Quarterly report pursuant to Section 13 or 15(d)

Equity Transactions

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Equity Transactions
 3 Months Ended
Mar. 31, 2016
Equity [Abstract]  
Equity Transactions

7. EQUITY TRANSACTIONS

 

Common Stock

 

During the three months ended March 31, 2015, the Company entered into a settlement and release agreement with two previous shareholders of Songstagram, pursuant to which the Company agreed to issue a total of 820,000 shares of common stock valued at $410,000 to the previous shareholders in full settlement and release of claims they had on certain assets acquired from Songstagram.

 

During the three months ended March 31, 2016, the Company received $132,480 in subscriptions for the issuance of shares of common stock at a price of $0.045 per share. The shares were issued in connection with a private placement completed on April 4, 2016 (see Note 9).

 

On January 28, 2016, the Company entered into stock repurchase agreements with three former employees and consultants to acquire an aggregate total of 9,011,324 shares of the Company’s common stock. Pursuant to the terms of the agreements, the Company has the right to purchase the shares at a price of $0.02 per share on or before April 15, 2016. The Company has not repurchased any shares as of March 31, 2016.

 

Stock Options

 

Effective October 16, 2014, the Company adopted the 2014 Stock Option Plan (the “Plan”) under the administration of the board of directors to retain the services of valued key employees and consultants of the Company.

 

On November 21, 2014, the Company entered into an executive employment agreement with Rory Cutaia, the Company’s Chief Executive Officer, pursuant to which the Company (i) issued Mr. Cutaia 800,000 stock options, each exercisable into one share of the Company’s common stock at a price of $0.50 per share, 400,000 of which vested immediately and 400,000 which will vest one year from the execution date, on November 21, 2015 and (ii) agreed to issue Mr. Cutaia 250,000 stock options on each anniversary of the execution date.

 

A summary of option activity for the three months ended March 31, 2016 is presented below.

 

                Weighted-        
          Weighted-     Average        
          Average     Remaining     Aggregate  
          Exercise     Contractual     Intrinsic  
    Options     Price     Life (Years)     Value  
                                 
Outstanding at December 31, 2015     7,656,250     $ 0.66       4.03     $ -  
Granted     -       -                  
Forfeited     (1,155,556 )     0.92                  
Exercised     -       -                  
Outstanding at March 31, 2016 (unaudited)     6,500,694     $ 0.61       3.75     $ -  
                                 
Vested and expected to vest  at March 31, 2016 (unaudited)      4,420,472     $  0.61        3.75     $  -  
                                 
Exercisable at March 31, 2016 (unaudited)     3,846,944     $ 0.56       3.69     $ -  

 

The total expense recognized relating to stock options for the three months ended March 31, 2016 and 2015 amounted to $92,673 and $64,496, respectively. There were no new options issued during the three months ended March 31 2016. As of March 31, 2016, total unrecognized stock-based compensation expense was $819,816, which is expected to be recognized as an operating expense through July 2020.

 

The following table summarizes information about stock options outstanding and exercisable at March 31, 2016.

 

      Options Outstanding     Options Exercisable  
            Weighted     Weighted           Weighted  
            Average     Average           Average  
Exercise     Number     Remaining     Exercise     Number     Exercise  
Price     of Shares     Life (Years)     Price     of Shares     Price  
                                             
$ 0.50       5,600,694       3.65     $ 0.50       3,546,944     $ 0.50  
  1.30       900,000       4.31       1.30       300,000       1.30  
          6,500,694                       3,846,944          

  

Warrants

 

On November 12, 2014, the Company granted warrants to a consultant to purchase 600,000 shares of common stock at an exercise price of $0.50 per share. The warrants expire on November 12, 2019 and were fully vested on the grant date.

 

On March 21, 2015, in connection with the DelMorgan agreement (see note 4), the Company issued 48,000 warrants, each exercisable into one share of common stock at an exercise price of $0.10 per share. The warrants were fully vested on the date of the grant and expire on March 20, 2018. The warrants have been valued using the Black-Scholes pricing model as of the contract date. The total value of $20,114 has been recorded as a component of prepaid expenses and other current assets in the accompanying condensed consolidated balance sheet and is being amortized over the life of the agreement.

 

On October 30, 2015, the Company granted warrants to a consultant to purchase 600,000 shares of common stock at an exercise price of $0.50 per share. The warrants expire on October 30, 2020 and were fully vested on the grant date.

 

On December 1, 2015, the Company granted 9,719,879 warrants as consideration for the Company’s Chief Executive Officer and a Board of Director member agreeing to extend the payment terms of their respective note payable balances to a maturity date of April 1, 2017 (see Note 5).