On January 9, 2018, the Company entered into an Underwriting Agreement (the “Underwriting Agreement”) with Maxim Group LLC, acting as sole book-running manager (the “Underwriter”), for a secondary public offering (the “Offering”) of a combination of 2,150,000 [113,158] shares of common stock, par value $0.001 per share (the “Common Stock”) of the Company, and 1,935,000 [101,842] warrants to purchase 1,935,000 [101,842] shares of common stock (the “Warrants”). Each share of common stock was sold in combination with a warrant to purchase 0.90 [0.05] shares of common stock. The Warrants have a five-year term and an original exercise price of $1.10 [$20.90] per share.

  

The warrants have a price adjustment provision (“ratchet”) in cases where the Company sells common stock or settles liabilities with equity, at a lower price than is reflected in the Warrants. During June, July and August, the Company completed qualifying transactions under the SCWorx note resulting in the Warrant exercise price being adjusted to $0.31 [$5.89] in June and $0.29 [$5.51] in July, which is the lowest amount the warrant can be repriced to. Based upon ASU 2017-11, the decrease in the exercise price of the warrant has been fair valued at approximately $190,000 and accounted for as a non-cash dividend within the consolidated balance sheet. The warrant also has a provision requiring the Company to pay the warrant holders the Black-Scholes value of the warrant upon consummation of a fundamental transaction. On August 20, 2018, the Company entered a stock exchange agreement with SCWorx which, upon closing, meets this definition. For illustration purposes only, the stock price at closing

 

The Offering price was $1.00 [$19.00] per share of Common Stock and related Warrant and the Underwriter had agreed to purchase the shares of Common Stock and related Warrants from the Company at a 7.0% discount to the Offering price. In addition, the Company granted to the Underwriter a 45-day option to purchase up to an additional 322,500 [16,974] shares of Common Stock and/or 290,250 [15,276] Warrants to purchase 290,250 [15,276] shares of Common Stock at the same price to cover over-allotments, if any. The underwriter exercised this option is February 2018 resulting in an additional $50,000 from the sale and issuance of 50,000 [2,632] shares and 272,500 [14,342] warrants. The Underwriting Agreement contains customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations of the Company and the Underwriter, including for liabilities under the Securities Act of 1933, as amended, other obligations of the parties and termination provisions.

The gross proceeds to the Company from the Offering and overallotment were approximately $2.2 million before underwriting discounts and commissions and other offering expenses.

 

The Offering was made pursuant to an effective shelf registration statement on Form S-3 that was declared effective by the Securities and Exchange Commission on December 1, 2017 and a prospectus supplement, dated January 9, 2018, together with the accompanying base prospectus.

 

One of our former board members, Joseph Gamberale, participated in the offering and acquired 25,000 [1,316] units which included 22,500 [1,184] warrants.

 

 

In July 2017, the board of directors approved the issuance of up to $2.5 million of our common stock in one or more private placements.

 

In July 2017, Board members and an employee executed subscription agreements for 513,761 [27,040] units at a purchase price of $1.09 [$20.71] per unit. In August 2017, the Company determined that the amount raised through such sales was insufficient to meet its current needs, and accordingly solicited subscription agreements from third parties for 965,000 [50,789] units at $1.00 [$19.00] per unit. Each unit sold in these placements consists of one restricted share of AMMA common stock and a warrant to acquire one share of common stock at an exercise price of $1.50 [$28.50] per share. The Company issued all 1,478,761 [77,830] shares of common stock sold in these placements on August 29, 2017.

 

In October and November 2017, the Company solicited subscription agreements from third parties for 390,000 [20,526] units at $1.25 [$23.75] per unit. Each unit sold in the placement consists of one restricted share of AMMA common stock and a warrant to acquire one half a share of common stock, 195,000 [10,263] shares in total, at an exercise price of $1.75 [$33.25] per share.

 

The warrant issued with the October common stock placement included a price ratchet provision for cases where the Company sells common stock or settles liabilities with equity, at a lower price than is reflected in the warrants. The Company completed a transaction which resulted in the warrant exercise price being adjusted to $1.10 [$20.90]. Based upon ASU 2017-11, the decrease in the exercise price of the warrant has been fair valued at approximately $10,000 and accounted for as a non-cash dividend within the consolidated balance sheet. There is no further reduction to the exercise price as this provision has expired.

 

 

In February 2017, the Company entered a consulting arrangement with DC Consulting for management consulting services with a term of one year and included the grant of 150,000 [7,895] shares subject to board of director approval. In July 2017, the Company issued the 150,000

 restricted shares to DC Consulting under the arrangement and recognized stock-based compensation of approximately $148,000, the fair value of the shares on the date of issuance.

