SHAREHOLDERS’ (DEFICIT) EQUITY

12 Months Ended

Dec. 31, 2016

Equity [Abstract]

SHAREHOLDERS’) EQUITY (DEFICIT

Preferred Stock 

   On December 19, 2016, the Company filed an amendment to its Certificate of Incorporation to authorize the issuance of 20,000,000 shares of blank-check preferred stock at $.001 par value, of which 3,825,000 shares have been reserved for future issuance. The Board of Directors will be authorized to fix the designations, rights, preferences, powers and limitations of each series of the preferred stock. See Note 4 for information regarding the preferred stock.

Common Stock

In October 2015, the board of directors agreed to effectuate a reverse split of the Company’s common stock. As a result of the split every fifty shares of common stock outstanding were consolidated into one share, reducing the number of common shares outstanding on the effective date from 44,662,330 to 893,246.

In November 2016, the majority shareholders approved an amendment to the Company’s Certificate of Incorporation to increase the Company’s authorized shares of common stock from 1,100,000 to 25,000,000, to issue up to 2,000,000 shares of blank check preferred stock and to make effective, a reverse stock split at a range of 1 for 500 through 1 for 3,000 immediately followed by a forward split of the outstanding common stock at an exchange rate of 50 for 1 through 300 for 1 to reduce the number of authorized shares of the Company’s common stock, subject to the Board of Directors’ discretion.

In January 2017, the Company completed a reverse split of 1-for 3,000 immediately followed by a forward split of 300 for 1. As a result of the split every ten shares of common stock outstanding were consolidated into one share, reducing the number of common shares outstanding on the effective date from 10,989,608 to 1,098,960. All share and per share information on this Form 10-K has been retroactively adjusted to reflect the reverse stock split.

The Company has authorized and reserved for future issuance 550,000 shares of common stock and 3,850,000 shares of preferred stock with respect to the exchangeable shares issued as a result of the merger.

During the year ended December 31, 2016, the Company issued a total of 205,714 shares of common stock for gross proceeds of $180,000 from the exercise of warrants.

In December 2016, the Company issued 550,000 shares of common stock in connection with the Amalgamation Agreement (see Note 4).

Share-based Incentive Plans

During the years ended December 31, 2016 and 2015, the Company had three stock option plans that include both incentive and non-qualified options to be granted to certain eligible employees, non-employee directors, or consultants of the Company. In 2016 there were 9,000 options granted, 3,500 options cancelled and no options were exercised.

Active Plans:

2012 Plan

On October 15, 2012, the Company adopted the 2012 Non-Qualified Stock Option Plan (the "2012 Plan"). The purpose of the 2012 Plan, is to provide long-term incentives and rewards to those employees of the Company, and any other individuals, whether directors, consultants or advisors who are in a position to contribute to the long-term success and growth of the Company. The options granted have a 10 year contractual term and vest one hundred percent on the date of grant. There are no shares reserved for future issuance under this plan. Information with respect to stock options granted under this plan during the year ended December 31, 2016:

	Number of shares		Weighted average exercise price per share
Options outstanding at January 1, 2016		30,000	$	2.80
Granted		6,000		0.98
Cancelled		—		—
Exercised		—		—
Options outstanding at December 31, 2016		36,000	$	0.98

2011 Plan

On February 1, 2011, the Company adopted the 2011 Non-Qualified Stock Option Plan (the "2011 Plan"). Under the 2011 Plan, employees and consultants may elect to receive their gross compensation in the form of options, exercisable at $0.98 per share, to acquire the number of shares of the Company's common stock equal to their gross compensation divided by the fair value of the stock on the date of grant. The options granted have a 10 year contractual term and have vesting periods that range from one hundred percent on the date of grant to one third immediately, one third vesting in 18 months and the final on third vesting in 36 months from the date of the grant. Information with respect to stock options granted under this plan during the years ended December 31, 2016 is as follows:

	Number of shares			Weighted average exercise price per share
Options outstanding at January 1, 2016		6,000		$	35.80
Granted		3,000			0.98
Cancelled		(3,500	)		2.15
Exercised		—			—
Options outstanding at December 31, 2016		5,500		$	0.98

At December 31, 2016 there are no shares reserved for issuance under this plan.

2002 Plan

The 2002 Stock Option Plan (“2002 Plan”) provides for the award of qualified and non-qualified options for up to 60,000 shares. The options granted have a ten-year contractual term and have a vesting schedule of either immediately, two years, or four years from the date of grant. Information with respect to stock options granted under this plan during the year ended December 31, 2016 is as follows:

	Number of shares		Weighted average exercise price per share
Options outstanding at January 1, 2016		16,000	$	23.70
Granted		—		—
Cancelled		—		—
Exercised		—		—
Options outstanding at December 31, 2016		16,000	$	23.33

There are currently no shares reserved for issuance under this plan.

Fair value of issuances

The fair value of the Company's option grants under the 2012, 2011, and 2002 Plans was estimated at the date of grant using the Black-Scholes model with the following weighted average assumptions:

	2016
Expected term (based upon historical experience)	5-6 years
Expected volatility		304.3	%
Expected dividends	None
Risk free interest rate		1.0	%-2.0%

For the years ended December 31, 2016 and 2015, the Company recorded share-based compensation expense related to stock options of $41,814 and $181,365 and are included in operating expenses in the accompanying consolidated statements of operations, respectively.

On August 26, 2016, the Board of Directors approved to vote to reprice and immediately vest 52,500 stock options for two employees and three board members. The grant price was lowered to $0.975 which reflects the market value of the stock. The incremental expense for the repricing of the options was approximately $17,000.

The Company has no unrecognized share-based compensation expense for options outstanding as of December 31, 2016.

Information pertaining to options outstanding and exercisable at December 31, 2016 is as follows:

Options Outstanding						Options Exercisable
Exercise Prices		Number of shares		Weighted Average Remaining contractual Life (In Years)		Number of shares		Weighted Average Remaining contractual Life (In Years)
	0.98		52,500		6.93		52,500		6.93
	72.50		5,000		0.42		5,000		0.42
			57,500		6.75		57,500		6.75

Summary of all stock option plans during the year ended December 31, 2016 is as follows:

	Number of Shares		Weighted Average Price			Weighted Average Remaining Contractual Life (In Years)	Aggregate Intrinsic Value
Options exercisable at January1, 2016		52,000	$	11.60
Granted		9,000	$	0.98
Expired		(3,500)	$	2.15
Options outstanding and exxercisable at December 31, 2016		57,500	$	7.20	6.75	$171,938

Warrants

From time to time, the Company issues warrants to purchase share of the Company’s common stock to investors, note holders and to non-employees for service rendered or to be rendered in the future.

A summary of the warrant activity during the year ended December 31, 2016 is as follows:

	Number of Shares Subject to Warrants Outstanding			Weighted Average Exercise Price Price
Warrants outstanding - January 1, 2016		205,714		$	0.88
Granted		34,425		$	0.87
Exercised		(205,714	)	$	0.88

Warrants outstanding and exercisable - December 31, 2016	34,425	$	0.87
Weighted average remaining contractual life of the outstanding warrants in years	5.00