Note 10 - Capital Stock Transactions | 12 Months Ended |
Dec. 31, 2013 |
Notes | ' |
Note 10 - Capital Stock Transactions | ' |
NOTE 10 – CAPITAL STOCK TRANSACTIONS |
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On April 21, 2005, our Board of Directors and shareholders approved the following capital stock transactions: |
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We re-domiciled in the state of Nevada, whereby increasing the number of authorized common shares to 200,000,000 and designating a par value of $.001 per share. |
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On May 25, 2006, our Board of Directors and shareholders approved the following capital stock transactions: |
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An amendment to the Articles of Incorporation of the Company authorizing a new series of preferred stock, which shall be designated as Series C, and consists of 15,000 shares. |
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Stock Repurchase Program |
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On November 1, 2011, the Company adopted a plan to repurchase up to 500,000 shares of its issued and outstanding common stock in accordance with the guidelines specified in Rule 10b-18 and Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. |
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The plan allows the Company to purchase its issued and outstanding common shares in the open market or in negotiated transactions, from time to time, depending on market conditions and other factors as well as being subject to relevant rules under Untied States securities regulations. The plan does not obligate the Company to make any purchases, at any specific time or in any particular situation. The plan may be suspended or discontinued at any time at the sole discretion of the Company. Share repurchases will be funded with the Company's available cash, after determining the working capital requirements of the Company. Accordingly, there is no guarantee as to the exact number of shares that will be repurchased under the plan. |
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The company's Board of Directors authorized the repurchase plan because it believes recent market conditions may have caused the Company's common stock to be undervalued. The timing and number of any shares repurchased will depend on the terms and conditions of the plan and no assurance can be given that any specific amount of common stock will be repurchased. |
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As of December 31, 2013, we had repurchased 11,500 shares of our common stock. |
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Common Stock Transactions |
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For the years ended December 31, 2013 and 2012, we issued the following securities without registration under the Securities Act of 1933, as amended. These securities were issued on the reliance of an exemption provided by Section 4(2) of the Securities Act. |
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On December 24, 2012 we issued 500,000 Shares of common stock to an accredited investor at $.10 per share. |
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On March 20, 2013, we completed the acquisition of Trident Manufacturing, Inc and as a result we issued 1,600,000 shares of our common stock at $.07 |
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On January 25, 2013 we issued 110,000 of common stock for services at $.10 |
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On January 25, 2013 we issued 10,000 of common stock to employees at $.10 |
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Convertible Promissory Note |
On February 15, 2013 we entered into a convertible promissory note with a related party for $120,000. The note bears interest at the rate of 10% simple interest and is convertible at $.10 per share and is due on February 15, 2015. |
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On May 10, 2013 the related party presented notice of conversion for the entire note. The shares were converted at $.010. As a result, the company issued 1,200,000 shares of common stock. The balance due on the note on December 31, 2012 is $0 |
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On December 4, 2012 we issued 1,000,000 Shares of common stock to an accredited investor at $.10 per share. |
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Common Stock |
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Our Articles of Incorporation authorize us to issue 200,000,000 shares of common stock, par value $0.001 per share. As of December 31, 2013 and 2011, there were 20,331,906 and 19,765,906 shares of common stock issued and outstanding, respectively. All outstanding shares of common stock are, and the common stock to be issued will be, fully paid and non-assessable. Each share of our common stock has identical rights and privileges in every respect. The holders of our common stock are entitled to vote upon all matters submitted to a vote of our shareholders and are entitled to one vote for each share of common stock held. There are no cumulative voting rights. |
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The holders of our common stock are entitled to share equally in dividends and other distributions that our Board of Directors may declare from time to time out of funds legally available for that purpose, if any, after the satisfaction of any prior rights and preferences of any outstanding preferred stock. If we liquidate, dissolve or wind up, the holders of common stock shares will be entitled to share ratably in the distribution of all of our assets remaining available for distribution after satisfaction of all our liabilities and our obligations to holders of our outstanding preferred stock. |
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Reverse Stock Split |
