11. Equity | 11. Equity The Company has authorized 200,000,000 shares of no par common stock at December 31, 2015 and 2014. In addition, the Company has authorized 1,000,000 shares of no par preferred stock, none of which had been issued at December 31, 2015 or 2014. Stock Purchase Warrants Outstanding Transactions in common stock purchase warrants for the year ended December 31, 2014 and 2013, are as follows: Number of Warrants Exercise Prices Balance December 31, 2013 11,000,000 $ 0.15 Issued in connection with private placement 10,200,000 0.10-0.20 Balance December 31, 2014 21,200,000 0.10-0.20 Expired (11,000,000) $ 0.15 Balance December 31, 2015 10,200,000 $ 0.10-0.20 These warrants expire as follows: Shares Exercise Price Expiration Date 3,000,000 $0.15 March 4, 2017 6,000,000 $0.20 August 11, 2017 1,200,000 $0.10 August 11, 2019 Stock Options In April 2014 the Board of Directors of the Company established a stock option plan to authorize the granting of stock options to officers and employees. Upon exercise of the options shares are issued from the available authorized shares of the Company. On April 30, 2014, 2,250,000 options were issued to management, 750,000 options vested immediately and the remaining 1,500,000 vested at a rate of 750,000 each year on the anniversary for 2 additional years, and they expire 3 years after resting date. Each option allows the holder to purchase one share of the CompanyÂ’s stock at $0.10 prior to expiration. Utilizing the Black Scholes option pricing model, an expected life of three years, a risk free rate of 0.87%, and expected volatility of 161.30% compensation cost of $173,844 is associated with these options. Of this $115,896 was recorded as a general and administrative expense in 2014 and $43,461 was recognized in 2015, at December 31, 2015 unrecognized compensation cost related to these options was $14,487 which is expected to be recognized over the next 0.25 years. On December 31, 2014, 500,000 options which vested immediately and expire after two years were issued to R Patrick Highsmith in connection with his hiring as the CompanyÂ’s President and CEO. Each option allows the holder to purchase one share of the CompanyÂ’s stock at $0.11 prior to expiration. Utilizing the Black Scholes option pricing model, an expected life of two years, a risk free rate of 0.49%, and expected volatility of 158.10% compensation cost of $36,250 is associated with these options and was recorded as a general and administrative expense in 2014. These options expire December 1, 2016. On December 12, 2014, 1,500,000 options were issued to management, 750,000 options vested immediately and the remaining 750,000 vested after one year. The options expire 5 years after their vestment date. Each option allows the holder to purchase one share of the CompanyÂ’s stock at $0.15 prior to expiration. Utilizing the Black Scholes option pricing model, an expected life of five years, a risk free rate of 1.65%, and expected volatility of 150.60% compensation cost of $99,558 is associated with these options. Of this $49,780 was recorded as a general and administrative expense in both 2015 and 2014. At December 31, 2015, no unrecognized compensation cost related to these options remained. On December 12, 2014 an additional 250,000 options were issued to past President and CEO R. Patrick Highsmith with a vesting date of December 2015. As part of the resignation and release agreement those options are no longer valid. On December 30, 2015, 1,500,000 options were granted to management, 750,000 options vested immediately and the remaining 750,000 vested on December 30, 2016.The options expire 5 years after their corresponding vesting date. Each option allows the holder to purchase one share of the CompanyÂ’s stock at $0.10 prior to expiration. Utilizing the Black Scholes option pricing model, an expected life of five years, a risk free rate of 1.80%, and expected volatility of 158.50%, a compensation cost of $110,208 is associated with the options. Of this, $55,104 was recorded as a general and administrative expense in 2015. The remaining unrecognized compensation cost of $55,104 is expected to be recognized in 2016. Number of Options Exercise Prices Weighted Average Remaining Term Balance January 1, 2014 0 0 Issued 4,500,000 $ 0.10-0.15 $ 0.12 Balance December 31, 2014 4,500,000 $ 0.10-0.15 $ 0.12 Exercisable at December 31, 2014 2,000,000 $ 0.10-0.15 $ 0.12 Cancelled (250,000) $ 0.15 $ 0.15 Issued 1,500,000 $ 0.10 $ 0.10 Balance December 31, 2015 5,750,000 $ 0.10-0.15 $ 0.11 Exercisable at December 31, 2015 4,250,000 $ 0.10-0.15 $ 0.12 Outstanding options had no intrinsic value at December 31, 2015. Common Stock issued For Cash The Company completed a private placement in the first quarter of 2014. Each unit consisted of two shares of the CompanyÂ’s common stock and one purchase warrant, each warrant exercisable for one share of the CompanyÂ’s stock at $0.15 through March 2017. At closing of the private placement in March 2014, 3,000,000 units consisting of 6,000,000 shares and 3,000,000 warrants were sold for net proceeds of $405,000 after deducting the 10% commission. The Company completed a private placement in the third quarter of 2014. Each unit consisted of two shares of the CompanyÂ’s common stock and one purchase warrant for $0.20; each warrant is exercisable for one share of the CompanyÂ’s stock at $0.20 through August 2017; 6,000,000 units were sold for net proceeds of $1,080,000 after deducting the 10% commission. In addition to the 10% cash commission 1,200,000 warrants were issued to the placing broker. These warrants are exercisable at $0.10 through August 11, 2019. No stock was issued for cash in 2015. |