Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Deficit

v3.5.0.2
Stockholders' Deficit
 6 Months Ended
Jun. 30, 2016
Equity [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, 2016, 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, 2015 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, 2016, options to acquire 1,209,750 shares were outstanding under the Plan with 344,250 shares available for future grant under the 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, 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, 2016 2,107,500 options have been granted under the 2013 Plan.

 

On November 29, 2015 the Company’s Board of Directors adopted the 2015 Nonqualified Stock Option Plan (the “2015 Plan”) pursuant to which 5,000,000 shares of our common stock were reserved for issuance upon exercise of non-qualified stock options. Under the 2015 Plan, we may award non-qualified stock options 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, 2016, non-qualified options to acquire 2,068,000 shares were outstanding under the Plan with 2,932,000 shares available for future grants under the 2015 Plan.

 

All of the outstanding non-qualified options had an exercise price that was at or above the Company’s common stock share price on June 30, 2016.

 

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

 

    Stock Options     Warrants              
    Weighted     Weighted              
    Average     Average           Total  
    Shares     Price
per share 		    Shares     Price
per share 		    Shares     Exercisable  
Balance outstanding, 01/01/15     3,406,250     $ 0.51       19,182,201     $ 0.49       22,588,451       16,611,528  
Granted     2,500,000       0.40       10,837,141       0.40       13,337,141          
Exercised     -               -       -       -          
Expired     (205,000 )     1.00       (791,678 )     0.31       (996,678 )        
Forfeited     (130,000 )     0.70       -       -       (130,000 )        
Balance outstanding, 12/31/15     5,571,250     $ 0.44       29,227,664     $ 0.44       34,798,914       31,664,469  
Granted     -       -       3,079,522       0.41       3,079,552          
Exercised     -               (70,000 )     0.31       (70,000 )        
Expired     (186,000 )     1.00       (5,833,876 )     0.43       (6,019,876 )        
Forfeited     -       -       -       -       -          
Balance outstanding, 6/30/2016     5,385,250     $ 0.42       26,403,340     $ 0.44       31,788,590       29,377,530  

 

    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       8.2     $ 0.30       1,183,438       8.2     $ 0.30  
0.40 - 0.49     2,811,000       9.2       0.40       892,002       8.6       0.40  
0.50 - 0.59     226,250       6.1       0.50       226,250       6.1       0.50  
0.60 - 0.69     402,500       3.6       0.60       402,500       3.6       0.60  
0.70 - 1.25     270,000       2.9       1.00       270,000       2.9       1.00  
$0.30 - $1.25     5,385,250       8.1     $ 0.42       2,974,190       7.1     $ 0.45  

 

As of June 30, 2016, the total estimated fair value of unvested stock options to be amortized over their remaining vesting period was $653,425. The non-cash, stock-based compensation expense associated with the vesting of these options is expected to be $87,684 for the remainder of 2016, $216,326 in 2017 and $157,104 in 2018.

 

Common Stock Issuances

 

On May 6, 2016, all remaining Series K preferred shareholders except one converted 4,600 shares of preferred stock into approximately 4.6 million shares of the Company’s common stock. The Company issued 247,435 shares of common stock to pay the accrued dividend of $63,413 on Series K preferred stock.

 

We issued 30,667 shares in connection with the convertible note issued on June 14, 2016 to compensate the lender. See Note 6.

 

On April 22, 2016, we issued 22,996 shares of common stock in connection with a cashless exercise of 70,000 warrants.

 

On various dates from January to June 2016 the Company issued 705,000 shares of restricted common stock to investor relations firms for services rendered.