Quarterly report pursuant to Section 13 or 15(d)

Stock Based Compensation

v3.20.2
Stock Based Compensation
6 Months Ended
Jun. 30, 2020
Stock Based Compensation  
Note 12 - Stock Based Compensation

Stock Based Compensation

  

Stock based compensation consists of the amortization of common stock, stock options and warrants issued for prepaid services. For the three months ended June 30, 2020 and 2019, stock based compensation amounted to $135,109 and $1,762,736, respectively. For the six months ended June 30, 2020 and 2019, stock based compensation amounted to $249,749 and $1,762,736, respectively. Such expense is classified in selling, general and administrative expenses.

 

Common Stock

 

As of January 1, 2020, and pursuant to an advisory agreement dated as of November 20, 2019 and effective as of January 1, 2020 for a term of one year with a nonaffiliated third party, the Company issued 1,000,000 shares of common stock of the Company to such third party as and for the entire compensation to be paid for all services to be rendered during the term. These shares of common stock were valued at $200,000 in accordance with FASB ASC Topic 718. The fair value of the shares is being amortized to selling, general and administrative expenses within the Company’s condensed consolidated statements of operations over one year.

 

Stock Options

 

The Company accounts for stock-based compensation awards in accordance with the provisions of ASC 718, which addresses the accounting for employee stock options which requires that the cost of all employee stock options, as well as other equity-based compensation arrangements, be reflected in the condensed consolidated financial statements over the vesting period based on the estimated fair value of the awards.

 

A summary of stock option activity for the six months ended June 30, 2020 is presented below: 

 

 

 

Number of

Shares

 

 

Weighted Average Exercise Price

 

 

Weighted Average Remaining Contractual Life (years)

 

 

Aggregate

Intrinsic

Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

January 1, 2020

 

 

12,553,326

 

 

$ 0.55

 

 

 

4.02

 

 

$ 927

 

Grants

 

 

250,000

 

 

 

0.19

 

 

 

5.00

 

 

 

 

 

Expirations

 

 

(356,000 )

 

 

0.59

 

 

 

-

 

 

 

 

 

June 30, 2020

 

 

12,447,326

 

 

$ 0.54

 

 

 

3.60

 

 

$ 1,734

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options exercisable at:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2020

 

 

12,322,326

 

 

$ 0.54

 

 

 

3.59

 

 

$ 1,734

 

 

The aggregate intrinsic value in the table above represents the total intrinsic value, based on the Company’s closing stock price of $0.19 as of June 30, 2020, which would have been received by the option holders had all option holders exercised their options as of that date.

 

The Company utilized the Black-Scholes options pricing model to value its options granted. The assumptions used for options granted during the six months ended June 30, 2020 and 2019 are as follows:

 

 

 

June 30,
2020

 

 

June 30,
2019

 

Exercise price

 

$ 0.19

 

 

$ 0.27

 

Expected dividends

 

 

0 %

 

 

0 %

Expected volatility

 

 

103 %

 

 

100 %

Risk free interest rate

 

 

0.33 %

 

 

3 %

Expected life

 

5 years

 

 

5 years

 

  

On June 15, 2020, the Company granted nonqualified stock options to acquire an aggregate of 250,000 shares of the Company’s common stock under the Company’s 2017 Equity Plan to an employee. The options granted are exercisable at $0.19 per share, representing the fair market value of the common stock on the date of grant as determined under the 2017 Equity Plan. Fifty percent of the options are fully vested and exercisable as of the date of grant and fifty percent of the options vest on April 1, 2021. The options will expire five years from the date of grant. Based on a Black-Scholes valuation model, these options were valued at $37,882 in accordance with FASB ASC Topic 718 which will be expensed over the vesting period in selling, general and administrative expenses within the Company’s consolidated statements of operations.