|3 Months Ended|
Mar. 31, 2020
|Stockholders' Equity Note [Abstract]|
NOTE 9 – STOCKHOLDERS’ EQUITY
At March 31, 2020, the Company had 10,000,000 shares of preferred stock, par value $0.0001, authorized for issuance, of which no shares of preferred stock were issued or outstanding.
At March 31, 2020, the Company had 350,000,000 shares of common stock, par value $0.0001 (the “Common Stock”) authorized for issuance, of which 59,268,085 shares of our Common Stock were issued and outstanding.
Warrants to Purchase Common Stock
We use the Black-Scholes-Merton option pricing model (“Black-Scholes Model”) to determine the fair value of warrants to purchase Common Stock of the Company (“Warrants”). The Black-Scholes Model is an acceptable model in accordance with the GAAP. The Black-Scholes Model requires the use of a number of assumptions including volatility of the stock price, the weighted average risk-free interest rate, and the weighted average term of the Warrant.
The risk-free interest rate assumption is based upon observed interest rates on zero coupon U.S. Treasury bonds whose maturity period is appropriate for the term of the Warrants. Estimated volatility is a measure of the amount by which our stock price is expected to fluctuate each year during the expected life of the award. Our estimated volatility is an average of the historical volatility of peer entities whose stock prices were publicly available over a period equal to the expected life of the awards. We used the historical volatility of peer entities due to the lack of sufficient historical data of our stock price.
As of March 31, 2020, we had Warrants outstanding to purchase an aggregate of 4,771,417 shares with a weighted-average contractual remaining life of approximately 2.6 years, and exercise prices ranging from $0.01 to $3.25 per share, resulting in a weighted average exercise price of $3.15 per share. At March 31, 2020, no Warrants were exercised.
Equity Incentive Plan
In connection with the Closing, our board of directors (the “Board”) approved, and our stockholders adopted, the 2018 Equity Incentive Plan (the “2018 Plan”) pursuant to which 10,000,000 shares of our Common Stock has been reserved for issuance to employees, including officers, directors and consultants. The 2018 Plan shall be administered by the Board, provided however, that the Board may delegate such administration to the compensation committee (the “Committee”). Subject to the provisions of the 2018 Plan, the Board and/or the Committee shall have authority to grant, in its discretion, incentive stock options, or non-statutory options, stock awards or restricted stock purchase offers (“Equity Awards”). As of March 31, 2020, the Board has not approved any Equity Awards made pursuant to the 2018 Plan.
Stock Options to Purchase Common Stock
In January 2020, pursuant to the terms of a Severance Agreement 19,625 stock options to purchase common stock of the Company (“Options”) with deferred distribution were promised to a former employee of the Company pursuant to the 2018 Plan. For the three months ended March 31, 2020, $15,479 in related stock compensation expense has been recorded and is included in the accompanying condensed consolidated financial statements. As of March 31, 2020, we had Options outstanding to purchase an aggregate of 694,625 shares with a weighted-average contractual remaining life of approximately 4.5 years, and exercise prices ranging from $2.50 to $3.25 per share, resulting in a weighted average exercise price of $3.23 per share. At March 31, 2020, no Options were exercised.
The assumptions used in the Black-Scholes Model are set forth in the table below.
Restricted Stock Purchase Offers
During 2018, the Company entered into an agreement wherein 378,478 restricted stock purchase offers (‘RSU(s)”) with deferred distribution were as promised to a consultant for the Company pursuant to the 2018 Plan. For the three months ended March 31, 2020, $10,120 in related stock compensation expense was recorded and is included in the accompanying consolidated financial statements. The Company has not yet executed the RSU agreement with the consultant. Non-vested RSUs as of March 31, 2020 totaled 94,620. The weighted average grant-date fair value for the RSU is $0.22. The weighted average vesting period of the RSU is 2.0 years. As of December 31, 2019, unrecognized compensation expense related to the unvested portion of the RSU was $20,237, which is expected to be recognized over a weighted average period of 0.5 years.
The Company recognizes stock compensation expense generally upon the grant date and over the period of vesting or period that services will be provided. Compensation associated with shares issued or to be issued to consultants and other non-employees is recognized over the expected service period beginning on the measurement date which is generally the time the Company and the service provider enter into a commitment whereby the Company agrees to grant shares in exchange for the services to be provided.
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.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef