Quarterly report pursuant to Section 13 or 15(d)

Equity

v3.19.3
Equity
9 Months Ended
Sep. 30, 2019
Equity [Abstract]  
EQUITY

NOTE 12 – EQUITY

 

Common Shares Issued for Warrant Exercise

 

On January 9, 2019, the Company issued 350,856 shares of its common stock upon cashless exercise of warrants to purchase 578,891 shares of common stock.

 

Common Shares Issued for Option Exercise

 

On February 27, 2019, the Company issued 158,932 shares of its common stock upon cashless exercise of options to purchase 200,000 shares of common stock.

 

Common Shares Issued for Service Fee

 

On April 1, 2019, the Company issued a total of 120,812 shares of its common stock in payment of service fee from certain consultants. These shares were valued at $313,800, the fair market values on the grant dates using the reported closing share prices on the dates of grant.

 

On September 23, 2019, the Company issued a total of 115,417 shares of its common stock in payment of service fee from certain consultants. These shares were valued at $391,867, the fair market values on the grant dates using the reported closing share prices on the dates of grant.

 

Units Sold for Cash

 

On April 25, 2019, the Company entered into a purchase agreement with several third party institutional investors for the purchase of 1,714,288 units in a registered direct offering, for gross proceeds of $6,000,008 before placement agent fees and other offering expenses payable by the Company. Each unit was sold at a public offering price of $3.50 and consists of one share of common stock and a warrant to purchase one share of common stock. The Company received net cash proceeds of $5,103,704, net of cash paid for placement agent fees and other offering expenses.

 

The warrants are exercisable immediately as of the date of issuance (the "Initial Exercise Date"), at an exercise price of $3.50 per share, subject to adjustment as provided in the warrants, and expire on the fifth (5th) anniversary of the Initial Exercise Date. The warrants include anti-dilution rights, which provide that if at any time the warrants are outstanding, the Company issues or is deemed to have issued any common stock or common stock equivalents for consideration less than the then current exercise price of the warrants, the exercise price of such warrants is automatically reduced to the lowest price per share of consideration provided or deemed to have been provided for such securities (subject to adjustment for reverse and forward stock splits, recapitalizations and similar transactions). The warrants include the fundamental transaction provisions and the exercise price of the warrants is protected against down-round financing throughout the term of the warrants. Upon evaluation, the warrants meet the definition of a derivative under FASB ASC 815, as the Company cannot avoid a net cash settlement under certain circumstances (see Note 11).

 

Options

 

The following table summarizes the shares of the Company's common stock issuable upon exercise of options outstanding at September 30, 2019:

 

Options Outstanding     Options Exercisable  
Range of
Exercise Price
    Number Outstanding at September 30,
2019
    Range of Weighted Average Remaining Contractual Life (Years)     Weighted Average Exercise Price     Number Exercisable at September 30, 2019     Weighted Average Exercise
Price
 
$ 0.50       2,000,000       7.36     $ 0.50       1,777,778     $ 0.50  
  1.00 – 1.49       450,000       1.09 – 3.09       1.07       450,000       1.07  
  2.00 – 2.80       2,560,000       2.58 – 4.26       2.15       1,922,500       2.15  
  4.76       60,000       4.52       4.76       40,000       4.76  
$ 0.50 – 4.76       5,070,000       5.20     $ 1.43       4,190,278     $ 1.36  

 

Stock option activities for the nine months ended September 30, 2019 were as follows:

 

    Number of Options     Weighted Average Exercise Price  
Outstanding at December 31, 2018     2,840,000     $ 0.76  
Granted     2,430,000       2.18  
Terminated / Exercised     (200,000 )     1.00  
Outstanding at September 30, 2019     5,070,000     $ 1.43  
Options exercisable at September 30, 2019     4,190,278     $ 1.36  
Options expected to vest     879,722     $ 1.79  

 

The aggregate intrinsic values of stock options outstanding and stock options exercisable at September 30, 2019 was $3,102,100 and $2,797,656, respectively.

 

The fair values of options granted during the nine months ended September 30, 2019 were estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions: volatility of 149.75% - 151.70%, risk-free rate of 2.28% - 2.49%, annual dividend yield of 0% and expected life of 3.00 – 5.00 years. The aggregate fair value of the options granted during the nine months ended September 30, 2019 was $6,338,844.

 

During the three months ended September 30, 2019 and 2018, the fair value of options of $1,916,193 and $612,081, respectively, has been reflected on the accompanying unaudited condensed consolidated statements of operations and comprehensive loss. During the nine months ended September 30, 2019 and 2018, the fair value of options of $5,713,079 and $1,633,254, respectively, has been reflected on the accompanying unaudited condensed consolidated statements of operations and comprehensive loss.

 

A summary of the status of the Company's nonvested stock options granted as of September 30, 2019 and changes during the nine months ended September 30, 2019 is presented below:

 

    Number of Options     Weighted Average Exercise Price  
Nonvested at December 31, 2018     915,555     $ 0.62  
Granted     2,430,000       2.18  
Vested     (2,465,833 )     (1.74 )
Nonvested at September 30, 2019     879,722     $ 1.79  

 

In the three months ended September 30, 2019, the overall value of common stock granted at unit price below $3.50 and stock options granted at exercise price below $3.50 to non-employee is $481,341.

 

Warrants

 

Stock warrants activities during the nine months ended September 30, 2019 were as follows:

 

    Number of Warrants     Weighted Average Exercise Price  
Outstanding at December 31, 2018     578,891     $ 1.28  
Issued     1,714,288       3.50  
Exercised     (578,891 )     (1.28 )
Outstanding and exercisable at September 30, 2019     1,714,288     $ 3.50  

 

The following table summarizes the shares of the Company's common stock issuable upon exercise of warrants outstanding at September 30, 2019:

 

Warrants Outstanding     Warrants Exercisable  
Exercise Price     Number Outstanding at September 30,
2019
    Remaining Contractual Life (Years)     Number Exercisable at September 30,
2019
    Exercise Price  
$ 3.50       1,714,288       4.57       1,714,288     $ 3.50  

 

The aggregate intrinsic values of stock warrants outstanding and stock warrants exercisable at September 30, 2019 was $0.