STOCKHOLDER'S EQUITY

9 Months Ended

Sep. 30, 2018

Equity [Abstract]

STOCKHOLDER'S EQUITY

NOTE 8 – STOCKHOLDER’S EQUITY

Common Stock

During the nine months ended September 30, 2018, the Company granted 720,000 shares of restricted stock to the non-employee Directors in connection with their compensation to serve as Board Members. The shares were valued at the fair value at the date of grant and vest quarterly. Additionally, during the nine months ended September 30, 2018, the Company granted 2,750,000 shares of restricted stock to employees of which 2,000,000 will be vested upon achieving certain performance criteria and 750,000 will vest over a three-year period. The Company also issued 170,240 shares of common stock to a service provider in satisfaction of $32,213 due for services.

During the nine months ended September 30, 2018, investors exercised 4,433,333 warrants at an average price of $0.05 cents per share on a cashless exercise basis in exchange for shares of common stock of the Company.

During the nine months ended September 30, 2018, the Company cancelled 728,448 shares of common stock in settlement of amounts due from the Multipay acquisition.

In August 2018, the Company entered into Subscription Agreements with accredited investors (the “August 2018 Accredited Investors”) pursuant to which the August 2018 Accredited Investors agree to purchase an aggregate of approximately 64,072,000 shares of the Company’s common stock for an aggregate purchase price of approximately $9,611,000. In connection with this private offering, the Company paid Network 1, a registered broker-dealer, a cash fee of approximately $629,000 and will issue approximately 2,470,000 common stock purchase warrants valued at approximately $314,000 that are exercisable for a term of five years at an exercise price of $0.165 per share.

Warrants

The following is a summary of the Company’s warrant activity for the nine months ended September 30, 2018:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Life
Outstanding at December 31,2017		48,164,543		$	0.08		2.9 Years
Granted		2,470,267			0.16		4.9 Years
Exercised		(4,433,333	)	$	0.05		—
Outstanding at September 30, 2018		46,201,477		$	0.09		2.1 Years

Stock Options

During the nine months ended September 30, 2018, the Company granted options to acquire 5,250,000 shares of common stock to five employees and one non-employee of which 3,250,000 options are exercisable at an average price of $0.22 per share and 2,000,000 are exercisable at $0.25 per share. The options have a term of ten years, were granted at fair market value at the date of grant. and vest over three years. The grant date fair value of the options totaled approximately $792,000, which will be charged to expense over the three-year vesting term of which approximately $231,000 was related to non-employees.

The Company determined the grant date fair value of the options granted during the nine months ended September 30, 2018 using the Black Scholes Method and the following assumptions:

Expected Volatility – 77-78%

Expected Term – 6.5 Years

Risk Free Rate – 2.4-2.7%

Dividend Rate – 0.00%

Activity related to stock options for the three months ended September 30, 2018 is summarized as follows:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Contractual Term (Yrs.)		Aggregate Intrinsic Value
Outstanding as of December 31, 2017		103,208,331		$	0.19		8.3	$	11,457,291
Granted		5,250,000		$	0.24		10.0	$	—
Forfeitures		—			—		—		—
Exercised		(2,508.331	)		0.15		—		296,176
Outstanding as of September 30, 2018		105,950,000			0.20		7.96	$	10,638,500
Exercisable as of September 30, 2018		85,652,778		$	0.21		7.86	$	9,432,500

The following table summarizes stock option information as of September 30, 2018:

Exercise Prices	Outstanding		Weighted Average Contractual Life (Yrs.)		Exercisable
$0.00		3,500,000		7.00		3,500,000
$0.05		33,450,000		7.86		28,033,331
$0.10		27,200,000		8.00		23,311,108
$0.13		250,000		9.05		—
$0.15		2,800,000		7.10		2,800,000
$0.22		2,750,000		9.30		—
$0.25		2,500,000		9.03		500,000
$0.26		500,000		9.55		—
$0.29		1,000,000		8.55		—
$0.40		l,000,000		7.67		l,000,000
$0.45		31,000,000		7.10		31,000,000
Total		105,950,000		7.70		90,144,442

During the nine months ended September 30, 2018, the Company recognized approximately $1,798,000 of stock-based compensation expense related to options of which non-employees expense was approximately $331,000. As of September 30, 2018, there was approximately $1,907,000 of unrecognized compensation costs related to stock options outstanding of which approximately $462,000 was related to non-employees and will be expensed through 2021.

Restricted Stock

During the nine months ended September 30, 2018, the Company granted 2,750,000 shares of restricted stock to employees of which 2,000,000 shares will be vested by upon achieving certain performance criteria and 750,000 common shares will vest over a three-year period. The restricted stock that is not subject to performance criteria will be expensed over the three-year vesting period was valued at the fair market value at the date of grant. Additionally, in the nine months ended September 30, 2018, the Company granted 720,000 shares of restricted stock to non-employee Directors in connection with their compensation to serve as Board Members. The shares were valued at the fair market value at the date of grant and vest quarterly.