 

 

In August 2016, the Company entered into an employment agreement with John Price as the Company’s Chief Financial Officer. In connection with Mr. Price’s employment he was awarded a stock option grant to acquire 200,000 [10,526] shares of the Company’s common stock. The stock option had a term of ten years, an exercise price of $4.50 [$85.50], and a grant date fair value of $364,326, and vested one third of the shares on the one year anniversary of the grant date and one third annually thereafter. The Company recognized $61,000 of stock-based compensation expense during the second quarter of 2018. On June 6, 2018, the Company cancelled the original stock option grant and issued a new stock option grant to acquire 200,000 [10,526] shares of the Company’s common stock. The stock option has a term of five years, an exercise price of $0.36 [$6.84], was vested upon grant, and had a grant date fair value of $42,000. The Company determined the fair value of the stock option using the Black - Scholes model. 

 

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 [5,263] shares of the Company’s common stock. The stock option had a term of 5 years, an exercise price of $3.55 [$67.45], 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. In February 2018, Mr. Byrne was terminated, and in May 2018, the Company entered a separation agreement for $25,000 and agreed to cancel Mr. Byrne’s existing stock option grant and issue a new award. On June 27, 2018, the Company issued a stock option grant outside the 2016 Equity Incentive Plan to acquire 100,000 [5,263] shares of the Company’s common stock. The stock option has a term of 5 years, an exercise price of $0.31 [$5.89] per share, was vested upon grant, and had a grant date fair value of $17,000. The Company determined the fair value of the stock option using the Black- Scholes model.

 

On May 25, 2018, the Company commenced the cessation of the professional MMA promotion business. In relation to the disposal of the Iron Tiger Fight Series promotion, the Company awarded the former owner, Scott Sheeley, a stock option grant to acquire 30,000 [1,579] shares of the Company’s common stock. The stock option has a term of five years, an exercise price of $0.35 [$6.65] and a Black - Scholes value of $7,674, which is included as a component of net loss from discontinued operations, net of taxes.

 

200,000

shares of the Company’s common stock. The stock options had a term of 10 years and an exercise price of $3.56

 per share, vested annually over three years in three equal tranches and had 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. In May 2018, in conjunction with the cessation of the professional MMA business, three of the employees were terminated, and 100,000

 unvested options were returned to the plan as forfeited. During the third quarter an additional 50,000

options

were returned to the plan as forfeited.

 

On May 15, 2017, the Company entered into an employment agreement with Ira Rainess as the Company’s EVP of Business Affairs. In connection with Mr. Rainess’ employment, in September 2017, 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 3 years, an exercise price of $1.30 [$24.70], and a grant date fair value of $53,306, and vests one half of the shares on the one year anniversary of the grant date and one half on the second anniversary. The Company determined the fair value of the stock option using the Black-Scholes model.

 

On December 17, 2017, the Company awarded Robert Mazzeo, the Company’s external General Counsel at that time, a stock option grant to acquire 125,000

shares of the Company’s common stock. The option had a term of three years, an exercise price of $1.50 [$28.50],

and a grant date fair value of $77,500, and was fully-vested upon grant. The Company determined the fair value of the stock option using the Black-Scholes model.

 

 250,000 [13,158] shares with an exercise price of $0.53 [$10.07] and vested upon grant. As of the date of this report the option agreements had not been issued.

 As both Mr. Mazzeo and Mr. Rainess are no longer employed by the Company and the option was not issued, and the period to exercise the awards expired, the Company cancelled the option grants during the fourth quarter of 2018.

On May 25, 2018, the Company commenced cessation of the professional MMA promotion business. In relation to the disposal of the Shogun promotion, the Company awarded the former owner, John Rallo, a stock option grant to acquire 366,072

shares of the Company’s common stock. The stock option was vested upon grant, has a term of five years, an exercise price of $0.35

and a Black-Scholes value of $94,000. The option award was issued as settlement of the $310,000 earn-out, the Company realized a gain of $216,000, which is included as a component of

 

On June 6, 2018, the Company awarded Burt Watson, the Company’s Vice President of Operations, a stock option grant to acquire 75,000

 shares of the Company’s common stock. The option has a term of five years, an exercise price of $0.36 [$6.84],

and a grant date fair value of $19,100, and was fully-vested upon grant. The Company determined the fair value of the stock option using the Black-Scholes model. 

