Quarterly report pursuant to Section 13 or 15(d)

5. Stockholders' Deficit

v2.4.1.9
5. Stockholders' Deficit
 3 Months Ended
Mar. 31, 2015
Notes to Financial Statements  
5. Stockholders' Deficit

Preferred Stock

 

We are authorized to issue 1,000,000 shares of preferred stock with a par value of $0.01. Of the 1,000,000 shares of preferred stock:

 

1)      20,000 shares have been designated as Series A Junior Participating Preferred Stock (“Junior A”)
2)    313,960 shares have been designated as Series A Convertible Preferred Stock (“Series A”)

 

3)    279,256 shares have been designated as Series B Convertible Preferred Stock (“Series B”)
4)      88,098 shares have been designated as Series C Convertible Preferred Stock (“Series C”)

 

5)           850 shares have been designated as Series D Convertible Preferred Stock (“Series D”)
6)           500 shares have been designated as Series E Convertible Preferred Stock (“Series E”)

 

7)    240,000 shares have been designated as Series G Convertible Preferred Stock (“Series G”)
8)      10,000 shares have been designated as Series H Convertible Preferred Stock (“Series H”)

 

9)             21 shares have been designated as Series H2 Convertible Preferred Stock (“Series H2”)
10)        6,250 shares have been designated as Series J Convertible Preferred Stock  (“Series J”)

 

11)      15,000 shares have been designated as Series K Convertible Preferred Stock  (“Series K”)

 

As of March 31, 2015, there were no shares of Junior A, and Series A, B, C and E issued and outstanding. See our Annual Report on Form 10-K for the year ended December 31, 2014 for the pertinent terms and disclosures of preferred stock.

  

 

Stock Options and Warrants

 

Our stockholders approved our amended 2005 Equity Incentive Plan (the “Plan”) pursuant to which an aggregate of 1,800,000 shares of our common stock were reserved for issuance upon exercise of stock options or other equity awards made under the Plan.  Under the Plan, we may award stock options, shares of common stock, and other equity interests in the Company to employees, officers, directors, consultants, and advisors, and to any other persons the Board of Directors deems appropriate.  As of March 31, 2015, options to acquire 1,720,750 shares were outstanding under the Plan with 79,250 shares available for future grant under the Plan.

 

As of March 31, 2015, options to acquire 10,000 shares are outstanding under the 1999 Non-qualified Stock Option Plan.  No additional options may be granted under the 1999 Non-qualified Stock Option Plan.

 

On December 12, 2013 at the Company’s special meeting the shareholders approved the 2013 Equity Incentive Plan (the “2013 Plan”) pursuant to which 3,000,000 shares of our common stock were reserved for issuance upon exercise of stock options or other equity awards under the 2013 Plan. Under the Plan, we may award stock options, shares of  common stock, and other equity interests in the Company to employees, officers, directors, consultants, and advisors, and to any other persons the Board of Directors deems appropriate. As of March 31, 2015 1,675,500 options have been granted under the 2013 Plan.

 

The following tables summarize information concerning options and warrants outstanding and exercisable:

 

    Stock Options     Warrants              
          Weighted           Weighted              
          Average price           Average price     Total        
    Shares     per share     Shares     per share     Shares     Exercisable  
Balance outstanding, January 1, 2014     1,771,708     $ 0.71       15,012,327     $ 0.57       16,784,035       16,611,528  
      Granted     1,675,500       0.30       8,903,000       0.38       10,578,500          
      Exercised     -       -       (4,208,658 )     0.25       (4,208,658 )        
      Expired     (10,000 )     1.00       (524,468 )     0.74       (534,468 )        
      Forfeited     (30,958 )     0.71       -       -       (30,958          
Balance outstanding, December 31, 2014     3,406,250     $ 0.51       19,182,201     $ 0.49       22,588,451       20,858,111  
      Granted     -       -       -       -       -          
      Exercised     -       -       -       -       -          
      Expired     -       -       -       -       -          
      Forfeited     -       -       -       -       -          
Balance outstanding, March 31, 2015     3,406,250     $ 0.51       19,182,201     $ 0.49       22,588,451       21,315,198  

 

 

      Options Outstanding     Options Exercisable  
            Weighted Average           Weighted Average  
Range of Exercise Prices     Number of Options     Remaining Contractual Life (Years)     Exercise Price     Number of Options     Remaining Contractual Life (Years)     Exercise Price  
$0.30-$0.39     1,675,500       9.5     $ 0.30       444,122       9.5     $ 0.30  
 0.40-0.49       311,000       8.1       0.40       311,000       8.1       0.40  
 0.50-0.59       251,250       7.4       0.50       251,250       7.4       0.50  
 0.60-0.69       467,500       4.7       0.60       439,375       4.6       0.60  
 1.00-1.25       701,000       2.0       1.00       687,250       1.9       1.00  
$0.30-$1.25       3,406,250       7.0     $ 0.51       2,132,997       5.6     $ 0.63  

 

As of March 31, 2015, the total estimated fair value of unvested stock options to be amortized over their remaining vesting period was $224,672.  The non-cash, stock-based compensation expense associated with the vesting of these options is expected to be $81,988 for the remainder of 2015, $83,440 in 2016 and $59,244 in 2017.

 

  Common Stock Issuances

 

On January 14, 2015, a lender, with the prior approval of the Company, chose to convert $25,000 of their outstanding note balance into 100,000 shares of the Company’s common stock.  On February 25, 2015 the same lender, with the prior approval of the Company, chose to convert $38,000 of their outstanding note balance into 140,741 shares of the Company’s common stock. The note was extended to February 28, 2015 and subsequently to April 15, 2015.  Each extension required a fee of $13,000.

 

On February 18, 2015, March 18, 2015 and March 31, 2015, a lender, with the prior approval of the Company, chose to convert $25,000, $22,500 and $27,500 of their outstanding note balance into 100,000, 90,000 and 110,000, shares, respectively, of the Company’s common stock. The maturity date of the note was extended to May 19, 2015 for an extension fee of $10,000.