Quarterly report pursuant to Section 13 or 15(d)

EQUITY

v3.7.0.1
EQUITY
6 Months Ended
Jun. 30, 2017
Notes to Financial Statements  
NOTE 10. EQUITY

The Company has authorized the issuance of 3,000,000 shares of Series A preferred stock, 500,000 shares of Series C preferred stock, 4,000,000 shares of preferred stock and 4,000,000,000 shares of common stock.

 

Common Stock

 

The Company issued common stock for services during the six months ended June 30, 2017. The table below details the issuances:

 

    Shares      Fair Value  
Month   Issued       at Issue Date  
January 2017     1,360,000     $ 884,000  
February 2017     100,000       50,000  
April 2017     136,250       48,450  
Total     1,596,250     $ 982,450  

 

Treasury Stock

 

During the six months ended June 30, 2017, former CEO Cristopher Grunewald returned to the treasury 1,000,000 shares of the Company’s common stock. No consideration was given with the shares recorded a $0 cost.

 

Options

 

2009 Plan

 

In 2009, the Company adopted the 2009 Stock Option Plan (the “2009 Plan”). The 2009 Plan allows the Company to issue options to officers, directors and employees, as well as consultants, to purchase up to 7,000,000 shares of common stock.

 

As of June 30, 2017, there are 5,200 stock options outstanding under the 2009 Plan which were issued prior to the merger. These stock options were valued at $6,934 using the Black-Scholes model which was included in the purchase price of American Exploration.

 

2015 Equity Incentive Plan

 

On November 25, 2015, the Company authorized the Spotlight Innovation Inc. 2015 Equity Incentive Plan (the “2015 Plan”).

 

The total number of shares of common stock which may be issued under the options granted pursuant to the 2015 Plan is 3,600,000. The shares covered by the portion of any grant under the plan which expires unexercised shall become available again for grant under the plan.

 

2016 Equity Incentive Plan

 

On December 13, 2016, the Company adopted the Spotlight Innovation Inc. 2016 Equity Incentive Plan (the “2016 Plan”) and reserved 5,000,000 shares of common stock under the 2016 Plan.

 

During the six months ended June 30, 2017, the Company issued no options. A summary of the stock option activity for the six months ended June 30, 2017 is presented below.

 

    Options    

Weighted-Average

Exercise Price

 
Outstanding December 31, 2017     153,771     $ 12.48  
Granted     -       -  
Exercised     -       -  
Expired/Forfeited     -       -  
Outstanding June 30, 2017     153,771     $ 12.48  
Exercisable June 30, 2017     153,771       12.48  

 

Warrants

 

During the six months ended June 30, 2017, the Company issued 454,500 warrants to purchase shares of common stock. These warrants were issued in connection with the Company’s private placement conducted during the six months ended June 30, 2017. These warrants have an exercise price equal to the closing price of the common stock of the Company on the six-month issuance thereof. The relative fair value of the warrants based on the Black-Scholes model was $39,232 on the grant date.

 

During the six months ended June 30, 2017, the Company issued 500,000 warrants to purchase shares of common stock. These warrants were issued in connection with a consulting agreement. These warrants have an exercise price equal to $1.25 and a term of three years. The relative fair value of the warrants based on the Black-Scholes model was $45,273 on the grant date.

 

During the six months ended June 30, 2017, warrants to purchase 494,171 common shares expired with an average exercise price of $1.29.

 

The fair value of the above warrants was determined by using the Black-Scholes option-pricing model. Variables used in the model for the warrants issued include: i) discount rates ranging from 1.38% to 1.66%; ii) expected terms of 3.00 years; iii) expected volatility ranging from 110.71% to 270.27%; iv) zero expected dividends and v) stock price of $0.26 to $0.52.

 

A summary of the warrant activity for the six months ended June 30, 2017 is presented below:

 

    Warrants     Weighted-Average Exercise Price  
Outstanding at December 31, 2016     5,826,271     $ 1.29  
Granted     954,500       1.03  
Exercised             -  
Expired/forfeited/terminated     (494,171 )     1.29  
Outstanding June 30, 2017     6,286,600     $ 1.16  
Exercisable June 30, 2017     6,286,600     $ 1.16  

 

The weighted average remaining contractual term of the outstanding warrants and exercisable warrants as of June 30, 2017 is 1.90 years.