SCWorx, Corp. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Equity

Stockholders' Equity

6 Months Ended

Jun. 30, 2017

Stockholders' Equity Note Disclosure [Text Block]

Note 6. Stockholders’ Equity

Stock Option Plan

Option Grants

On December 19, 2016, the Board of Directors of the Company awarded stock option grants under the 2016 Equity Incentive Plan to four employees to acquire an aggregate of 200,000 shares of the Company’s common stock. The stock options have a term of 10 years and an exercise price of $3.56 per share, vest annually over three years in three equal tranches and have a grant date fair value of $497,840. The Company determined the fair value of the stock options using the Black-Scholes model. Each award was accepted by the recipient during the first quarter 2017 at which point the Company began to recognize stock-based compensation expense.

On February 1, 2017, the Company entered into an employment agreement with James Byrne as the Company’s Chief Marketing Officer. In connection with Mr. Byrne’s employment he was awarded a stock option grant to acquire 100,000 shares of the Company’s common stock. The stock option has a term of 5 years, an exercise price of $3.55, and a grant date fair value of $247,882, and was fully-vested upon grant. The Company determined the fair value of the stock option using the Black-Scholes model.

Warrant Grants

On January 4, 2017, in connection with the acquisition of SuckerPunch, the Company entered an employment agreement with Bryan Hamper as Managing Director. Mr. Hamper was awarded a warrant to acquire 93,583 shares of the Company’s common stock. The warrant has a term of 10 years, an exercise price of $3.74, and a grant date fair value of $181,920, and was fully-vested upon grant and is included as a component of the SuckerPunch purchase price. The Company determined the fair value of the warrant using the Black-Scholes model.

On March 10, 2017, the Company entered into a service agreement with World Wide Holdings and issued a warrant to acquire 250,000 shares of the Company’s common stock. The warrant has an exercise price of $4.50, term of three years and vest in equal one third increments on April 1, July 1 and October 1, 2017. The Company has recognized stock-based compensation expense of $169,401 during the three months ended June 30, 2016 as the vendor is not required to perform future services to earn the warrant and the vesting provisions are only time based.

The number of shares of the Company’s common stock that are issuable pursuant to warrant and stock option grants with time based vesting as of June 30, 2017 are:

	Warrant Grants				Stock Option Grants
							Weighted-Average
	Number of Shares		Weighted-Average		Number of Shares Subject		Exercise Price
	Subject to Warrants		Exercise Price Per Share		to Options		Per Share
Balance at December 31, 2016		222,230	$	7.43		200,000	$	4.50
Granted		343,583		4.29		300,000		3.56
Exercised
Forfeited
Balance at June 30, 2017		565,813	$	5.53		500,000	$	3.93
Exercisable at June 30, 2017		315,813		6.34		100,000		3.55

As of June 30, 2017 and 2016, the total unrecognized expense for unvested stock options, net of expected forfeitures, was $667,899 and $0, respectively, which is expected to be amortized on a weighted-average basis over a period of three years.

Stock-based compensation expense for the three and six months ended June 30, 2017 and 2016 is as follows:

	Three Months Ended			Six Months Ended
	June 30, 2017		June 30, 2016	June 30, 2017		June 30, 2016
General and administrative expense	$	241,249	$	$	560,978	$

Stock-based compensation expense categorized by the equity components for the three and six months ended June 30, 2017 and 2016 is as follows:

	Three Months Ended			Six Months Ended
	June 30, 2017		June 30, 2016	June 30, 2017		June 30, 2016
Employee stock options	$	71,848	$	$	391,577	$
Warrants		169,401			169,401
	$	241,249	$	$	560,978	$