Stockholders' Equity (Deficiency) | 3 Months Ended |
Mar. 31, 2015 |
Equity [Abstract] | |
Stockholders' Equity (Deficiency) | 7. Stockholders’ Equity (Deficiency) |
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Common Stock |
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Sale of Common Stock and Common Stock Units |
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On February 9, 2015, the Company sold (a) an aggregate of 36,500,000 shares of common stock for an aggregate purchase price of $1,460,000, or $0.04 per share, and (b) common stock units that in aggregate consisted of 7,575,758 shares of common stock and warrants to purchase 3,787,880 shares of common stock for an aggregate purchase price of $500,000, or $0.066 per share. |
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The warrants have a three-year term, are exercisable at $0.066 per share and were fully vested at the date of issuance. In addition, the warrants are callable by the Company in the event that the closing price of its common stock for at least fifteen trading days in any consecutive twenty-trading-day period is equal to or greater than $0.132, provided that at least six months have lapsed from the issuance date of the warrants (see Warrants to Purchase Common Stock). |
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The Company paid an aggregate of $46,050 of offering costs in cash, issued an aggregate of 1,055,303 shares of common stock as payment of $56,000 of offering costs and issued warrants to purchase an aggregate of 1,450,303 shares of common stock (see Warrants to Purchase Common Stock), to non-affiliated third parties, related to these sales of common stock and common stock units. |
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Issuance of Common Stock to Executive Officers |
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On March 25, 2015, the Company issued an aggregate of 5,683,000 shares of common stock as stock-based compensation to its executive officers as follows: David R. LaVance, President and Chief Executive Officer – 3,613,250 shares; and Thomas S. Gifford, Executive Vice President and Chief Financial Officer – 2,069,750 shares. The total stock-based compensation expense associated with the issuance of these shares of common stock was $374,510. |
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Stock Options |
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The Company currently has two stock option/stock compensation plans in place: the 2010 Stock Incentive Plan and the 2012 Equity Incentive Plan (collectively, the “Equity Incentive Plans”). |
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The 2010 Stock Incentive Plan was approved by the stockholders in September 2010. The Company had reserved for issuance an aggregate of 10,000,000 shares of common stock under the 2010 Stock Incentive Plan. As of March 31, 2015, stock options to purchase 3,846,920 shares of the Company’s common stock were outstanding under the 2010 Stock Incentive Plan and 90,500 shares of the Company’s common stock had been issued under the 2010 Stock Incentive Plan. As a result of the adoption of the Company’s 2012 Equity Incentive Plan, no further awards are permitted under the 2010 Stock Incentive Plan. |
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The 2012 Equity Incentive Plan was approved by the stockholders in May 2012. The 2012 Equity Incentive Plan is designed to encourage and enable employees and directors of the Company to acquire or increase their holdings of common stock and other proprietary interests in the Company. The 2012 Equity Incentive Plan is intended to promote these individuals’ interests in the Company, thereby enhancing the efficiency, soundness, profitability, growth and stockholder value of the Company. The 2012 Equity Incentive Plan provides for grants and/or awards in the form of incentive and non-qualified stock option grants, stock appreciation rights, restricted stock awards, performance share awards, phantom stock awards and dividend equivalent awards. |
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The original aggregate number of shares of common stock which could be awarded under the 2012 Equity Incentive Plan was 14,000,000 shares, subject to adjustment as provided in the 2012 Equity Incentive Plan. Effective February 25, 2015, as permitted under the 2012 Equity Incentive Plan, the Company’s board of directors increased the number of shares of common stock that could be awarded under the 2012 Equity Incentive Plan to 37,950,000 shares. As of March 31, 2015, options to purchase 450,000 shares of the Company’s common stock were outstanding under the 2012 Equity Incentive Plan and up to 37,500,000 shares of the Company’s common stock remain available for awards under the 2012 Equity Incentive Plan. |
