STOCK COMPENSATION AND EQUITY BASED PAYMENTS | 12 Months Ended |
Dec. 31, 2013 |
Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract] | ' |
STOCK COMPENSATION AND EQUITY BASED PAYMENTS | ' |
Note H – STOCK COMPENSATION AND EQUITY BASED PAYMENTS |
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Information about options and warrants outstanding for 2013 and 2012 is summarized below: |
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Number of Warrants and Options Issued | | 2013 | | | Weighted Average | | | 2012 | | | Weighted Average | | |
Exercise Price | Exercise Price | |
Outstanding beginning of year | | | 12,250,000 | | | $ | 0.1 | | | | 30,291,667 | | | $ | 0.16 | | |
Granted | | | 17,750,000 | | | $ | 0.04 | | | | 1,000,000 | | | $ | 0.05 | | |
Exercised | | | - | | | $ | - | | | | (473,334 | ) | | $ | 0.07 | | |
Forfeited | | | (8,500,000 | ) | | $ | 0.12 | | | | (3,000,000 | ) | | $ | 0.12 | | |
Expired un-exercised | | | (8,000,000 | ) | | $ | 0.08 | | | | (15,568,333 | ) | | $ | 0.21 | | |
Outstanding end of the year | | | 13,500,000 | | | $ | 0.05 | | | | 12,250,000 | | | $ | 0.1 | | |
Exercisable December 31 | | | 4,750,000 | | | $ | 0.04 | | | | 11,000,000 | | | $ | 0.11 | | |
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31-Dec-13 |
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Exercise Prices | | Number | | | Weighted- | | | Number | | | Weighted | |
Outstanding | Average | Exercisable | Average |
| Remaining | | Remaining |
| Contractual | | Contractual Life |
| Life (years) | | (years) of |
| | | Exercisable |
| | | Warrants |
$0.03 | | | 3,000,000 | | | | 9.5 | | | | - | | | | - | | |
$0.04 | | | 7,750,000 | | | | 9.75 | | | | 2,000,000 | | | | 9.75 | | |
$0.04 | | | 1,000,000 | | | | 4 | | | | 1,000,000 | | | | 4 | | |
$0.05 | | | 1,000,000 | | | | 4 | | | | 1,000,000 | | | | 4 | | |
$0.08 | | | 750,000 | | | | 0.5 | | | | 750,000 | | | | 0.5 | | |
Total | | | 13,500,000 | | | | | | | | 4,750,000 | | | | | | |
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As of December 31, 2013, there was approximately $193,940 of unrecognized cost related to stock option and warrant grants. The cost is to be recognized over the remaining vesting periods that average approximately 2.5 years. The weighted average remaining life of all outstanding warrants and options at December 31, 2013 are 9.5 years. The aggregate intrinsic value of all options and warrants outstanding and exercisable as of December 31, 2013 was $636,237. |
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Stock-based expense included in the 2013 net loss consisted of $155,744 in director’s option expenses and common stock issued for services. Specifically, director option expenses were $30,855 and common stock issued for service expenses related to employees and consultants were $124,889. These were lower than the director option expense of $94,098 and stock grant expenses for Mr. Norris and Mr. Barnhill of $150,000 in 2012. |
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The following table reflects stock-based compensation and expense recorded in 2013 and 2012: |
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| | 2013 | | | 2012 | | | | | | | | | | |
Director’s option expenses | | $ | 30,855 | | | $ | 94,098 | | | | | | | | | | |
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Common stock issued for services | | | 124,889 | | | | 150,000 | | | | | | | | | | |
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Net Increase | | $ | 155,744 | | | $ | 244,098 | | | | | | | | | | |
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On December 18, 2012, the Company entered into an employment contract with Mr. Norris. Under the terms of that employment agreement, Mr. Norris received a one-time bonus of 1,000,000 shares of the Company’s common stock. |
Also as a part of that employment agreement, Mr. Norris also was granted an option to purchase shares of the Company’s common stock. These options will be granted and vest according to the following schedule: (i) 1,000,000 options were granted on December 18, 2012 at an exercise price of $0.05 and vest during the six months following the grant date, plus the potential to earn additional options if certain anniversary dates and other milestones were met. None of those milestones were met and therefore not awarded. |
