Annual report pursuant to Section 13 and 15(d)

EQUITY TRANSACTIONS

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EQUITY TRANSACTIONS
 12 Months Ended
Dec. 31, 2014
Equity [Abstract]  
EQUITY TRANSACTIONS
7.
EQUITY TRANSACTIONS
 
Common Stock
On May 19, 2014, CMG exchanged 100% of its membership interests for 100% of the common shares of bBooth pursuant to a Plan of Merger. Immediately after the recapitalization, CMG's membership interests were replaced with 36,000,000 (after the split described in the following paragraph) outstanding shares of common stock in the Company.
 
On July 17, 2014, the Articles of Incorporation of the Company were amended so that the amount of the total authorized capital stock of the corporation was increased to 75,000,000 shares of common stock with a par value of $0.0001 per share, and a 3,600 to 1 forward stock split was approved. This was done in order to facilitate a 1 for 1 share exchange between GSD and the Company at the Closing of the Acquisition of the Company by GSD (see Note 5).
 
In October 2014, the Company completed a private placement and sold 9,000,000 shares of common stock at a price of $0.50 per share for gross proceeds of $4,500,000. In connection with the sale of the stock, the Company incurred offering costs totaling $671,640 which have been recorded net of the proceeds received as a component of additional paid-in capital in the accompanying financial statements. The Company also issued an aggregate of 659,600 shares of common stock as payment of additional offering costs.
 
In October 2014, the Company issued 4,769,473 shares of common stock for the conversion of $1,669,316 convertible debt and accrued interest.
 
On November 11, 2014, the Company issued 600,000 shares of common stock valued at $300,000 in connection with an Asset License Agreement with Studio One (see Note 10).
 
During the year ended December 31, 2014 and 2013, the Company received capital contributions from stockholders of $595,000 and $1,383,967, respectively.
 
During the year ended December 31, 2013, the Company granted four stockholders membership interests as compensation which, at the time, represented an aggregate of 25.11% of the Company. As a result, the Company recorded $2,946,740 in share-based compensation expense during the year ended December 31, 2013 which represented the estimated fair value of the equity interests at the time of grant. The amounts are recorded as a component of general and administrative expenses in the accompanying statement of operations for the year ended December 31, 2013. There was no such grants during the year ended December 31, 2014.
 
During the years ended December 31, 2014 and 2013, the Company granted its majority shareholder $62,500 and $250,000, respectively, of equity interests as payment of his accrued salary.
 
During the year ended December 31, 2013, the Company granted a member $57,500 of equity interests as payment of a commission fee for finding certain investors to invest in the Company. The Company has recorded these offering costs net of the proceeds from the related investments as a reduction of additional paid-in capital in the accompanying balance sheet as of December 31, 2013.
 
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, and issued the following stock options in connection with the agreement: (i) 800,000 stock options, each exercisable into one share of our 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) 250,000 stock options on each anniversary of the execution date.
 
On November 12, 2014, the Company granted an additional 7,350,000 stock options to various key employees and consultants which are exercisable into shares of common stock at a price of $0.50 per share. The options have a 5 year life and vest over periods ranging from immediately to 4 years from the date of grant.
There was no option activity during the year ended December 31, 2013. A summary of option activity for the year ended December 31, 2014 is presented below.
Weighted-
Weighted-
Average
Average
Remaining
Aggregate
Exercise
Contractual
Intrinsic
Options
Price
Life (Years)
Value
Outstanding at December 31, 2013
-
$
-
-
$
-
Granted
8,150,000
0.50
-
Forfeited
(1,680,000
)
-
Exercised
-
-
Outstanding at December 31, 2014
6,470,000
$
0.50
4.87
$
-
Vested and expected to vest
at December 31, 2014
5,111,300
$
0.50
4.87
$
-
Exercisable at December 31, 2014
1,925,000
$
0.50
4.87
$
-
 
The weighted average grant date fair value of options granted during the year ended December 31, 2014 was $0.33 per option. The total expense recognized relating to stock options for the years ended December 31, 2014 and 2013 amounted to $635,250 and $0, respectively. As of December 31, 2014, total unrecognized stock-based compensation expense was $1,453,074, which is expected to be recognized as an operating expense through November 2019.
 
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. The total share based compensation expense recognized relating to these warrants for the years ended December 31, 2014 and 2013 amounted to $199,356.