Stock-Based Compensation

9 Months Ended

Sep. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

NOTE 16 – STOCK-BASED COMPENSATION

Stock Options

Following is a summary of the option activities during the nine months ended September 30, 2017:

	Number of Units			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)
Outstanding, December 31,2016		850,405		$	0.08		7.29
Granted		18,000		$	5.60		5.00
Exercised		(291,402	)	$	0.0001
Cancelled		(120,971	)	$	0.12
Outstanding, September 30, 2017		456,032		$	0.35		5.25
Exercisable, September 30, 2017		334,091		$	0.17		6.96

On May 13, 2016, the Company granted options to purchase 120,971 shares of Class A common stock at $0.12 per share to an employee for services. These options vest in four years and commenced in the quarter ended June 30, 2016 and expire 5 years from the date of grant. The options have a fair value of $109,000 that was calculated using the Black-Scholes option-pricing model.

On November 1, 2016, the Company entered into an amended employment agreement with its Chief Financial Officer, which amended the exercise price of the 291,402 options granted from $0.13 to $0.0001 per share. The options vesting term was changed to (i) 50% of the remaining unvested options shall vest immediately following the agreement, (ii) all remaining unvested options shall vest on March 31, 2017. Pursuant to the amendment of employment agreement, the fair value of options granted was changed to approximately $484,000 using the Black-Scholes option-pricing model. In 2017, the officer exercised the options and the Company issued 291,402 shares to the officer.

On April 4, 2017, the Company granted options to purchase 18,000 shares of Series A common stock at $5.60 per share to an employee for services. These options vest in four years and commenced in the quarter ended June 30, 2017 and expire 5 years from the date of grant. The options have a fair value of approximately $7,000 that was calculated using the Black-Scholes option-pricing model.

Variables used in the Black-Scholes option-pricing model for options granted during the year ended December 31, 2016 include: (1) discount rate of 0.97 - 0.99% (2) expected life of 3.75 to 3.96 years, (3) expected volatility range of 66 to 69%, and (4) zero expected dividends.

Variables used in the Black-Scholes option-pricing model for options granted during the nine months ended September 30, 2017 include: (1) discount rate of 1.47% (2) expected life of 3.75 years, (3) expected volatility of 68%, and (4) zero expected dividends.

For the nine months ended September 30, 2017 and 2016, the Company recorded stock compensation expense of $50,046 and $13,531, respectively.