4. COMMON STOCK

9 Months Ended

Sep. 30, 2018

Equity [Abstract]

COMMON STOCK

4.     COMMON STOCK

At September 30, 2018, 3PEA’s authorized capital stock was 150,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of preferred stock, par value $0.001 per share. As of September 30, 2018, we had outstanding 44,100,765 shares of common stock, and no shares of preferred stock.

2018 Transactions: During the nine months ended September 30, 2018, we issued shares of common stock as follows:

· 200,000 shares were issued as a result of the exercise of a warrant with an exercise price of $0.50 for a total of $100,000 in cash proceeds.

· 100,000 shares of common stock were issued for stock-based compensation for a consultant for services earned.

· 130,000 shares of common stock were issued for stock-based compensation for a consultant for services to be rendered.

2017 Transactions: During the nine months ended September 30, 2017, we issued shares of common stock as follows:

· 75,000 shares of common stock for current services rendered totaling $12,882 or $0.17 per share (average cost).

· 200,000 shares of common stock issued to an employee as a bonus totaling of $84,400 or $0.42 per share (average cost).

· 200,000 shares of common stock were issued as a result of the exercise of a warrant with an exercise price of $0.25 for a total of $50,000 in cash proceeds.

Stock, Options and Warrant Grants:

On August 7, 2018, we granted an employee of 3PEA options to purchase 500,000 shares common stock exercisable for five years at $2.63 per share, which vest annually over a five-year period from the date of hire. The options were valued at $1,315,011 using the Black-Scholes options pricing model under the following assumptions: stock price at issuance of $3.39 per share; exercise price of $3.39; 5 year life; discount rate of 2.95%; and volatility rate of 263%. The amount expensed of this grant for the three and nine months ended September 30, 2018 totaled $34,797 and $34,797, respectively. As of September 30, 2018 none of the options have vested or been exercised.

On July 18, 2018, we granted stock options for various employees of 3PEA to purchase 750,000 shares of common stock exercisable for five years with an exercise price of $2.40 per share, which vest annually over a five-year period, as long as they remain employed with 3PEA, beginning July 18, 2018. The options were valued at $1,397,777 using the Black-Scholes options pricing model under the following assumptions: stock price at issuance of $2.40 per share; exercise price of $2.40; 5 year life; discount rate of 2.88%; and volatility rate of 235%. The amount expensed related to this grant for the three and nine months ended September 30, 2018 totaled $55,911 and $55,911, respectively. As of September 30, 2018 none of the options have vested or been exercised.

In July 2018, we granted 130,000 shares to a consultant. The shares were valued at $338,000 or $2.60 per share. The 130,000 shares will be expensed over the contract period of one year. The value earned for the three and nine months ended September 30, 2018 was $60,189 and $60,189, respectively. As of September 30, 2018, the full 130,000 shares have been issued (see Note 4 Common Stock – 2018 Transactions) and the unearned portion totaling $277,811 has been recorded as contra equity and included in additional paid-in capital.

On May 3, 2018, we appointed Dan R. Henry to our board of directors as an independent director. In connection with his appointment, we issued Mr. Henry options to purchase 1,500,000 shares common stock exercisable over five years with an exercise price of $1.34 per share, which vest over a four-year period from the date of his appointment. The options were valued at $1,574,691 using the Black-Scholes options pricing model under the following assumptions: stock price at issuance of $1.34 per share; exercise price of $1.34; 5 year life; discount rate of 2.94%; and volatility rate of 238%. The amount expensed related to this grant for the three and nine months ended September 30, 2018 totaled $98,334 and $163,907, respectively. As of September 30, 2018 none of the options have vested or been exercised.

On May 3, 2018, we appointed Dennis Triplett to our board of directors as an independent director. In connection with his appointment, we granted Mr. Triplett 200,000 shares of restricted common stock which vest over a four-year period from the date of his appointment. The shares have a fair market value of $268,000 or $1.34 per share. The amount vested and expensed of this grant for the three and nine months ended September 30, 2018 totaled $18,884 and $30,000, respectively. As of September 30, 2018 none of the shares have been issued.

On April 13, 2018, we appointed Quinn Williams to our board of directors as an independent director. In connection with his appointment, we granted Mr. Williams 200,000 shares of restricted common stock which vest over a four-year period from the date of his appointment. The shares have a fair market value of $320,000 or $1.60 per share. The amount vested and expensed of this grant for the three and nine months ended September 30, 2018 totaled $20,002 and $37,336, respectively. As of September 30, 2018 none of the shares have been issued.

On March 29, 2018, we appointed Bruce A. Mina to our board of directors as an independent director. In connection with his appointment, we granted Mr. Mina 200,000 shares of restricted common stock which vest over a four-year period from the date of his appointment. The shares have a fair market value of $234,000 or $1.17 per share. The amount vested and expensed of this grant for the three and nine months ended September 30, 2018 totaled $14,625 and $29,250, respectively. As of September 30, 2018 none of the shares have been issued.

In January 2018, the Company granted 990,000 shares of restricted common stock to certain employees of 3PEA with a fair market value of $808,450 with a range of $0.67 to $0.74 per share. The 990,000 shares have an annual vesting period of five years with the first vesting period occurring on December 31, 2018. The amount vested and expensed of this grant for the three and nine months ended September 30, 2018 totaled $22,314 and $100,198, respectively. As of September 30, 2018, none of the shares have been issued.

In January 2018, we granted 300,000 shares of restricted common stock to an employee of 3PEA with a fair market value of $213,000, or $0.71 per share. The 300,000 shares have an annual vesting period of three years with the first vesting period occurring on December 31, 2018. The amount vested and expensed of this grant for the three and nine months ended September 30, 2018 totaled $17,750 and $53,250, respectively. As of September 30, 2018, none of the shares have been issued.

In July 2017, we granted 200,000 shares of restricted common stock to an officer of 3PEA with a fair market value of $84,400 or $0.422 per share. These shares have been issued. Concurrently, the Company also granted the employee four equal tranches of 200,000 restricted common shares, each valued at $84,400 which will vest in equal amounts over a four year period on the last day of each quarter, commencing December 31, 2017. The amount vested and expensed of this grant for the three and nine months ended September 30, 2018 totaled $21,100 and $63,300, respectively. None of the shares subject to vesting restrictions have been issued.

In November 2016, we granted a total of 5,000,000 shares to certain officers and directors of 3PEA with a total value of $787,950 or $0.15759 per share (including a 15% discount of fair market value due to these shares being restricted and lacking market liquidity). The 5,000,000 shares have a quarterly vesting period of five years with the first vesting period occurring on December 31, 2016. The approximate value vested and expensed for the three and nine months ended September 30, 2018 was $39,398 and $118,192 respectively. As of September 30, 2018, none of the shares have been issued.

In November 2016, we granted 210,000 shares to a consultant. The shares were valued at $33,094 or $0.15759 per share (including a 15% discount of fair market value due to these shares being restricted and lacking market liquidity). The 210,000 shares have a quarterly vesting period of three years with the first vesting period occurring on December 31, 2016. The approximate value vested for the three and nine months ended September 30, 2018 was $2,758 and $8,274, respectively. As of September 30, 2018, none of the shares have been issued.