STOCKHOLDER'S EQUITY

12 Months Ended

Dec. 31, 2020

Equity [Abstract]

STOCKHOLDER'S EQUITY

NOTE 9 – STOCKHOLDERS' EQUITY

The Company is authorized to issue 1,000,000,000 shares of common stock. The Company had 589,272,023 and 518,125,454 shares of common stock issued and outstanding as of December 31, 2020 and 2019, respectively. In addition, the Company is authorized to issue 20,000,000 shares of preferred stock but no shares of preferred stock have been issued.

Common Stock

2020 Common Stock Transactions

● During the year ended December 31, 2020, the Company granted 8,000,000 shares of Restricted Common Stock of which 3,000,000 shares were granted to two new members of our Board of Directors in connection with their compensation for service as Board Members and 5,000,000 to an employee in connection with his employment compensation. The shares were valued at the fair market value at the date of grant. The restricted stock vests upon the achievement of certain performance criteria.

● During the year ended December 31, 2020, the Company issued approximately 106,000 shares of common stock to a third-party provider of services in lieu of cash compensation.

● In June 2020, the Company entered into Subscription Agreements with two accredited investors (the "June 2020 Accredited Investors") pursuant to which the June 2020 Accredited Investors agreed to purchase 3,441,558 shares of common stock for $200,000.

● On June 30, 2020, Company entered into and consummated a private transaction pursuant to which a portion of the Company's $0.10 Warrants were exercised for cash at an exercise price of $0.07 per share. In addition, the holders that exercised the $0.10 Warrants received a $0.15 Warrant for every four $0.10 Warrants exercised. As a result, the Company issued 10,008,333 shares of common stock and 2,502,085 $0.15 Warrants in consideration of $700,583.

● On June 30, 2020, Company entered into and consummated a private transaction pursuant to which a portion of the Company's $0.05 Warrants were exercised for cash. In addition, the holders that exercised the $0.05 Warrants received a $0.15 Warrant for every two $0.05 Warrants exercised. As a result, the Company issued 4,632,000 shares of common stock and 2,316,000 $0.15 Warrants, in consideration of $231,600. Separately, certain holders of the $0.05 Warrants to acquire 1,770,000 shares of common stock exercised on a cashless basis resulting in the issuance of 560,659 shares of common stock.

● On June 30, 2020, Company entered into and consummated a private transaction pursuant to which a portion of the Company's $0.06 Warrants were exercised. In addition, the holders that exercised the $0.06 Warrants also received $0.15 Warrant for every two $0.06 Warrants exercised. As a result, the Company issued 5,280,000 shares of common stock and 2,640,000 $0.15 Warrants in consideration of $316,800.

● On October 30, 2020 and on November 6, 2020, Ipsidy Inc. entered into Securities Purchase Agreements with several accredited investors (the "October 2020 Accredited Investors") pursuant to which the October 2020 Accredited Investors agreed to purchase an aggregate of 52,435,000 shares of the Company's common stock together with Warrants to acquire 26,217,500 shares of common stock for a term of five years at an exercise price of $0.15 per share for an aggregate purchase price of approximately $5.24 million. In connection with this private offering, the Company paid a registered broker-dealer, a cash fee of approximately $367,000 and issue the broker-dealer a common stock purchase warrant to acquire approximately 3.15 million shares of common stock of the Company exercisable for a term of five years at an exercise price of $0.15 per share.

● During 2020, the Company issued approximately 1.7 million share of common stock pursuant to cashless exercises of common stock purchase warrants and options, other than the June 2020 warrant exercises.

2019 Common Stock Transactions

● 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 $173,000 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 approximately 411,000 shares of common stock to two service providers in satisfaction of $41,000 due for services.

The criteria for the 2019 and 2018 performance based restricted stock have not been met as of December 31, 2020.

Warrants

● During the year ended December 31, 2020, the Company issued approximately 29.4 million common stock warrants in connection with its sale of common stock in the 4^th quarter of 2020 for a term of five years at an exercise price $0.15 per share. Of the approximate 29.4 million shares, approximately 3.15 million shares were issued to a broker-dealer in connection with the sale of common stock.

● During the year ended December 31, 2020, the Company issued approximately 7.5 million common stock warrants for a term of five years at an average exercise price of $0.15 cents in connection with cash exercises of previously issued warrants. The Company recorded a charge of approximately $367,000 in connection with an inducement to the warrant holders who exercised their outstanding warrants.

● During the year ended December 31, 2019, the Company issued 1,251,750 common stock warrants to its investment bankers in connection with the June 2019 private common stock offering at an exercise price of $0.088 cents for a period of five years.   See Common Stock Transaction above for a further description of the warrant issuances.  

