Stockholders' Equity

3 Months Ended

Mar. 31, 2017

Stockholders' Equity Note [Abstract]

Stockholders' Equity

Stock Options and Warrants

Warrant activity (including warrants issued to investors and for consulting and advisory services) for the three months ended March 31, 2017 and 2016 was as follows:

	For the three months ended
	March 31,
	2017			2016
Beginning balance outstanding		39,818,347			26,397,410
Warrants issued during the period:
Expired during the period		(726,416	)		(546,667	)
Exercised during the period		-			(12,270,853	)
In connection with tender offer exercise		-			26,479,217
Ending balance outstanding		39,091,931			40,059,107

Stock option activity during the following periods was as follows:

	For the three months ended
	March 31,
	2017			2016
Beginning balance outstanding		26,865,017			10,337,113
Options issued during the period		4,698,759			6,836,016
Options expired during the period		(716,830	)		(85,000	)
Ending balance outstanding		30,846,946			17,088,129

The numbers and exercise prices of all options and warrants outstanding at March 31, 2017 are as follows:

Shares Issuable		Weighted Average Exercise Price		Expiration Fiscal Period
	652,516		7.85	2nd Qtr, 2017
	536,500		1.14	3rd Qtr, 2017
	1,162,088		6.45	4th Qtr, 2017
	10,000		6.60	1st Qtr, 2018
	755,000		0.26	4th Qtr, 2018
	36,973,317		0.31	1st Qtr, 2019
	1,850,007		0.44	2nd Qtr, 2019
	1,309,002		0.92	3rd Qtr, 2019
	2,603,000		1.15	4th Qtr, 2019
	8,273,172		0.15	1st Qtr, 2020
	1,475,789		0.18	4th Qtr, 2020
	3,288,713		0.12	1st Qtr, 2021
	1,427,605		0.09	2nd Qtr, 2021
	1,189,668		0.06	3rd Qtr, 2021
	4,698,759		0.02	4th Qtr, 2021
	2,813,284		0.02	1st Qtr, 2021
	133,334		7.05	4th Qtr, 2022
	69,938,877		0.47

Stock-based Compensation

Results of operations for the three months ended March 31, 2017 and 2016 include stock based compensation costs totaling $280,919 and $433,180, respectively, all of which was charged to personnel related expenses.

For purposes of accounting for stock based compensation, the fair value of each option and warrant award is estimated on the date of grant using the Black-Scholes-Merton option pricing formula. Compensation expense is recognized over the service period. The following weighted average assumptions were utilized for the calculations during the three months ended March 31, 2017 and 2016:

	For the three months ended
	March 31,
	2017			2016
Expected life (in years)	2.50 years			2.874 years
Weighted average volatility		202.30	%		108.81	%
Forfeiture rate		26.07	%		13.58	%
Risk-free interest rate		1.38	%		.96	%
Expected dividend rate		0.00	%		0.00	%

The weighted average expected option and warrant term for employee stock options granted reflects the application of the simplified method set out in SEC Staff Accounting Bulletin No. 107, Share-Based Payment (SAB 107). The simplified method defines the life as the average of the contractual term of the options and the weighted average vesting period for all options. The Company utilized this approach as its historical share option exercise experience does not provide a reasonable basis upon which to estimate an expected term. Expected volatilities are based on the historical volatility of the Company’s stock. The Company estimated the forfeiture rate based on our expectation for future forfeitures and (for the purpose of computing stock based compensation given the contractual vesting of the Company’s options and warrants outstanding) the Company assumes that all options and warrants will vest. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield in effect at or near the time of grant. The Company has never declared or paid dividends and has no plans to do so in the foreseeable future.

In February 2017, the Company modified 7,888,172 in outstanding stock options to our former CEO upon his resignation. The new terms extended the exercise date to February 10, 2020 and accelerated vesting on any unvested options. The cancellation and reissuance of these stock options was treated as a modification under ASC 718 and, accordingly, total stock-based compensation expense related to these awards increased $128,807 during the three months ended March 31, 2017. 

As of March 31, 2017, $231,130 of total unrecognized compensation cost related to unvested stock based compensation arrangements is expected to be recognized over a weighted-average period of 15.5 months.