Quarterly report pursuant to Section 13 or 15(d)

Equity Transactions

v3.5.0.2
Equity Transactions
6 Months Ended
Jun. 30, 2016
Equity [Abstract]  
Equity Transactions

NOTE 4 – EQUITY TRANSACTIONS

 

Common Stock:

 

During the six months ended June 30, 2016, the Company issued an aggregate of 1,325,000 shares of common stock to employees with a total fair value of $199,512 for services rendered. The shares issued are non-refundable and deemed earned upon issuance. As a result, the Company expensed the entire $199,512 upon issuance. The shares issued were valued at the date of the respective agreements.

 

During the six months ended June 30, 2016, the Company issued an aggregate of 392,500 shares of restricted common stock to consultants with a total fair value of $65,900. The shares issued are non-refundable and deemed earned upon issuance. As a result, the Company expensed the entire $65,900 upon issuance. The shares issued were valued at the date of the respective agreements.

 

During the six months ended June 30, 2016, the Company issued an aggregate of 100,000 shares of restricted common stock to consultants for cash of $15,000. The common shares had a fair value of $19,000 at the date of grant, and as a result, the Company reflected an expense of $4,000 upon issuance. The shares issued were valued at the date of the respective agreements.

 

Common Stock with Vesting Terms:

 

In August 2015, the Company granted and issued 100,000 shares of its restricted common stock to an employee pursuant to

an employment agreement. The 100,000 shares vest over a period of one year with a fair value of $37,000 at the date of grant.

 

In February 2015, the Company granted and issued 500,000 shares of its restricted common stock to a consultant pursuant to a consulting agreement. The 500,000 shares are forfeitable and are deemed earned upon completion of service over a period of twenty four months. The Company recognizes the fair value of these shares as they vest.

 

During the six months ended June 30, 2016, 175,001 of these shares vested and as a result, the Company recognized compensation cost of $68,292. As of June 30, 2016, total unvested shares totaled 154,166 shares with unearned compensation costs of $42,458 which will be recognized in the remainder of fiscal year 2016 and in fiscal 2017.

 

When calculating basic net income (loss) per share, these shares are included in weighted average common shares outstanding from the time they vest. When calculating diluted net income per share, these shares are included in weighted average common shares outstanding as of their grant date.

 

The following table summarizes common stock with vesting terms activity:

 

        Weighted
        Average
    Number of   Grant Date
    Shares   Fair Value
Non-vested, December 31, 2015       329,167     $ 0.47  
Granted       —         —    
Vested       (175,001 )     0.46  
Forfeited       —         —    
Non-vested, June 30, 2016       154,166     $ 0.49  

 

Options

 

In June 2016, the Company was granted an exclusive option to purchase all the assets of a game developer and licensor, MMOJoe USA, Inc. (“MMOJoe”) for $5,000,000 payable in cash and issuance shares of common stock valued at $10,000,000. The purchase option will expire on December 31, 2020. In exchange for this purchase option, the Company granted MMOJoe stock options to purchase an aggregate of 3.75 million shares of common stock with a fair value of $471,574 using the Black-Scholes Option Pricing Model. The stock options are fully vested, exercisable at a price per share of $1.00, $2.50 and $5.00 and will expire starting in December 31, 2017 through December 31, 2019.

 

The Company deferred the entire fair value of $471,574 at grant date based upon the Company’s determination that the acquisition of MMOJoe will occur on or before December 31, 2016, otherwise, the amount will be reflected as an expense if the acquisition is deemed not to occur. Once the acquisition of MMOJoe occurs, the $471,574 will be included as part of its acquisition cost. The deferred fair value of $471,574 was reported as Deferred acquisition cost in the accompanying Consolidated Balance Sheets at June 30, 2016.

 

The following table summarizes common stock options activity:

 

      Weighted
        Average
    Options   Exercise Price
December 31, 2015       —       $ —    
Granted       3,750,000       3.97  
Exercised       —         —    
Forfeited       —         —    
Outstanding June 30, 2016       3,750,000        3.97
Exercisable, June 30, 2016       3,750,000     $ 3.97  

 

The weighted average exercise prices, remaining lives for options granted, and exercisable as of June 30, 2016, were as follows:

 

                     
    Outstanding Options       Exercisable Options
Options           Weighted       Weighted
Exercise Price       Life   Average  Exercise       Average  Exercise
Per Share   Shares   (Years)   Price   Shares   Price
$ 1.00       500,000       1.5     $ 1.00       500,000     $ 1.00  
$ 2.50       750,000       2.5     $ 2.50       750,000     $ 2.50  
$ 5.00       2,500,000       3.5     $ 5.00       2,500,000     $ 5.00  
          3,750,000       3.03     $ 3.97       3,750,000     $ 3.97  

 

At June 30, 2016, the Company’s closing stock price was $0.27 per share. As all outstanding options had an exercise price greater than $0.27 per share, the aggregate intrinsic value of the options outstanding at June 30, 2016 was $0.