Stockholders' Equity | 12 Months Ended |
Dec. 31, 2014 |
Equity [Abstract] | |
Stockholders' Equity | Note 7 – Stockholders’ Deficit |
|
Deferred Equity Compensation |
|
During the year ended December 31, 2013, the Company’s CFO was issued 520,754 shares of common stock. The common stock was valued at $260,377, equal to $0.50 per share, the same value as the most recent sales of common stock. The Company amortized the deferred equity compensation over the twelve month term, and has included $216,981 and $43,395, respectively, in stock compensation expense for the years ended December 31, 2014 and 2013. |
|
Common Stock |
On June 7, 2013, the Company amended its’ Articles of Incorporation to increase the number of authorized shares to 17,500,000 of common stock, par value $.01 per share. |
|
On June 20, 2013, the Company amended its’ Articles of Incorporation to increase the number of authorized shares to 100,000,000 consisting of 95,000,000 shares of common stock, par value $0.01 per share and 5,000,000 shares of preferred stock. The preferred stock may be created in any number of series and issued from time to time, with such designations, preferences, rights and restrictions as shall be stated in resolutions adopted by the Board of Directors. |
|
On June 30, 2013, the Company issued 11,748 shares of common stock for services. The Company recorded an expense of $5,874 for the issuance, based on a per share price in recent private placements of $0.50 per share. Also on June 30, 2013 the Company issued 4,500 shares of common stock in payment of accounts payable of $2,250. The shares were issued at $0.50 per share. |
|
From July 2013 to September 2013, pursuant to a Private Placement Memorandum (“PPM”) the Company sold 740,000 shares of common stock for $0.50 per share for gross proceeds of $370,000. |
|
On September 30, 2013, the Company issued 100,000 shares of common stock in settlement of accrued and unpaid legal fees of $49,995. The shares were issued at $0.50 per share. |
|
On October 7, 2013, the Company issued 867,923 shares of common stock to Venture Equity for the services of Mr. Barry Hollander as CFO of the Company (see note 6). |
|
On November 18, 2013, the Company amended its Articles of Incorporation to increase the number of authorized shares to 115,000,000 consisting of 100,000,000 shares of common stock, par value $0.01 per share and 15,000,000 shares of preferred stock, par value $0.01 per share. |
|
On June 18, 2014, pursuant to a consulting agreement, the Company issued 911,233 shares of common stock to Makena (see note 9). During the year ended December 31, 2014, the Company recorded an expense of $455,617 for the issuance, based on a per share price in the most recent private placements of $0.50 per share. |
|
On December 12, 2014, the Company issued 10,000 shares of common stock in satisfaction of consulting services provided. During the year ended December 31, 2014, the Company recorded an expense of $5,000 for the issuance, based on a per share price in the most recent private placements of $0.50 per share. |
|
Also on December 12, 2014, the Company issued 10,000 shares of common stock to two employees in recognition for services performed in the past. Each received 5,000 shares of common stock under the Company’s 2011 Stock Option/Issuance Plan. The Company recorded an expense of $5,000 for the issuance, based on a per share price in the most recent private placements of $0.50 per share. |
|
Series A Preferred Stock |
|
On October 7, 2013, the Board of Directors of the Company authorized the filing of a Certificate of Designation establishing Series A Convertible Preferred Stock (the “Series A Preferred Stock”) and authorized 3,500,000 shares be available for issuance. Each share of Series A Preferred Stock shall be convertible at the option of the Holder thereof and without the payment of additional consideration by the Holder thereof, at any time, into shares of Common Stock at a conversion rate of two (2) shares of Common Stock for every one (1) share of Series A Preferred Stock and holders of Series A Preferred Stock shall have the right to cast fifteen (15) votes for each share held of record on all matters submitted to a vote of holders of the Corporation’s common stock, including the election of directors, and all other matters as required by law. The holders of Series A Preferred Stock shall vote together with all other classes and series of common stock of the Corporation as a single class on all actions to be taken by the common stock holders of the Corporation except to the extent that voting as a separate class or series is required by law. |
On October 23, 2013, the Company executed a Patent Purchase Agreement with Mr. Bulat. Pursuant to the Patent Purchase Agreement, the Company issued 3,500,000 shares of Series A Preferred Stock. The Company recorded an expense of $3,483,325 for the year ended December 31, 2013, and has included $16,675 (the inventor’s cost basis) in patents pending on the consolidated balance sheet presented herein. The amounts were based on the conversion feature of the Series A Preferred Stock, whereby the holder, in his sole discretion is entitled to convert the 3,500,000 shares of Series A Preferred Stock to 7,000,000 shares of Company common stock. The Company valued the common stock at $0.50 per share, the same value as the most recent sales of common stock. |
|
Series B Preferred Stock |
|
On November 13, 2013, the Board of Directors of the Company authorized the Company to sell 4,000,000 shares of Series B Convertible Redeemable Preferred Stock (the “Series B Preferred Stock”), at $0.75 per share. |
|
