Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Deficit

v3.2.0.727
Stockholders' Deficit
 6 Months Ended
Jun. 30, 2015
Stockholders' Equity Note [Abstract]  
Stockholders' Deficit

7) 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 June 30, 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 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 June 30, 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 June 30, 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 June 30, 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     (155,000 )     1.00       -       -       -          
Forfeited     -       -       -       -       -          
Balance outstanding, June 30, 2015     3,251,250     $ 0.49       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       9.2     $ 0.30       666,161       9.2     $ 0.30  
0.40 - 0.49       311,000       7.9       0.40       311,000       7.9       0.40  
0.50 - 0.59       251,250       7.1       0.50       251,250       7.1       0.50  
0.60  - 0.69       467,500       4.5       0.60       445,471       4.4       0.60  
1.00 - 1.25       546,000       2.3       1.00       539,127       2.2       1.00  
$0.30 - $1.25       3,251,250       7.1     $ 0.49       2,213,009       6.1     $ 0.57  

 

As of June 30, 2015, the total estimated fair value of unvested stock options to be amortized over their remaining vesting period was $168,931. The non-cash, stock-based compensation expense associated with the vesting of these options is expected to be $26,247 for the remainder of 2015, $83,440 in 2016 and $59,244 in 2017.

 

Common Stock Issuances

 

With respect to the convertible debenture for $223,000 signed by the Company on December 4, 2013, a lender, with the prior approval of the Company, chose to convert a portion of the outstanding note balance into shares of the Company’s common stock, and to extend the note for approximately 45 days after each conversion, as follows:

 

On January 14, 2015 $25,000 was converted into 100,000 shares of the Company’s common stock.

 

On February 25, 2015 $38,000 was converted into 140,741 shares of the Company’s common stock.

 

On April 10, 2015 $35,000 was converted into 140,000 shares of the Company’s common stock.

 

On May 29, 2015 $35,000 was converted into 140,000 shares of the Company’s common stock.

 

For each extension, the Company paid a fee of $13,000, $13,000, $10,000, and $8,000, respectively.

 

With respect to the convertible debenture for $150,000 signed by the Company on June 4, 2014, a lender, with prior approval of the Company, chose to convert a portion of the outstanding note balance into shares of the Company’s common stock, and to extend the note for approximately 30 days after each conversion, as follows:

 

On February 18, 2015 $25,000 was converted into 100,000 shares of the Company’s common stock.

 

On March 18, 2015 $22,500 was converted into 90,000 shares of the Company’s common stock.

 

On March 31, 2015 $27,500 was converted into 110,000 shares of the Company’s common stock.

 

On April 17, 2015 $30,000 was converted into 120,000 shares of the Company’s common stock.

 

For each extension, the Company paid a fee of $10,000, $0, $0, and $0. This note was paid off in its entirety on July 14, 2015.

 

 With respect to the convertible debenture for $75,000 signed by the Company on November 10, 2014, a lender, upon the request of the Company, on June 8, 2015 agreed to extend the conversion date of the note until July 20, 2015. The lender received 40,000 shares of the Company’s common stock in exchange for the extension. The Company recorded $10,000 to interest expense for this transaction. This note was paid off in its entirety on July 24, 2015.