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Effective January 22, 2013, we completed a one-for-ten reverse stock split of the Company's issued and outstanding shares of common stock. The reverse stock split was previously approved by the our board of directors and by shareholders at the 2012 Annual General Meeting of Shareholders held on November 28, 2012. Upon effectiveness of the reverse stock split, each ten (10) shares of the company's issued and outstanding common stock was automatically combined and converted into one (1) issued and outstanding share of common stock. This reduced the number of issued and outstanding shares of the company's common stock from approximately 200 million to approximately 20 million. The reverse stock split affected only the issued and outstanding shares of the company's common stock, as well as common stock underlying stock options outstanding immediately prior to the effectiveness of the reverse stock split. The number of authorized shares of the company's common stock was not affected by the reverse split. |
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Preferred Stock |
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Our Articles of Incorporation authorize us to issue 10,000,000 shares of preferred stock. We authorized 440 shares of Series A Convertible Preferred Stock and 20,000 shares of Series B Convertible Preferred Stock. On May 25, 2006 the Articles of Incorporation were amended authorizing 15,000 shares Series C Convertible Preferred Stock. |
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As of August 20, 2006 all series A, B, and C preferred been converted into Common stock. |
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Our Board of Directors has the authority to issue additional shares of preferred stock in one or more series, and fix for each series, the designation of and number of shares to be included in each such series. Our Board of Directors is also authorized to set the powers, privileges, preferences, and relative participating, optional or other rights, if any, of the shares of each such series and the qualifications, limitations or restrictions of the shares of each such series. |
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Unless our Board of Directors provides otherwise, the shares of all series of preferred stock will rank on parity with respect to the payment of dividends and to the distribution of assets upon liquidation. Any issuance by us of shares of our preferred stock may have the effect of delaying, deferring or preventing a change of our control or an unsolicited acquisition proposal. The issuance of preferred stock also could decrease the amount of earnings and assets available for distribution to the holders of common stock or could adversely affect the rights and powers, including voting rights, of the holders of common stock. |
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On August 7, 2013, we held our initial closing of our Series D Preferred Stock private financing offering with two related parties, whereby we received $750,000 in financing. Our Series D Preferred Stock offering terms allow us to raise up to $1,000,000 US with an over-allotment of $500,000 in multiple closings over the course of 6 months. |
The following are primary terms of the Series D Preferred Stock Offering. The Series D Preferred holders will be paid a special monthly divided at the rate of 17.5% per annum or at the option of the Investor such special may accrue such special dividends. If the Company does not pay the special dividend within five (5) business days from the end of the calendar month for which the payment of such dividend to owed, the Company will pay the investor a penalty of 3.5%. Any unpaid or accrued special dividends will be paid upon a liquidation or redemption. For any other dividends or distributions, participation with common stock on an as-converted basis. The Series D Preferred holders may elect to convert the Series D Preferred Stock, in his sole discretion, at any time after a one year (1) year holding period, by sending the Company a notice to convert. The conversion rate shall equal to the greater of $0.08 or a 20% discount to the average of the three (3) lowest closing market prices of the common stock during the ten (10) trading day period prior to conversion. The Series D Preferred shall be redeemable from funds legally available for distribution at the option of the individual holders of the Series D Preferred commencing any time after the one (1) year period from the Closing (the “Redemption Period”) at a price equal to the Purchase Price plus all accrued but unpaid dividends. If Company is not in financial position to pay it back it need to notify the Investors thirty (30) days prior the Redemption Period commencing and both parties will negotiate in good faith for an extension of the Redemption Period. Notwithstanding, the Company may elect to redeem the Series D Preferred shares any time after the Closing at a price equal to Purchase Price plus all accrued but unpaid dividends subject to the Investors right to convert by providing the Investors written notice about its intent to redeem whereby the Investor shall have the right to convert per the terms of the conversion terms at least ten (10) days prior to such redemption by the Company. |
The capital received from the Series D Preferred Stock offering shall be used as working capital and is intended to replace the accounts receivable financing and credit line we have with Far West Capital, which upon the final closing Series D Preferred Stock offering. |
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On June 25th, 2013 we received $500,000 from a related party and issued 5,000 shares of Preferred Series D Preferred stock. |
In addition We issued series F warrants to purchase 250,000 shares of our common stock at $.10 and series G warrants to purchase 250,000 shares of our common stock at $.20. Each warrant gives the holder the right to purchase 1 share of common stock. |
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On September 19th 2013 we received $250,000 from a related party and issued 2,500 shares of Preferred Series D Preferred stock. In addition We issued series F warrants to purchase 125,000 shares of our common stock at $.10 and series G warrants to purchase 125,000 shares of our common stock at $.20. Each warrant gives the holder the right to purchase 1 share of common stock. |
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Warrants |
