Quarterly report pursuant to Section 13 or 15(d)

EQUITY TRANSACTIONS

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EQUITY TRANSACTIONS
 9 Months Ended
Sep. 30, 2015
Equity [Abstract]  
EQUITY TRANSACTIONS
6. 
EQUITY TRANSACTIONS
 
Common Stock
 
During the nine months ended September 30, 2015, the Company entered into settlement and release agreements, pursuant to which the Company agreed to issue an aggregate of 1,060,000 shares of common stock valued at $530,000 in full settlement and release of claims on certain assets acquired from Songstagram (see Note 5).
 
On July 18, 2015, the Company issued an aggregate total of 1,215,000 shares of restricted common stock as compensation to certain employees.  Of the shares issued, 1,200,000 of the shares vest over a 3 year period through January 20, 2018.  The other 15,000 shares were vested immediately on the gate of the grant.  The Company recorded a total of $146,004 as shares based compensation expense during the three months ended September 30, 2015 for these grants.
 
On July 21, 2015, the Company issued an aggregate total of 600,000 shares of restricted common stock as compensation to members of the Board of Directors.  The shares vest over an 18 month period from the issuance date.  The Company recorded a total of $38,738 as share based compensation expense during the three months ended September 30, 2015 for these grants.
 
During the nine months ended September 30, 2014, the Company received capital contributions from stockholders' totaling $595,000, and granted its majority shareholder $62,500 of equity interests as payment of his accrued salary for the nine months ended September 30, 2014.
 
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 nine months ended September 30, 2015 is presented below.
 
           
Weighted-
      
       
Weighted-
    
Average
      
       
Average
    
Remaining
    
Aggregate
  
       
Exercise
    
Contractual
    
Intrinsic
  
   
Options
    
Price
    
Life (Years)
    
Value
  
                 
Outstanding at December 31, 2014
    
6,470,000
    
$
0.50
      
4.87
    
$
-
  
Granted
    
2,900,000
      
1.30
              
-
  
Forfeited
    
(295,000
)
    
0.50
              
-
  
Exercised
    
-
                      
-
  
Outstanding at September 30, 2015 (unaudited)
    
9,075,000
    
$
0.73
      
4.32
    
$
-
  
                                 
Vested and expected to vest
                                
  at September 30, 2015 (unaudited)
    
7,169,250
    
$
0.73
      
4.32
    
$
-
  
                                 
Exercisable at September 30, 2015 (unaudited)
    
2,525,000
    
$
0.61
      
4.21
    
$
-
  
 
 
The total expense recognized relating to stock options for the three months ended September 30, 2015 and 2014 amounted to $476,732 and $0, respectively.  The weighted average grant date fair value of options granted during the nine months ended September 30, 2015 was $0.16 per option.  The total expense recognized relating to stock options for the nine months ended September 30, 2015 and 2014 amounted to $729,773 and $0, respectively.  As of September 30, 2015, total unrecognized stock-based compensation expense was $1,015,292, 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 September 30, 2015.
 
   
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
      
6,475,000
      
4.12
    
$
0.50
      
2,225,000
    
$
0.50
  
 
1.30
      
2,600,000
      
4.81
      
1.30
      
300,000
      
1.30
  
         
9,075,000
                      
2,525,000
          
 
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 as of September 30, 2015 and is being amortized over the life of the agreement.