STOCKHOLDER'S EQUITY

9 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement [Abstract]

STOCKHOLDER'S EQUITY

NOTE 9 – STOCKHOLDER’S EQUITY

Common Stock

In June 2019, the Company entered into Subscription Agreements with accredited investors (the “2019 Accredited Investors”) pursuant to which the 2019 Accredited Investors purchased an aggregate of approximately 38,764,000 shares of the Company’s common stock for an aggregate purchase price of approximately $3,100,000. In connection with the private offering, the Company paid a cash fee of approximately $178,000 and issued 1,251,750 common stock purchase warrants with a fair value of approximately $79,000 that are exercisable during a term of five years at an exercise price of $0.088 per share.

The Company also issued 410,708 shares of common stock during the nine months ended September 30, 2019 to two service providers in satisfaction of approximately $41,000 due for services.

Warrants

The Company issued 1,251,750 common stock warrants to its investment bankers in connection with the June 2019 private common stock offering as described above in the nine months ended September 30, 2019:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Life
Outstanding at December 31, 2018		46,201,477	$	0.08		1.9 Years
Granted		1,251,750		0.09		5.0 Years
Outstanding at September 30,2019		47,453,227	$	0.09		1.3 Years

Stock Options

During the nine months ended September 30, 2019, the Company granted options to acquire 600,000 shares of common stock to three employees at fair market value on date of grant. Of the 600,000 stock options, 475,000 options vest over a three-year period and 125,000 options vest upon achieving certain performance thresholds. The options have a term of ten years and the approximate fair value of the options as of the grant date was $49,000. The following assumptions were used to determine fair value in the nine-months ended September 30, 2019.

Expected Volatility – 75%

Expected Term – 2.5 – 6.5 Years

Risk Free Rate – 2.0%

Dividend Rate – 0.00%

Activity related to stock options for the nine months ended September 30, 2019 is summarized as follows:

				Weighted Average		Weighted Average		Aggregate
	Number of			Exercise		Contractual		Intrinsic
	Shares			Price		Term (Yrs.)		Value
Outstanding as of December 31, 2018		106,253,339		$	0.20		7.4	$	1,989,163
Granted		600,000			0.12		9.5		-
Forfeitures		(453,333	)		0.11		-		-
Outstanding as of September 30,2019		106,400,006			0.20		6.6	$	1,952,230
Exercisable as of September 30, 2019		99,540,282		$	0.20		6.6	$	1,920,074

The following table summarizes stock option information as of September 30, 2019:

				Weighted Average
				Contractual
Exercise Price		Outstanding		Life (Yrs.)		Exercisable
$	0.00001		3,500,000		6.0		3,500,000
	0.05		32,700,006		6.8		31,700,006
	0.10		27,200,000		7.0		26,644,444
	0.12		1,200,000		9.2		—
	0.13		250,000		8.1		145,832
	0.15		2,800,000		6.1		2,800,000
	0.22		2,750,000		8.3		750,000
	0.25		2,500,000		8.6		1,166,667
	0.26		500,000		8.6		166,667
	0.29		1,000,000		7.5		666,667
	0.40		1,000,000		6.4		1,000,000
	0.45		31,000,000		6.1		31,000,000
			106,400,006		6.6		99,540,282

During the nine months ended September 30, 2019, the Company recognized approximately $866,000 of stock-based compensation expense related to options of which non-employees’ expense was approximately $226,000. As of September 30, 2019, there was approximately $554,000 of unrecognized compensation costs related to stock options outstanding of which approximately $33,000 was related to non-employees and will be expensed through 2022.