Shareholders' Deficit

3 Months Ended

Mar. 31, 2017

Shareholders' Deficit [Abstract]

SHAREHOLDERS' DEFICIT

NOTE 8 – SHAREHOLDERS’ DEFICIT

Issuance of Common Stock

On January 1, 2016, the Company made grants totaling 1,515,000 shares of common stock pursuant to the Company’s 2016 Equity Incentive Plan (the “EIP”). The grants are subject to time-based vesting requirements and generally vest a portion upon grant and the balance on a straight-line basis over a period of four years. Shares vested and issued upon grant on January 1, 2016 totaled 600,000. The share grants were valued at $0.05 per share. See section below entitled “Employee Equity Incentive Plan” for further discussion of the EIP.

During February 2017, the Company sold 2,100,000 shares of common stock to three separate investors. The Company received $210,000 in proceeds from the sale. The shares were issued at a share price of $0.10 per share.

Common Stock Issuable

As of March 31, 2017 and December 31, 2016, the Company was obligated to issue 171,400 and 80,643 shares of common stock in exchange for professional services provided by a third party during 2016 and the first quarter of 2017. During the three months ended March 31, 2017, the Company recognized expense related to these shares of $8,903.

As of March 31, 2017 and December 31, 2016, the Company was obligated to issue 207,500 and -0- shares of common stock to employees under the EIP as a result of grants made in 2016 that vested during the first quarter of 2017 for which shares were not issued as of March 31, 2017. See section below entitled “Employee Equity Incentive Plan” for further discussion of the EIP.

Stock Warrants

Transactions involving our stock warrants during the three months ended March 31, 2017 are summarized as follows:

			Weighted
			Average
			Exercise
	Number		Price
Outstanding at beginning of the period		10,576,389	$	0.08
Granted during the period		7,500,000	$	0.41
Exercised during the period		---	$	---
Terminated during the period		---	$	---
Outstanding at end of the period		18,076,389	$	0.22
Exercisable at end of the period		18,076,389	$	0.22
Weighted average remaining life		4.9 years

The following table summarizes information about the Company’s stock warrants outstanding as of March 31, 2017:

Warrants Outstanding								Warrants Exercisable
				Weighted-
				Average		Weighted-				Weighted-
				Remaining		Average				Average
Exercise		Number		Contractual		Exercise		Number		Exercise
Prices		Outstanding		Life (years)		Price		Exercisable		Price
$	0.05 to 0.09		8,388,889		5.1	$	0.08		8,388,889	$	0.08
$	0.10 to 0.15		2,687,500		4.4	$	0.11		2,687,500	$	0.11
$	0.25		4,000,000		5.0	$	0.25		4,000,000	$	0.25
$	0.50		2,000,000		5.0	$	0.50		2,000,000	$	0.50
$	1.00		1,000,000		5.0	$	1.00		1,000,000	$	1.00
$	0.05 to 1.00		18,076,389		4.9	$	0.22		18,076,389	$	0.22

During the three months ended March 31, 2017, the Company issued 7,500,000 warrants. The fair value of the warrant was calculated using the Black-Scholes pricing model with the following assumptions: risk-free interest rate of 1.89% to 1.95%, expected life of 5 years, volatility of 40%, and expected dividend yield of zero. The aggregate grant date fair value of warrants issued during the three months ended March 31, 2017 was $64,141.

Employee Equity Incentive Plan

On January 1, 2016, the Company instituted the EIP for the purpose of having equity awards available to allow for equity participation by its employees. The EIP allows for the issuance of up to 15,503,680 shares of the Company’s common stock to employees, which may be issued in the form of stock options, stock appreciation rights, or restricted shares. The EIP is governed by the Company’s board, or a committee that may be appointed by the board in the future.

The following table summarizes the status of shares issued and outstanding under the EIP outstanding as of and for the three months ended March 31, 2017:

Outstanding at beginning of the period		1,552,500
Granted during the period		---
Terminated during the period		(85,000	)
Outstanding at end of the period		1,467,500
Shares vested at period-end		807,500
Weighted average grant date fair value of shares granted during the period	$	---
Aggregate grant date fair value of shares granted during the period	$	---
Shares available for grant pursuant to EIP at period-end		11,686,184

The aggregate grant date fair value of shares granted pursuant to the EIP in the three months ended March 31, 2017 and 2016 was $-0- and $60,600, respectively (net of expected forfeitures). Grants made during three months ended March 31, 2016 were valued at $0.05 per share, which is the price at which the Company’s common shares were last sold at that time. Total stock based compensation recognized for grants under the EIP was $3,150 and $3,030 during the three months ended March 31, 2017 and 2016. Total unrecognized stock compensation related to these grants was $47,490 as of March 31, 2017.

A summary of the status of nonvested shares issued pursuant to the EIP as of March 31, 2017 presented below:

				Weighted
				Average
				Grant Date
	Shares			Fair Value
Nonvested at January 1, 2017		940,000		$	0.04
Granted		---		$	---
Vested		(207,500	)	$	0.04
Forfeited		(85,000	)	$	0.04
Nonvested at March 31, 2017		647,500		$	0.04

Employee Stock Options

The following table summarizes the status of options outstanding as of and for the three months ended March 31, 2017:

			Weighted
			Average
			Exercise
	Number		Price
Outstanding at beginning of the period		2,349,996	$	0.12
Granted during the period		---	$	---
Exercised during the period		---	$	---
Terminated during the period		---	$	---
Outstanding at end of the period		2,349,996	$	0.12
Options exercisable at period-end		100,000
Weighted average remaining life (in years)		9.4
Weighted average grant date fair value of options granted during the period	$	---
Options available for grant at period-end		11,601,184

The following table summarizes information about the Company’s stock options outstanding as of March 31, 2017:

Options Outstanding								Options Exercisable
				Weighted-
				Average		Weighted-				Weighted-
				Remaining		Average				Average
Exercise		Number		Contractual		Exercise		Number		Exercise
Prices		Outstanding		Life (years)		Price		Exercisable		Price
$	0.08		1,600,000		9.3	$	0.08		100,000	$	0.08
$	0.20		749,996		9.7	$	0.20		---	$	---
$	0.08 to 0.20		2,349,996		9.4	$	0.12		100,000	$	0.08

A summary of the status of nonvested options issued pursuant to the EIP as of March 31, 2017 is presented below:

			Weighted
			Average
			Grant Date
	Shares		Fair Value
Nonvested at January 1, 2017		2,249,996	$	0.12
Granted		---	$	---
Vested		---	$	---
Forfeited		---	$	---
Nonvested at March 31, 2017		2,249,996	$	0.12