7.  Stockholders’ Equity



Common Stock



The total number of shares of common stock, $0.001 par value, that the Company is authorized to issue is 100,000,000.



The Company issued shares of common stock of 7,080,016 and 636,143 related to restricted stock awards during the six months ended June 30, 2018 and the year ended December 31, 2017, respectively. The Company issued 152,085 shares related to exercises of stock options and 484,058 restricted stock awards in the year ended December 31, 2017.



On February 7, 2018, the Company issued 12,500 shares of our common stock, at a price of $0.78 per share, for the gross proceeds of $9,595 in conjunction with one employee that exercised vested stock options.



On February 23, 2018, the Company issued 1,808 shares of our common stock in a cashless transaction related to a 25,000 warrant exercise.



During the three months ended March 31, 2018, the Company issued 2,018,125 shares of common stock for $2,018,125 related to the exercise of certain warrants.



In June 2018, the Company commenced a private placement of its common shares at an offering price of $1.00 per shares. As of June 30, 2018, the Company had sold 5,047,583 shares of its common stock for gross proceeds of $5,047,583 including $4,000,000 of cash and the cancellation of $1,000,000 of principal, $47,583 of accrued interest, and a loss on conversion of $41,902 under its February 2018 private placement Notes (See Note 6).



As of June 30, 2018, and December 31, 2017 we had an equity payable balance of $100,862 and $100,862, respectively.





Stock-based Plans



Stock Option Activity



The following table summarizes stock option activity for the year ended December 31, 2017 and for the six months ended June 30, 2018:







The weighted average exercise price of stock options granted during the period was $0.72 and the related weighted average grant date fair value was $0.52 per share.



2018



On February 7, 2018, the Company issued 12,500 shares of our common stock, at a price of $0.78 per share, for the gross proceeds of $9,595 in conjunction with one employee that exercised vested stock options.



On March 26, 2018, the Company granted one employee a total of 300,000 options to purchase shares of the Company common stock at the closing price as of March 26, 2018 of $1.10 per share. The Option Shares will vest ratably over forty-eight (48) months. and are exercisable until March 26, 2028. The total estimated value using the Black-Scholes Model, based on a volatility rate of 102% and an option fair value of $.88 was $265,575.



In the three months ended June 30, 2018, the Company granted seven employees a total of 250,000 options to purchase shares of the Company common stock at prices ranging from $0.90 to $1.40 per share. The options vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter and are exercisable until 2028. The total estimated value using the Black-Scholes Model, based on a volatility rate of 84% and an option value of $0.82 was $235,452.



Stock-Based Compensation Expense from Stock Options and Warrants



The impact on our results of operations of recording stock-based compensation expense for the three and six months ended June 30, 2018 and 2017 were as follows:



Valuation Assumptions



The fair value of each stock option award was calculated on the date of grant using the Black-Scholes option pricing model. The following weighted average assumptions were used for the six months ended June 30, 2018 and 2017.







The risk-free interest rate assumption is based upon published interest rates appropriate for the expected life of our employee stock options.



The expected life of the stock options represents the weighted-average period that the stock options are expected to remain outstanding and was determined based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior as influenced by changes to the terms of its stock-based awards.



The dividend yield assumption is based on our history of not paying dividends and no future expectations of dividend payouts.



The expected volatility in 2018 and 2017 is based on the historical publicly traded price of our common stock.



Restricted stock units



The following table summarizes restricted stock unit activity under our stock-based plans for the year ended December 31, 2017 and for the six months ended June 30, 2018:



Stock Based Compensation from Restricted Stock



The impact on our results of operations of recording stock-based compensation expense for restricted stock units for the three and six months ended June 30, 2018 and 2017 was as follows: 





As of June 30, 2018, there was unearned restricted stock unit compensation as described in the tables above. If there are any modifications or cancellations of the underlying unvested awards, we may be required to accelerate, increase or cancel all or a portion of the remaining unearned restricted unit compensation expense. Future unearned restricted unit compensation will increase to the extent we grant additional equity awards.





Warrants Issued to Investors and Placement Agents



At June 30, 2018, we had warrants to purchase 4,529,164 shares of common stock at $1.20 per share and 605,185 at $1.00 per share, respectively, which are outstanding. Of this amount, warrants to purchase 2,762,868 shares expire in 2018, warrants to purchase 1,558,356 shares expire in 2019, and warrants to purchase 813,125 shares expire in 2020.