 

On June 6, 2018, the Company awarded each of its directors, Joe Gamberale, Joel Tracy and Burt Watson, a stock option grant to acquire 150,000

shares of the Company’s common stock. Each option has a term of five years, an exercise price of $0.36 [$6.84],

and a grant date fair value of $38,000, and was fully-vested upon grant. The Company determined the fair value of the stock option using the Black-Scholes model.

On July 30, 2018, in relation to the disposal of the CFFC promotion, the Company awarded the former owner, Michael Constantino, a stock option grant to acquire 75,000

shares of the Company’s common stock. The stock option has a term of five years, an exercise price of $0.20

and a grant date fair value of $10,500 and was fully-vested upon grant. The Company determined the fair value of the stock option using the Black-Scholes Model. The grant date fair value is included as a component of

On August 14, 2018, the Company awarded John Price, the Company’s President and CFO, a stock option grant to acquire 200,000

hares of the Company’s common stock. The option has a term of five years, an exercise price of $0.18 [$3.42],

and a grant date fair value of $25,000, and was fully-vested upon grant. The Company determined the fair value of the stock option using the Black-Scholes model.

On September 13, 2018, the Company awarded John Price, the Company’s President and CFO, a stock option grant to acquire 250,000

shares of the Company’s common stock. The option has a term of five years, an exercise price of $0.31 [$5.89],

and a grant date fair value of $55,000, and was fully-vested upon grant. The Company determined the fair value of the stock option using the Black-Scholes model.

On September 13, 2018, the Company awarded Joseph Gamberale, the Company’s board member, a stock option grant to acquire 250,000 

shares of the Company’s common stock. The option has a term of five years, an exercise price of $0.31 [$5.89],

and a grant date fair value of $55,000, and was fully-vested upon grant. The Company determined the fair value of the stock option using the Black-Scholes model.

 

On September 13, 2018, the Company awarded Jason Schneider, the Company’s Vice President of Operations, a stock option grant to acquire 75,000

 shares of the Company’s common stock. The option has a term of five years, an exercise price of $0.31 [$5.89],

and a grant date fair value of $16,500, and was fully-vested upon grant. The Company determined the fair value of the stock option using the Black-Scholes model.

 

 

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 5 years, an exercise price of $3.74 [$71.06],

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. In September 2018, the Company disposed of SuckerPunch and agreed to reprice the warrant to acquire 93,583

common shares to $0.3725

per share. The Company recognized a stock based compensation expense of $10,000 related to the repricing.

 

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 [$85.50],

term of three years and vest in equal one third increments on April 1, July 1 and October 1, 2017. The Company determined the fair value of the warrant to be $169,000 which was expensed in the second quarter of 2017. The Company determined the fair value of the warrant using the Black-Scholes model.

 

On January 12, 2018, the Company entered into a service agreement with National Services, LLC (“National”), and issued a warrant to acquire 100,000

shares of the Company’s common stock. The warrant has an exercise price of $1.10 [$20.90],

term of five years and was vested upon grant. The service agreement allowed National to earn up to 300,000

additional warrants, each with an exercise price of $1.10 [$20.90] and five-year term, based upon achieving certain designated milestones. The Company terminated the agreement during the third quarter 2018 and issued no additional warrants. The Company determined the fair value of the warrant to be $38,000 which was expensed in the first quarter of 2018. The Company determined the fair value of the warrant using the Black-Scholes model.

 

On April 11, 2018, the Company entered into a service agreement with a consultant, and issued a warrant to acquire 100,000

 shares of the Company’s common stock. The warrant has an exercise price of $1.10 [$20.90],

term of five years and was vested upon grant. The Company determined the fair value of the warrant using the Black-Scholes model and determined the value to be $25,580, which was expensed during the second quarter of 2018.

 

In May 2018, the Company issued a promissory note to

for $200,000 of borrowings for operating capital. In September 2018, the Company agreed to issue the note holder 200,000

common shares with a fair value of $ and 50,000

warrants with an exercise price of $0.29

and term of five years and a fair value of $8,500, in exchange for the noteholder’s agreement to convert all interest under the loan into shares of the Company’s common stock, and extend the note to December 31, 2018. 

 

 503,356

 

 

As of December 31, 2018 and 2017, the total unrecognized expense for unvested stock options, net of expected forfeitures, was approximately

0

 and $564,184, respectively. 

 

Stock-based compensation expense for the years ended December 31, 2018 and 2017 is as follows:

 

 

 

 

 

Stock-based compensation expense categorized by the equity components for the year ended December 31, 2018 and 2017 is as follows: