STOCKHOLDER'S DEFICIT

3 Months Ended

Mar. 31, 2016

Equity [Abstract]

STOCKHOLDER'S DEFICIT

NOTE 10 – STOCKHOLDER’S DEFICIT

Common Stock

During the three months ended March 31, 2016, the Company issued 704,074 shares of common stock upon the conversion of principal and interest on convertible debt totaling $21,222.

During the three months ended March 31, 2016, the Company issued 675,000 shares of common stock as consideration for services related to its acquisition of FIN Holdings. The fair value of the shares, totaling $270,000, was estimated based on the publicly quoted trading price and recorded as an expense on the date of the acquisition.

During the three months ended March 31, 2016, the Company issued 190,000 shares of common stock as consideration for debt issuance costs. The fair value of the shares, totaling $76,000, was estimated based on publicly quoted trading prices and recorded as debt issuance costs to be amortized into interest expense over the terms of the respective debt agreements.

During the three months ended March 31, 2016, the Company issued 22,500,000 shares of common stock as consideration for the acquisition of FIN Holdings Inc. (See Note 2.)

Warrants

During the three months ended March 31, 2016, in connection with the issuance of convertible debt, the Company issued warrants to acquire 208,332 shares of common stock over five-year terms for an exercise price of $0.48 per share.

The following is a summary of the Company’s warrant activity for the three months ended March 31, 2016:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Life
Outstanding at December 31, 2015		35,171,744	$	0.10	4.4 Years
Granted		208,332	$	0.48	5.0 Years
Outstanding at March 31, 2016		35,380,076	$	0.13	4.5 Years

Stock Options

During the three months ended March 31, 2016, the Company granted to employees, options to acquire 2,500,000 shares of common stock, of which 1,000,000 are exercisable at an exercise price of $0.45 per share vesting over two years, 1,000,000 are exercisable at an exercise price of $0.40 per share vesting on the date of grant and 500,000 are exercisable at an exercise price of $0.10 per share vesting quarterly over two years. The options have a 5 year term. The Company determined the grant date fair value of the options granted during the three months ended March 31, 2016 using the Black Scholes Method and the following assumptions:

Expected Volatility – 82% to 93%

Expected Term – 2.5 to 4.2 Years

Risk Free Rate – 1.31% to 1.51%

Dividend Rate – 0.00%

Activity related to stock options for the three months ended March 31, 2016 is summarized as follows:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Contractual Term (Yrs.)		Aggregate Intrinsic Value
Outstanding as of December 31, 2015		47,800,000	$	0.32		4.49	$	2,779,650
Granted		2,500,000	$	0.36		4.82	$	75,000
Outstanding as of March 31, 2016		50,300,000	$	0.33		4.51	$	2,779,650
Exercisable as of March 31, 2016		30,345,833	$	0.37		4.51	$	1,062,577

The following table summarizes stock option information as of March 31, 2016:

Exercise Prices		Outstanding		Weighted Average Contractual Life	Exercisable
$	0.0001		3,500,000	4.5 Years		1,312,500
$	0.10		8,500,000	4.5 Years		3,625,000
$	0.15		6,300,000	4.5 Years		1,908,333
$	0.40		1,000,000	5.5 Years		1,000,000
$	0.45		31,000,000	4.5 Years		22,500,000
	Total		50,300,000	4.5 Years		30,345,833

As discussed in note 12, the term of the options were extended to ten years in August 2016 from their original grant dates and therefore the remaining contractual term in the table above would be 9.5 years.

During the three months ended March 31, 2016, the Company recognized approximately $3,215,000 of stock-based compensation expense. As of March 31, 2016, there was approximately $5,222,000 of unrecognized compensation costs related to stock options outstanding, which is expected to be recognized through 2018.