On April 3, 2014, the Company received proceeds of $26,250 from the sale of 35,000 shares of Series B Preferred Stock. The shares were issued at $0.75 per share. |
|
On July 2, 2014, the Company received proceeds of $6,000 from the sale of 8,000 shares of Series B Preferred Stock. The shares were issued at $0.75 per share. |
|
On August 18, 2014, the Company issued 136,667 shares of Series B Preferred Stock in satisfaction of $102,500 of accrued and unpaid consulting fees. The shares were issued at $0.75 per share. |
|
The Series B Preferred Stock and any accrued and unpaid dividends thereon shall, with respect to rights on liquidation, winding up and dissolution, rank senior to the common stock, and the Series A Preferred Stock. |
|
The holders of shares of Series B Preferred Stock are entitled to receive an annual dividend at the rate of eight percent (8%) per annum. Such dividend can be paid in cash or in the issuance of additional Series B Preferred Shares. |
|
Each share of Series B Preferred Stock shall automatically convert (the “Mandatory Conversion”) and without the payment of additional consideration by the Holder thereof, into shares of Common Stock on the Mandatory Conversion Date (as hereinafter defined) at a conversion rate of seventy-five percent (75%) of the price of the Common Stock sold for cash in a non-affiliated equity transaction (the “Equity Price”). The Mandatory Conversion Date shall be the date that the five (5) day weighted average trading price of the Common Stock exceeds 110% of the Equity Price. |
|
At any time, or upon receipt of a redemption notice by the Company, the Holder will have twenty (20) days to elect to convert the Series B Preferred Stock into Common Stock at a price per share equal to a twenty-five percent (25%) discount to the most recent Common Stock price per share paid by any non-affiliated investor in a subsequent financing to the Series B Preferred Stock. |
|
Because the Series B convertible preferred stock is convertible into a variable number of shares of the Company’s stock, determined with referenced to a fixed dollar amount, the fair value of the conversion option, which approximates its intrinsic value, is required to be presented as a liability. Accordingly, $179,667 is presented as Series B convertible preferred stock obligation, a liability on the accompanying consolidated balance sheets as of December 31, 2014. The excess of the fair value of the conversion option over the proceeds received was recorded as interest expense of $44,917 for the year ended December 31, 2014. |
|
Stock Options |
|
During the year ended December 31, 2007, the Company adopted the 2007 Stock Option/Stock Issuance Plan (the “2007 Plan”). The 2007 Plan permits the grants of Options to purchase shares of Common Stock, either ISOs or Non-Qualified Options; and awards of Restricted Stock. The Board shall have the right to grant other Awards based upon the Common Stock having such terms and conditions as the Board may determine, including, without limitation, the grant of shares based upon certain conditions, the grant of securities convertible into Common Stock and the grant of stock appreciation rights, phantom stock awards or stock units. |
|
Effective May 17, 2011, the Company adopted the 2011 Stock Option/Stock Issuance Plan (the “2011 Plan”). The 2011 Plan permits the grants of Options to purchase shares of Common Stock, either ISOs or Non-Qualified Options; and awards of Restricted Stock. The Board shall have the right to grant other Awards based upon the Common Stock having such terms and conditions as the Board may determine, including, without limitation, the grant of shares based upon certain conditions, the grant of securities convertible into Common Stock and the grant of stock appreciation rights, phantom stock awards or stock units. |
|
A summary of the plans as of December 31, 2014 is as follows: |
|
Plan | Authorized | Granted | Available | | | | | | | | | | | |
2007 | 1,500,000 | 515,000 | 985,000 | | | | | | | | | | | |
2011 | 10,000,000 | 3,747,360 | 6,252,460 | | | | | | | | | | | |
|
A summary of the activity of options for the years ended December 31, 2014 and 2013 is as follows: |
|
| | Options | | Weighted- | | Weighted- | | Weighted- |
Average | Average | Average remaining term |
exercise | grant date | |
price | fair value | |
Balance January 1, 2013 | | | 10,746,903 | | | $ | 1.28 | | | | | | | |
Options granted | | | 171,561 | | | $ | 1.25 | | | $ | 1.11 | | | |
Options cancelled | | | (6,356,327 | ) | | $ | 1.27 | | | | | | | |
| | | | | | | | | | | | | | |
Outstanding as of December 31, 2013 | | | 4,562,137 | | | $ | 1.28 | | | | | | | 6.75 |
Options expired | | | (299,777 | ) | | | | | | | | | | |
Outstanding as of December 31, 2014 | | | 4,262,360 | | | $ | 1.28 | | | | | | | 6.22 |
Exercisable at December 31, 2014 | | | 4,251,185 | | | $ | 1.28 | | | | | | | 6.22 |
|
As of December 31, 2014, there are options to purchase 11,661 shares of common stock that have not vested. Upon their vesting, expecting to occur through December 31, 2015, the Company will realize future expenses of $13,498. |
|
The fair value for the options granted during the years ended December 31, 2014 and 2013 were estimated at the date of grant using a Black-Scholes option-pricing model with the following weighted average assumptions: |
|
| | 2013 | | | | | | | | | | |
Expected volatility | | | 81 | % | | | | | | | | | | |
Expected dividend yield | | | 0 | % | | | | | | | | | | |
Expected life (in years) | | | 4 | | | | | | | | | | | |
Risk free interest rate | | | 0.7 | % | | | | | | | | | | |
|
During the years ended December 31, 2014 and 2013, the Company recorded stock based compensation expense related to stock options of $109,629 and $274,367 respectively. |