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Series A - Common Stock Warrants |
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We currently have 119,288 Series A Warrants issued and outstanding. Each warrant gives the holder the right to purchase 5 shares of common stock (596,438 total shares) at $3.30 per share. The Series A Warrants expired on November 15, 2011. |
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Series B - Common Stock Warrants |
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We currently have 119,288 Series B Warrants issued and outstanding. Each warrant gives the holder the right to purchase 5 shares of common stock (596,438 total shares) at $5.00 per share. The Series B Warrants expired on May 15, 2012. |
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Series C – Common Stock Warrants |
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We currently have 60,000 Series C Warrants issued and outstanding. Each warrant gives the holder the right to purchase 1 shares of common stock (60,000 total shares) at $2.67 per share. The Series C Warrants expired on November 5, 2011. |
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Series D – Common Stock warrants |
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We currently have 171,858 Series D Warrants issued and outstanding. Each warrant gives the holder the right to purchase 1 share of common stock (171,858 total shares) at $1.33 per share. The Series D Warrants expired on November 5, 2012. |
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For the year ended December 31, 2008 and 2009, we recognized share based compensation expense of $14,403 and $8,232, respectively from the issuance of options and Warrants. |
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Series E – Common Stock warrants |
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On April 8, 2011, we issued 300,000 series E Warrants. Each warrant gives the holder the right to purchase 1 share of common stock (300,000 total shares) at $0.50 per share. The Series E Warrants expire on April 8, 2016, as a result we recognized $6,600 in share based expense. |
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Series F – Common Stock warrants |
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On June 25th, we issued 250,000 series F warrants . Each warrant gives the holder the right to purchase 1 share of common stock at $.10. |
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On September 19th, we issued 125,000 series F warrants . Each warrant gives the holder the right to purchase 1 share of common stock at $.10. |
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Series G – Common Stock warrants |
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On June 25th, we issued 250,000 series G warrants . Each warrant gives the holder the right to purchase 1 share of common stock at $.20. |
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On September 19th, we issued 125,000 series G warrants . Each warrant gives the holder the right to purchase 1 share of common stock at $.20. |
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A summary of warrant activity for the periods is as follows: |
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| Probe Manufacturing |
| Outstanding Warrants |
| 31-Dec-13 |
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| | Warrants - Common Share Equivalents | Weighted Average Exercise price | | Warrants exercisable - Common Share Equivalents | Weighted Average Exercise price |
Outstanding December 31, 2012 | 300,000 | 0.50 | | 300,000 | 0.50 |
| Granted | 750,000 | 0.15 | | 500,000 | 0.15 |
| Expired | - | - | | - | - |
| Exercised | - | - | | - | - |
Outstanding December 31, 2013 | 1,050,000 | 0.50 | | 800,000 | 0.50 |
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| Warrants Outstanding | | Warrants Exercisable |
Range of Warrant Exercise Price | Warrants - Common Share Equivalents | Weighted Average Exercise price | Weighted Average Remaining Contractual life in years | | Warrants - Common Share Equivalents | Weighted Average Exercise price |
$ 0.50 | 300,000 | $0.50 | 2.52 | | 300,000 | $0.50 |
$ 0.10 | 375,000 | $0.10 | 4.50 | | 250,000 | $0.10 |
$ 0.20 | 375,000 | $0.20 | 4.50 | | 25,000 | $0.20 |
Total | 1,050,000 | $0.25 | | | 300,000 | $0.25 |
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Stock Options |
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On February 8, 2007 pursuant to our 2006 Qualified Incentive Option Plan which was adopted by our Board of Directors granted Company employees an incentive stock option to purchase up to 406,638 shares of our common stock. These options were granted at $1.73 cents, the fair market value of the Company at the time of the grant. These options expire on February 8, 2017. As of December 31, 2013, there were 107,789 outstanding options under this plan. |
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On February 8, 2008, we granted stock options to its key employees, to purchase up to 750,000 shares of our common stock, which was approved by our Board of Directors. These options were granted at $1.73 cents, the fair market value of the Company at the time of the grant. These options expire on February 8, 2017. As a result, we recognized share-based compensation expense in the amount of $5,313 for the year ended December 31, 2007, $2,657 for the year ended December 31, 2008; $2,656 for the year ended December 31, 2009; $2,656 for the year ended December 31, 2012 and $0 for the year ended December 31, 2013. As of December 31, 2013 the balance of the outstanding options under this plan is 60,000. |
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On February 28, 2008 our granted stock options to a key employee, to purchase up to 30,000 shares of our common stock, which was approved by our Board of Directors. These options were granted at $.033 cents, the fair market value of the Company at the time of the grant. These options expire on February 8, 2017. As a result, we recognized share-based compensation expense in the amount of $5,574 for year ended December 31, 2008; $5,576 for the year ended December 31, 2009; $2,786 for the year ended December 31, 2012; and $0 for the year ended December 31, 2013. |