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In connection with their appointment to the Board of Directors, on February 28, 2013, the Company granted to Mr. David Eckoff, Mr. Sumio “Sumi” Takeichi and Mr. John Norris each an option to purchase 1,500,000 shares of the Company’s common stock. The options vest over a three-year period, have an exercise price of $0.032, and expire on February 28, 2023. The fair value of each option granted is $0.023 and was estimated on the date of grant using the Black-Scholes pricing model with the following assumptions: dividend yield at 0%, risk-free interest rate of 1.97%, an expected life of 5 years, and volatility of 96%. All of these options were forfeited upon each of these individuals departure from the Board and are no longer in effect. |
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As a part of his consulting agreement with the Company, Dr. Herbert Fritsche was awarded an option to purchase 1,000,000 shares of the Company’s common stock. The options vest immediately, have an exercise price of $0.04, and expire on February 1, 2018. The fair value of each option granted is $0.029 and was estimated on the date of grant using the Black-Scholes pricing model with the following assumptions: dividend yield at 0%, risk-free interest rate of 1.91%, an expected life of 5 years, and volatility of 97%. The value of these options is $29,454, and this amount was charged as an expense in the second quarter 2013. |
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In connection with his appointment to the Board of Directors in May 2013, the Company granted to Mr. Norman Mineta an option to purchase 1,500,000 shares of the Company’s common stock. The options vest over a three-year period, have an exercise price of $0.048, and expire on May 10, 2023. The fair value of each option granted is $0.035 and was estimated on the date of grant using the Black-Scholes pricing model with the following assumptions: dividend yield at 0%, risk-free interest rate of 1.91%, an expected life of 5 years, and volatility of 97%. These options were forfeited upon Mr. Mineta’s departure from the Board and are no longer in effect. |
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In connection with their election to the Board of Directors, on July 25, 2013, the Company granted to Mr. Henry Kaplan, Mr. Kevin Kowbel, and Mr. Eric Winger each an option to purchase 1,500,000 shares of the Company’s common stock. Upon his appointment to Interim Chief Executive Officer, Mr. Kowbel returned his options back to the Company. As a result, only the options for Messrs. Kaplan and Winger vest 250,000 shares every six months, have an exercise price of $0.027, and expire on July 25, 2023. The fair value of each option granted is $0.020 and was estimated on the date of grant using the Black-Scholes pricing model with the following assumptions: dividend yield at 0%, risk-free interest rate of 1.91%, an expected life of 5 years, and volatility of 98%. The aggregate computed value of these options is $60,124, and this amount will be charged as an expense over the three-year vesting period. There is no expense related to Mr. Kowbel as he returned all of the options granted to him back to the Company. |
In connection with his appointment to the Board of Directors in July 2013, on October 21, 2013, the Board of Directors of Health Discovery Corporation (the “Company”) granted to Mr. William F. Quirk, Jr. an option to purchase 1,500,000 shares of the Company’s common stock. This option grant is consistent with what has been granted to other board members. The options vest 250,000 shares every six months, have an exercise price of $0.036, and expire on October 21, 2023. |
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Also, on October 21, 2013, the Company granted options to purchase 6,000,000 shares of the Company’s common stock to a group of employees and consultants in recognition of their efforts to lower the Company’s monthly expenditures and compensation and their continuing contributions to the Company. The options vest over a three-year period, have an exercise price of $.036, and expire on October 21, 2023. Within the group of 6,000,000 options, the Company’s Vice President, Mark A. Moore, Ph.D., received an option to purchase 1,000,000 shares of the Company’s common stock and the Company’s Senior Vice President, Hong Zhang, Ph.D., received an option to purchase 750,000 shares of the Company’s common stock. The non-cash charge of $203,931 for the fair value of these options will be recognized as an expense over the three-year vesting period. |