4. COMMON STOCK

12 Months Ended

Dec. 31, 2019

Equity [Abstract]

COMMON STOCK

4.     COMMON STOCK

At December 31, 2019, the Company’s authorized capital stock was 150,000,000 shares of common stock, par value $0.001 per share, and 25,000,000 shares of preferred stock, par value $0.001 per share. On that date, the Company had outstanding 48,577,712 shares of common stock, and no shares of preferred stock outstanding.

2019 Transactions: During the year ended December 31, 2019, the Company issued shares of common stock as follows:

· 245,800 shares of common stock were issued related to the exercise of vested stock options and received cash proceeds totaling $430,919.

· 1,891,147 shares of common stock were issued for vested stock grants to employees.

2018 Transactions: During the year ended December 31, 2018, the Company 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.

· 130,000 shares of common stock were issued for stock-based compensation to a consultant for services earned and unearned.

· 2,440,000 shares of common stock were issued for vested stock grants to various employees and consultants.

In 2019, the Company’s shareholders approved the 3Pea International, Inc. 2018 Incentive Compensation Plan (the “2018 Plan”), which was approved by the board of directors on July 18, 2018. The Plan permits the Company to issue awards to the officers, directors, employees, consultants and other persons who provide services to our company or any related entity. Pursuant to the 2018 Plan, 5,000,000 shares of the Company’s common stock are reserved for issuance. Any awards that are not settled in shares of common stock are not counted against the limit. As of December 31, 2019, there were 3,795,400 shares available for future grants under the 2018 Plan.

Stock, Options and Warrant Grants:

During the year ended December 31, 2019, excluding employee terminations, the Company granted a total of 555,000 shares of common stock. The shares were valued at $5,256,350 or an average price per share of $9.47. The stock grants have an annual vesting period over five years.

From 2016 to 2018, excluding employee terminations, the Company granted a total of 8,630,000 shares of common stock and 2,643,000 stock options. The shares were valued at $6,097,200 or an average price per share of $.71. The stock options were valued at $4,088,981 an average price per share of $1.55, collectively vesting over a three to five year period.

Stock-based compensation expense for the years ended December 31, 2019 and 2018 was $2,528,613 and $1,366,944, respectively. 

Stock Options

A summary of stock options activity for the year ended December 31, 2019 and 2018 is presented as follows:

						Weighted-
				Weighted-		Average
				Average		Remaining		Aggregate
				Exercise		Contractual		Intrinsic
	Shares			Price		Term (Years)		Value
Outstanding at December 31, 2017		–		$	–
Granted		2,750,000			2.00
Exercised		–			–
Forfeited/expired		(42,673	)		2.40
Outstanding at December 31, 2018		2,707,327		$	2.00		9.56	$	5,402,585
Granted		–			–
Exercised		(245,800	)		1.75
Forfeited/expired		(57,727	)		2.40
Outstanding at December 31, 2019		2,403,800		$	2.01		8.45	$	19,565,450
Exercisable at December 31, 2019		364,400		$	2.02		8.44	$	2,963,600

A summary of unvested options activity for the years ended December 31, 2019 and 2018 was as follows:

				Weighted-
				Average
				Grant Date
	Shares			Fair Value
Unvested at December 31, 2017		–		$	–
Granted		2,750,000			2.00
Forfeited/expired		(42,673	)		2.40
Vested		–			–
Unvested at December 31, 2018		2,707,327		$	2.00
Granted		–			–
Forfeited/expired		(57,727	)		2.40
Vested		(610,200	)		1.91
Unvested at December 31, 2019		2,039,400		$	2.01

The weighted average grant date fair value of options granted and the total intrinsic value of options exercised for the years ended December 31, 2019 and 2018 is as follows:

	2019		2018
Weighted average grant date fair value of options granted	$	–	$	1.56
Intrinsic value of options exercised	$	2,605,923	$	–

The weighted-average assumptions used in the Black-Scholes option-pricing model for the year ended December 31, 2018 was a risk-free interest rate of 2.95%, expected volatility of 242%, dividend yield of -0- and the weighted-average expected life of 5 years.

Stock Awards

A summary of stock awards activity for the years ended December 31, 2019 and 2018 was as follows:

				Weighted-
				Average Grant
	Shares			Date Fair Value
Outstanding at December 31, 2017		4,640,000		$	0.20
Granted		3,070,000			1.78
Forfeited		(275,000	)		0.16
Vested		(1,640,000	)		0.18
Outstanding at December 31, 2018		5,795,000			0.94
Granted		576,147			9.50
Forfeited		(170,000	)		4.47
Vested		(1,801,147	)		0.68
Outstanding at December 31, 2019		4,400,000		$	2.06