Stockholders' Equity (Deficiency) | 7. Stockholders Equity (Deficiency) Common Stock On April 3, 2015, the Company issued an aggregate of 171,428 shares of its common stock, at a per share price of $0.07, as settlement of $12,000 of director fees due certain members of the Companys board of directors for services rendered for the period commencing July 1, 2014 through December 31, 2014. The quoted market price of the Companys common stock on April 3, 2015, the date the issuance was approved by the Companys board of directors, was $0.07 per share. Stock Options 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). 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 June 30, 2015, stock options to purchase 3,846,920 shares of the Companys common stock were outstanding under the 2010 Stock Incentive Plan and 90,500 shares of the Companys common stock had been issued under the 2010 Stock Incentive Plan. As a result of the adoption of the Companys 2012 Equity Incentive Plan, no further awards are permitted under the 2010 Stock Incentive Plan. 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. 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 Companys 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 June 30, 2015, options to purchase 2,518,150 shares of the Companys common stock were outstanding under the 2012 Equity Incentive Plan and up to 35,431,850 shares of the Companys common stock remain available for awards under the 2012 Equity Incentive Plan. Common stock grants and stock option awards under the Equity Incentive Plans were granted or issued at prices as determined by the Companys compensation committee, but such prices were not less than the fair market value of the Companys 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. A summary of stock option transactions under the Equity Incentive Plans during the six months ended June 30, 2015 is set forth below: Stock Option Shares Weighted Average Exercise Price Per Common Share Aggregate Intrinsic Value Outstanding at December 31, 2014 4,846,920 $ 0.15 $ Granted during the period 2,518,150 $ 0.07 Exercised during the period Terminated during the period (1,000,000 ) $ 0.09 Outstanding at June 30, 2015 6,365,070 $ 0.13 $ Exercisable at June 30, 2015 5,482,534 $ 0.14 $ Exercisable at December 31, 2014 3,846,920 $ 0.16 $ The fair value of stock options granted during the six months ended June 30, 2015 was $101,762 and was calculated using the Black-Scholes pricing model with the following weighted average assumptions: Exercise price $0.07 - $0.08 Grant date stock price $0.07 - $0.076 Expected volatility 128% - 137 % Risk-free interest rates 1.26% - 2.08 % Risk of forfeiture 35 % Expected life (in years) 5 - 10 Dividend yield 0.00 % 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. Information with respect to stock options outstanding and stock options exercisable as of June 30, 2015 is as follows: Stock Options Exercisable Stock Options Outstanding Number of Exercise Prices Number of Shares Available Under Outstanding Stock Options Weighted Average Exercise Price Per Common Share Weighted Average Remaining Contractual Life (Years) Shares Available for Purchase Under Outstanding Stock Options Weighted Average Exercise Price Per Common Share Weighted Average Remaining Contractual Life (Years) $ 0.07 2,068,150 $ 0.07 4.8 1,548,114 $ 0.07 4.8 $ 0.08 450,000 $ 0.08 9.7 87,500 $ 0.08 9.7 $ 0.10 2,180,253 $ 0.10 3.7 2,180,253 $ 0.10 3.7 $ 0.20 833,333 $ 0.20 6.8 833,333 $ 0.20 6.8 $ 0.30 833,334 $ 0.30 6.8 833,334 $ 0.30 6.8 6,365,070 $ 0.13 3.0 5,482,534 $ 0.14 5.0 A summary of the non-vested shares subject to stock options granted under the Equity Incentive Plans as of June 30, 2015 is as follows: Stock Option Shares Weighted Average Grant Date Fair Value Per Share Non-vested at December 31, 2014 1,000,000 $ 0.09 Granted during the period 2,518,150 $ 0.07 Vested during the period (1,635,614 ) $ 0.07 Terminated during the period (1,000,000 ) $ 0.09 Non-vested at June 30, 2015 882,536 $ 0.07 As of June 30, 2015, there was $32,893 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 twenty-three months. Warrants to Purchase Common Stock A summary of warrant transactions during the six months ended June 30, 2015 is as follows: Warrant Shares Weighted Average Exercise Price Per Common Share Aggregate Intrinsic Value 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 (11,706,250 ) $ 0.13 Outstanding at June 30, 2015 22,440,811 $ 0.10 $ 3,459 Exercisable at June 30, 2015 22,440,811 $ 0.10 $ 3,459 Exercisable at December 31, 2014 28,908,878 0.12 $ 42,006 Warrants issued by the Company contain exercise prices that were approved by the Companys board of directors. Such exercise prices are generally not less than the quoted market price of the Companys 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. The fair value of the warrants issued during the six months ended June 30, 2015 was $168,813 and was calculated using the Black-Scholes pricing model with the following weighted average assumptions: 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 0.00 % Information with respect to warrants outstanding and warrants exercisable at June 30, 2015 is as follows: Warrants Exercisable Warrants Outstanding Number of Range of Exercise Prices Number of Shares Available Under Outstanding Warrants Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Per Common Share Shares Available for Purchase Under Outstanding Warrants Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Per Common Share $ 0.03 - 0.04 1,151,567 1.5 $ 0.04 1,151,567 1.5 $ 0.04 $ 0.06 - 0.07 10,344,244 3.9 $ 0.07 10,344,244 3.9 $ 0.07 $ 0.08 - 0.09 6,320,000 5.8 $ 0.09 6,320,000 5.8 $ 0.09 $ 0.20 4,625,000 0.2 $ 0.20 4,625,000 0.2 $ 0.20 22,440,811 3.6 $ 0.10 22,440,811 3.6 $ 0.10 As of June 30, 2015, there were no non-vested shares subject to warrants and no unrecognized compensation cost related to warrants. |