, 2018, the Company granted 226,000 options to purchase the Company stock in connection with the services rendered at the exercise price of $4.43 per share for a term of ten years with vesting immediately.


On May 14, 2018, the Company granted 100,000 options to purchase the Company stock in connection with the services rendered at the exercise price of $4.43 per share for a term of ten years with vesting immediately.


The following assumptions were used in determining the fair value of employee options for the nine months ended September 30, 2018:


Risk-free interest rate

    2.65% to 2.85

%

Dividend yield

    0

%

Stock price volatility

    92.65% to 94.10

%

Expected life

    5  years

Weighted average grant date fair value

  $ 3.20  

The fair value of all options vesting during the three and nine months ended September 30, 2018 of $160,086 and $1,574,106 and for the three and nine months ended September 30, 2017 of $54,243 and $151,470, respectively, was charged to current period operations.  Unrecognized compensation expense of $227,886 and $979,812 at September 30, 2018 and December 31, 2017, respectively, will be expensed in future periods.


Warrants


The following table summarizes information with respect to outstanding warrants to purchase common stock of the Company at September 30, 2018: 


 

Exercise

   

Number

 

Expiration

 

Price

   

Outstanding

 

Date

  $ 0.0025       153,328  

January 2020

  $ 3.75       2,645,199  

October 2018 to August 2021

  $ 4.375       666,606  

May 2021

  $ 4.60       12,294  

January 2020

  $ 4.875       648,951  

October 2018 to September 2019

  $ 5.05       12,227  

January 2020

  $ 6.85       217,958  

July 2021 to August 2021

  $ 6.875       91,504  

August 2019 to September 2019

  $ 9.175       85,684  

December 2018 to January 2019

  $ 9.375       536,267  

April 2019 to March 2020

            5,070,018    

On January 5, 2018, the Company issued 40,000 warrants to purchase the Company’s common stock at $3.75 per share, expiring on January 5, 2021, in connection with the sale of the Company’s common stock.


On February 14, 2018, the Company entered into a consent agreement with the holders of the Company’s Series D Convertible Preferred Stock.  Pursuant to the consent, the Series D Holders consented to the Series E Preferred Stock transaction and are entitled at any time on or before April 17, 2018, to elect to receive the more favorable terms of the transaction.  In consideration for their entry into the consent, the Company issued to the Series D Holders warrants to purchase up to an aggregate of 40,000 shares of common stock.  The consent warrants are exercisable immediately and expire on February 14, 2021, and have an exercise price of $3.75 per share. The warrants contain certain anti-dilutive provisions (see Note 8).


On February 16, 2018, the Company issued an aggregate of 200,000 warrants to purchase the Company’s common stock at $4.375 per share, expiring on August 16, 2021, in connection with the sale of the Company’s Series E preferred stock.  The warrants contain certain anti-dilutive provisions. On April 30, 2018, the exercise prices of the previously issued 200,000 warrants were reset to $3.75 and an additional 33,334 warrants were issued at $3.75 per share due to reset provisions (see Note 8).


On April 30, 2018, the Company issued 638,606 warrants to purchase the Company’s common stock at $4.375 per share, expiring on April 30, 2021, in connection with the sale of the Company’s common stock.


On May 11, 2018, the Company issued 28,000 warrants to purchase the Company’s common stock at $4.375 per share, expiring on May 11, 2021, in connection with the sale of the Company’s common stock.


On July 31, 2018, the Company issued 41,174 and 41,174 warrants to purchase the Company’s common stock at $3.75 and $6.85 per share, expiring on April 30, 2019 and July 30, 2021, respectively, in connection with the sale of the Company’s common stock.


On August 16, 2018, the Company issued 82,266 and 82,266 warrants to purchase the Company’s common stock at $3.75 and $6.85 per share, expiring on May 16, 2019 and August 16, 2021, respectively, in connection with the sale of the Company’s common stock.


On August 17, 2018, the Company issued 54,036 and 54,036 warrants to purchase the Company’s common stock at $3.75 and $6.85 per share, expiring on May 17, 2019 and August 17, 2021, respectively, in connection with the sale of the Company’s common stock. In addition, in connection with the sale, the Company issued on August 7, 2018, 40,482 warrants to purchase the Company’s common stock at $6.85 per share, expiring on August 7, 2021 for placement agent services.


A summary of the warrant activity for the nine months ended September 30, 2018 is as follows:


                   

Weighted-Average

         
           

Weighted-Average

   

Remaining

   

Aggregate

 
   

Shares

   

Exercise Price

   

Contractual Term

   

Intrinsic Value

 

Outstanding at December 31, 2017

    5,115,805     $ 4.55       1.7     $ 551,636  

Grants

    1,375,374     $ 4.54       2.4       -  

Exercised

    (632,063

)

  $ 4.04                  

Expired

    (789,098

)

  $ 3.75       -       -  

Outstanding at September 30, 2018

    5,070,018     $ 4.74       1.6     $ 6,975,200  
                                 

Vested and expected to vest at September 30, 2018

    5,070,018     $ 4.74       1.6     $ 6,975,200  

Exercisable at September 30, 2018

    5,070,018     $ 4.74       1.6     $ 6,975,200  

The aggregate intrinsic value in the preceding tables represents the total pretax intrinsic value, based on options with an exercise price less than the Company’s stock price of $5.58 of September 30, 2018, which would have been received by the option holders had those option holders exercised their options as of that date.