 The following is a summary of the Company's warrant activity for the years ended December 31, 2020 and 2019:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Life
Outstanding on January 1, 2019		46,201,477		$	0.11		2.9 Years
Granted		1,251,750		$	0.09		5.0 Years
Exercised/Cancelled		-		$	-		-
Outstanding at December 31, 2019		47,453,227		$	0.09		1.9 Years
Granted		36,821,683		$	0.15		5.0 Years
Exercised/Cancelled		(29,577,889	)	$	0.06		-
Outstanding at December 31, 2020		54,697,021		$	0.14		3.4 Years

Stock Options

The Company has adopted the Ipsidy Inc. 2014 Equity Compensation Plan and the 2017 Incentive Stock Plan. The Company has no other stock options plans in effect as of December 31, 2020.

On November 21, 2014, our Board of Directors authorized the Ipsidy Inc. Equity Compensation Plan (the "2014 Plan"). On September 28, 2017, the shareholders of the Company approved the 2017 Incentive Stock Plan ("2017 Incentive Plan"). The following is a summary of principal features of the 2014 Plan and the 2017 Incentive Plan. The summaries, however, does not purport to be a complete description of all the provisions of each plan.

The terms of Awards granted under the plans shall be contained in an agreement between the participant and the Company and such terms shall be determined by the Compensation Committee consistent with the provisions of the applicable plan. The terms of Awards may or not require a performance condition in order to vest the equity comprised in the relevant Award. The terms of each Option granted shall be contained in a stock option agreement between the optionee and the Company and such terms shall be determined by the Compensation Committee consistent with the provisions of the applicable plan.

The Company has also granted equity awards that have not been approved by security holders.

2020 Stock Option Issuances

● During the year ended December 31, 2020, the Company granted Mr. Kumnick and Mr. Broenniman granted options to acquire 33,333,334 and 16,666,666 shares of common stock upon their employment. The options granted to Mr. Kumnick and Mr. Broenniman vest 20% at date of the grant with the balance vesting upon achieving certain performance thresholds. Additionally, the Company granted options to acquire approximately 12,674,000 shares of common stock to employees and one service provider in connection with service. The options have a term of ten years with vesting ranging from immediate to a three-year period. All options granted approximated fair value.

2019 Stock Option Issuances

● During the year ended December 31, 2019, the Company granted options to acquire 3,600,000 shares of common stock to one member of the Board of Directors and three employees at fair market value on date of grant. Of the 3,600,000 stock options, 3,475,000 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 $150,000.

The Company determined the grant date fair value of the options granted during the years ended December 31, 2020 and 2019 using the Black Scholes Method and the following assumptions:

	2020	2019
Expected Volatility	67% to 75%	75.0% to 80.0%
Expected Term	2.5 – 5.9 Years	2.5 – 5.9 Years
Risk Free Rate	0.33% to 0.5%	1.73% – 2.49%
Dividend Rate	0.00%	0.00%

Activity related to stock options for the years ended December 31, 2020 and 2019 is summarized as follows:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Contractual Term (Yrs.)		Aggregate Intrinsic Value
Outstanding as of January 1, 2019		106,253,339		$	0.19		9.5	$	11,457,291
Granted		3,600,000		$	0.07		10.0	$	-
Exercised/Forfeited		(453,333	)	$	0.13		-	$	-
Outstanding as of December 31, 2020		109,400,006		$	0.20		6.5	$	280,000
Granted		62,674,054		$	0.07		10.0	$	-
Exercised/Forfeited		(2,699,999	)	$	0.09		-	$	-
Outstanding as of December 31, 2020		169,374,061		$	0.15		6.9	$	8,283,639
Exercisable as of December 31, 2020		113,185,727		$	0.19		6.5	$	4,862,410

The following table summarizes stock option information as of December 31, 2020:

Exercise Price		Outstanding		Weighted Average Life (Yrs.)		Exercisable
$	0.0001		3,500,000		5.5		3,500,000
$	0.05		33,700,006		6.4		30,950,006
$	0.06		1,044,054		9.4		1,044,054
$	0.07		50,000,000		9.7		10,000,000
$	0.09		11,630,000		0.8		-
$	0.10		27,200,000		6.5		27,200,000
$	0.12		400,001		9.0		158,334
$	0.12		600,000		8.5		200,000
$	0.13		250,000		7.6		250,000
$	0.15		2,800,000		5.6		2,800,000
$	0.22		2,583,333		7.8		2,083,333
$	0.25		2,500,000		7.6		1,833,333
$	0.26		166,667		8.1		166,667
$	0.29		1,000,000		7.1		1,000,000
$	0.40		1,000,000		5.9		1,000,000
$	0.45		31,000,000		5.6		31,000,000
			169,374,061		6.9		113,185,727

As of December 31, 2020, there was approximately $801,000 of unrecognized compensation costs related to employee stock options outstanding which will be recognized in 2021 through 2023. The company will recognize forfeitures as they occur. Stock compensation expense for the years ended December 31, 2020 and 2019 was approximately $823,000 and $1,246,000, respectively.

The criteria for certain performance-based stock options have not been achieved as of December 31, 2020.