Quarterly report pursuant to Section 13 or 15(d)

Options and Warrants

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Options and Warrants
9 Months Ended
Sep. 30, 2016
Options And Warrants  
Options and Warrants

Note 9 – Options and Warrants

Warrants – 5BARz International Inc.  

The following table summarizes the warrant activity for the quarter ended September 30, 2016:

 

    Number of
Warrants
  Weighted Average
Exercise Price
  Average Remaining
Contractual Life
Outstanding at December 31, 2015     102,188,477     $ 0.25       1.20  
Granted *     95,305,382       0.20       2.17  
Exercised     (12,441,667 )     0.05         .43  
Cancelled/ expired     (24,305,296 )     0.30       —    
Outstanding at September 30, 2016     160,746,896     $ 0.21       1.35  
Exercisable at September 30, 2016     152,746,896     $ 0.22       .95  

 

* During the nine months ended September 30, 2016, the Company granted warrants to purchase 95,305,382 shares of common stock of which warrants to purchase 71,757,333 shares of common stock were issued as part of a private placement of units, warrants to purchase 16,000,000 shares of common stock were paid as compensation to executive of the Company, warrants to purchase 3,812,500 shares of common stock were issued for investor relations fees, warrants to purchase 3,047,349 shares of common stock were issued as part of a unit for services, and warrants to purchase 688,200 shares of common stock were issued in payment of interest to consultants.

  

The Company had authorized capital of 600,000,000 shares at September 30, 2016, and accordingly should all options, warrants and potentially convertible securities be exercised, the Company may not have enough authorized shares to honor its commitments.

 

Options – 5BARz International Inc.

    Number of
Options
  Weighted Average
Exercise Price
  Average Remaining
Contractual Life
Outstanding at December 31, 2015     15,480,000     $ 0.11       5.04  
Granted     10,565,000       0.09       9.48  
Exercised     —         —         —    
Cancelled     (100,000)                      0.17       —    
Outstanding at September 30, 2016     25,945,000     $ 0.10       6.13  
Exercisable at September 30, 2016     14,617,041     $ 0.12       2.11  

 

During the nine months ended September 30, 2016 the Company issued 10,565,000 stock options at a strike price ranging from $0.075 to $0.12 per share. The Company reports stock-based compensation under ASC 718 “Compensation – Stock Compensation”. ASC 718 requires all share-based payments to employees, including grants of employee stock options, warrants to be recognized in the consolidated financial statements based on their fair values. The Company amortizes the fair value of employee stock options on a straight-line basis over the requisite service period of the awards.  The Company accounts for equity instruments issued to non-employees as compensation in accordance with the provisions of ASC 718, which require that each such equity instrument be recorded at its fair value on the measurement date, which is typically the date the services are performed.

 

 As of September 30, 2016, total unamortized compensation expenses related to unvested stock options were $192,162, This amount is expected to be recognized based upon the vesting provisions provided which include both tangible and intangible factors. The Black-Scholes option valuation model is used to estimate the fair value of the warrants or options granted. The Company measured the stock options issued at fair value using the Black-Scholes pricing model and are classified within Level 3 of the valuation hierarchy. The significant assumptions and valuation methods that the Company used to determine fair value and the change in fair value of the Company’s derivative financial instruments are provided below:

              September 8, 2016   June 14,  2016   February 29, 2016   January 22, 2016
Stock price                     $ 0.075     $ 0.09     $ 0.09     $ 0.08  
Volatility                       106.01     106.02 %     93 %     91.62 %
Risk-free interest rate                     1.14 %     1.01 %     1.74 %     1.21 %
Dividend yield                        0       0       0       0  
Expected life                        5 years        10 years       10 years       5 years  

  

 

        December 4, 2015   July 1, 2015   June 19, 2015   April 22, 2015   April 7, 2015   January 27, 2015
Stock price       $ 0.08     $ 0.11     $ 0.10     $ 0.10     $ 0.10     $ 0.12  
Volatility         91 %     96 %     96 %     96 %     96 %     96 %
Risk-free interest rate       .64 %     .64 %     .64 %     1.63 %     2.26 %     1.36 %
Dividend yield         0       0       0       0       0       0  
Expected life          5 years       5 years       5 years        10 years       10 years       5 years  

 

The fair value of the options was determined to be as follows based upon the assumptions provided above; 

Date Issued   Number of options   Fair value
January 27, 2015   500,000   $34,540
April 7, 2015   2,000,000               $156,344
April 22, 2015   100,000     $8,810
June, 2015   800,000   $57,212
July 1, 2015   300,000   $18,632
December 4, 2015   3,590,000   $199,365
January 22, 2016   240,000   $19,922
February 29, 2016   100,000   $7,758
June 14, 2016   1,000,000   $81,492
September 8, 2016   225,000   $12,960
         

The option valuations are being amortized over vesting terms ranging from immediate to 3 years. For the three and nine months ended September 30, 2016, $45,772 (2015 - $144,088) and $208,736 (2015 –$323,508) was amortized to expense respectively.    

On September 8, 2016, at the annual general meeting of the Company, the shareholders voted in favor of a resolution to ratify the adoption of the 5BARz International, Inc. 2016 stock incentive plan. The 2016 Stock Incentive Plan provides for the grant of options (“Options”) to purchase common stock, and stock awards (“Awards”) consisting of common stock, to eligible participants, including our directors, executive officers, employees and consultants. The terms and conditions of the Plan apply equally to all participants. We have reserved a total of 30,000,000 shares of common stock for issuance under the Plan. As of September 30, 2016, there were outstanding Options for a total of 25,945,000 shares of common stock, none of which have been exercised, and no Awards have been granted. The Plan Administrator, which is currently the board of directors, may designate which of our directors, officers, employees and consultants are to be granted Options and Awards. The Plan Administrator has the authority, in its sole discretion, to determine the type or types of awards to be granted under the Plan. Awards may be granted singly or in combination.

 

Options – CelLynx Group, Inc.

  

The number and weighted average exercise prices of all CelLynx Group, Inc. options exercisable as of September 30, 2016, are as follows:  

    Options   Weighted average
exercise price
  Weighted average remaining contract life
Opening at December 31, 2015     69,000,000     $ 0.0002       2.02  
Granted     —         —         —    
Forfeited     (24,000,000)          0.0002       2.02  
Outstanding at September 30, 2016     45,000,000     $ 0.0002       1.43  
Exercisable at September 30, 2016     45,000,000     $ 0.0002       1.43