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Common stock grants and stock option awards under the Equity Incentive Plans were granted or issued at prices as determined by the Company’s compensation committee, but such prices were not less than the fair market value of the Company’s common stock on the date of grant or issuance. Stock options granted and outstanding to date consist of both incentive stock options and non-qualified stock options. |
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A summary of stock option transactions under the Equity Incentive Plans during the three months ended March 31, 2015 is set forth below: |
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| | Stock | | | Weighted | | | | Aggregate | | | | | | | | | | | | | | | |
Option | Average | Intrinsic | | | | | | | | | | | | | | |
Shares | Exercise | Value | | | | | | | | | | | | | | |
| Price Per | | | | | | | | | | | | | | | |
| Common | | | | | | | | | | | | | | | |
| Share | | | | | | | | | | | | | | | |
Outstanding at December 31, 2014 | | | 4,846,920 | | | $ | 0.15 | | | $ | - | | | | | | | | | | | | | | | |
Granted during the period | | | 450,000 | | | $ | 0.08 | | | | - | | | | | | | | | | | | | | | |
Exercised during the period | | | - | | | | - | | | | - | | | | | | | | | | | | | | | |
Terminated during the period | | | (1,000,000 | ) | | | - | | | | - | | | | | | | | | | | | | | | |
Outstanding at March 31, 2015 | | | 4,296,920 | | | $ | 0.16 | | | $ | - | | | | | | | | | | | | | | | |
Exercisable at March 31, 2015 | | | 3,934,420 | | | $ | 0.16 | | | $ | - | | | | | | | | | | | | | | | |
Exercisable at December 31, 2014 | | | 3,846,920 | | | $ | 0.16 | | | $ | - | | | | | | | | | | | | | | | |
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The fair value of stock options granted during the three months ended March 31, 2015 was $21,613 and was calculated using the Black-Scholes pricing model with the following weighted average assumptions: |
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Exercise price | | $ | 0.08 | | | | | | | | | | | | | | | | | | | | | | | |
Grant date stock price | | $ | 0.076 | | | | | | | | | | | | | | | | | | | | | | | |
Expected volatility | | | 137 | % | | | | | | | | | | | | | | | | | | | | | | |
Risk-free interest rates | | | 2.08 | % | | | | | | | | | | | | | | | | | | | | | | |
Risk of forfeiture | | | 35 | % | | | | | | | | | | | | | | | | | | | | | | |
Expected life (in years) | | | 10 | | | | | | | | | | | | | | | | | | | | | | | |
Dividend yield | | | 0 | % | | | | | | | | | | | | | | | | | | | | | | |
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The risk-free interest rate is based on a treasury instrument, the term of which is consistent with the expected life of the stock options at the date of grant. In projecting expected stock price volatility, the Company used historical stock price volatility of its common stock which the Company believes is representative of future volatility. The Company estimated the expected life of stock options based on historical experience using employee exercise and option expiration data. |
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Information with respect to stock options outstanding and stock options exercisable as of March 31, 2015 is as follows: |
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| | | Stock Options Outstanding | | | Stock Options Exercisable | |
Exercise | | | Number of Shares Available Under Outstanding Stock | | | Weighted Average Exercise Price Per Common Share | | | Weighted Average Remaining Contractual Life (Years) | | | Number of Shares Available for Purchase Under Outstanding Stock | | | Weighted Average Exercise Price Per Common Share | | | Weighted Average Remaining Contractual Life (Years) | |
Price | Options | Options |
$ | 0.08 | | | | 450,000 | | | $ | 0.08 | | | | 9.9 | | | | 87,500 | | | $ | 0.08 | | | | 9.9 | |
$ | 0.1 | | | | 2,180,253 | | | $ | 0.1 | | | | 3.9 | | | | 2,180,253 | | | $ | 0.1 | | | | 3.9 | |
$ | 0.2 | | | | 833,333 | | | $ | 0.2 | | | | 7 | | | | 833,333 | | | $ | 0.2 | | | | 7 | |
$ | 0.3 | | | | 833,334 | | | $ | 0.3 | | | | 7 | | | | 833,334 | | | $ | 0.3 | | | | 7 | |
| | | | | 4,296,920 | | | $ | 0.16 | | | | 5.7 | | | | 3,934,420 | | | $ | 0.16 | | | | 5.4 | |
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A summary of the non-vested shares subject to stock options granted under the Equity Incentive Plans as of March 31, 2015 is as follows: |
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| | Stock | | | Weighted | | | | | | | | | | | | | | | | | | | |
Option | Average | | | | | | | | | | | | | | | | | | |
Shares | Grant Date | | | | | | | | | | | | | | | | | | |
| Fair Value | | | | | | | | | | | | | | | | | | |
| Per Share | | | | | | | | | | | | | | | | | | |
Non-vested at December 31, 2014 | | | 1,000,000 | | | $ | 0.09 | | | | | | | | | | | | | | | | | | | |
Granted during the period | | | 450,000 | | | $ | 0.08 | | | | | | | | | | | | | | | | | | | |
Vested during the period | | | (87,500 | ) | | $ | 0.08 | | | | | | | | | | | | | | | | | | | |
Terminated during the period | | | (1,000,000 | ) | | $ | 0.09 | | | | | | | | | | | | | | | | | | | |
Non-vested at March 31, 2015 | | | 362,500 | | | $ | 0.08 | | | | | | | | | | | | | | | | | | | |
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As of March 31, 2015, there was $21,035 of total unrecognized compensation cost related to non-vested, stock-based compensation arrangements granted under the Equity Incentive Plans. That cost is expected to be recognized over a weighted average period of thirty-eight months. |
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Warrants to Purchase Common Stock |
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A summary of warrant transactions during the three months ended March 31, 2015 is as follows: |
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| | Warrant | | | Weighted | | | Aggregate Intrinsic | | | | | | | | | | | | | | | |
Shares | Average | Value | | | | | | | | | | | | | | |
| Exercise | | | | | | | | | | | | | | | |
| Price Per | | | | | | | | | | | | | | | |
| Common | | | | | | | | | | | | | | | |
| Share | | | | | | | | | | | | | | | |
Outstanding at December 31, 2014 | | | 28,908,878 | | | $ | 0.12 | | | $ | 42,006 | | | | | | | | | | | | | | | |
Issued during the period | | | 5,238,183 | | | $ | 0.065 | | | | - | | | | | | | | | | | | | | | |
Exercised during the period | | | - | | | | - | | | | - | | | | | | | | | | | | | | | |
Terminated during the period | | | (10,675,000 | ) | | $ | 0.12 | | | | - | | | | | | | | | | | | | | | |
Outstanding at March 31, 2015 | | | 23,472,061 | | | $ | 0.1 | | | $ | 79,974 | | | | | | | | | | | | | | | |
Exercisable at March 31, 2015 | | | 23,472,061 | | | $ | 0.1 | | | $ | 79,974 | | | | | | | | | | | | | | | |
Exercisable at December 31, 2014 | | | 28,908,878 | | | $ | 0.12 | | | $ | 42,006 | | | | | | | | | | | | | | | |
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Warrants issued by the Company contain exercise prices that were approved by the Company’s board of directors. Such exercise prices are generally not less than the quoted market price of the Company’s common stock on the date of issuance. Warrants currently issued either vested immediately or over a period of up to three years and have a maximum term of ten years from the date of issuance. |
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The fair value of the warrants issued during the three months ended March 31, 2015 was $168,813 and was calculated using the Black-Scholes pricing model with the following weighted average assumptions: |
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Exercise price | | | $0.06 - $0.066 | | | | | | | | | | | | | | | | | | | | | | | |
Grant date stock price | | $ | 0.067 | | | | | | | | | | | | | | | | | | | | | | | |
Expected volatility | | | 128 | % | | | | | | | | | | | | | | | | | | | | | | |
Risk-free interest rates | | | 0.87 | % | | | | | | | | | | | | | | | | | | | | | | |
Risk of forfeiture | | | 35 | % | | | | | | | | | | | | | | | | | | | | | | |
Expected life (in years) | | | 3 | | | | | | | | | | | | | | | | | | | | | | | |
Dividend yield | | | 0 | % | | | | | | | | | | | | | | | | | | | | | | |
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Information with respect to warrants outstanding and warrants exercisable at March 31, 2015 is as follows: |
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| | | Warrants Outstanding | | | Warrants Exercisable | |
Range of | | | Number of Shares Available Under Outstanding Warrants | | | Weighted Average Remaining Contractual Life (Years) | | | Weighted Average Exercise Price Per Common Share | | | Number of Shares Available for Purchase Under Outstanding Warrants | | | Weighted Average Remaining Contractual Life (Years) | | | Weighted Average Exercise Price Per Common Share | |
Exercise Prices |
$ | 0.03 - 0.04 | | | | 1,151,567 | | | | 1.8 | | | $ | 0.04 | | | | 1,151,567 | | | | 1.8 | | | $ | 0.04 | |
$ | 0.06 - 0.07 | | | | 10,344,244 | | | | 4.2 | | | $ | 0.07 | | | | 10,344,244 | | | | 4.2 | | | $ | 0.07 | |
$ | 0.08 - 0.09 | | | | 6,320,000 | | | | 6.1 | | | $ | 0.09 | | | | 6,320,000 | | | | 6.1 | | | $ | 0.09 | |
$ | 0.2 | | | | 5,656,250 | | | | 0.5 | | | $ | 0.2 | | | | 5,656,250 | | | | 0.5 | | | $ | 0.2 | |
| | | | | 23,472,061 | | | | 3.7 | | | $ | 0.1 | | | | 23,472,061 | | | | 3.7 | | | $ | 0.1 | |
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As of March 31, 2015, there were no non-vested shares subject to warrants and no unrecognized compensation cost related to warrants. |