| EQUITY | NOTE 11 - EQUITY Common and Preferred Stock The Company is authorized
to issue 150,000,000 shares of common stock, $0.01 par value, of which 8,082,971 common shares were issued and outstanding as of
June 30, 2015. The Company is authorized to issue 10,000,000 shares of Series A Convertible Preferred Stock, $0.01 par value, 1,000
shares of its 10% Cumulative Perpetual Series B Preferred Stock, $0.01 par value, and 500 shares of its Series C Convertible Preferred
Stock, par value $0.01, none of which were issued and outstanding as of June 30, 2015. As of June 30, 2015,
5,814 shares of common stock were subscribed. Options As of June 30, 2015,
590.000 options to purchase common stock of the Company were issued and outstanding, 370,000 of which had an exercise price equal
to $2.30 per share, 40,000 of which had an exercise price equal to $2.20 per share, 60,000 of which had an exercise price equal
to $1.00 per share, and 120,000 of which had a strike price of $0.90 per share. During the three month period ended June 30, 2015,
the Company issued 0 to management, key employees and members of the board of directors, for which it recorded an expense of $0. Warrants The Company values
all warrants using the Black-Scholes option-pricing model. Critical assumptions for the Black-Scholes option-pricing
model include the market value of the stock price at the time of issuance, the risk-free interest rate corresponding to the term
of the warrant, the volatility of the Companys stock price, dividend yield on the common stock, as well as the exercise
price and term of the warrant. The Black Scholes option-pricing model was the best determinable value of the warrants
that the Company knew up front when issuing the warrants in accordance with Topic 505. Other than as expressly noted
below, the warrants are not subject to any form of vesting schedule and, therefore, are exercisable by the holders anytime at their
discretion during the life of the warrant. No discounts were applied to the valuation determined by the Black-Scholes
option-pricing model; provided, however, As of June 30, 2015,
83,680 warrants to purchase common stock of the Company were issued and outstanding, additional information about which is included
in the following table:
Issued Exercise Price Issuance Date Expiration Date Vesting
25,000 $3.000 11/01/13 11/01/16 No
26,180 $2.000 07/21/10 07/21/15 No
7,500 $2.000 09/03/10 09/03/15 No
25,000 $2.000 11/01/13 11/01/16 No
83,680
Expected Dividend Yield 0.0%
Volatility 40.0%
Weighted average risk free interest rate 0.2%
Weighted average expected life (in years) 0.8 Private Placements, Other Issuances
and Cancellations The Company periodically
issues shares of its common stock, as well as options and warrants to purchase shares of common stock to investors in connection
with private placement transactions, and to advisors, consultants and employees for the fair value of services rendered. Absent
an arms length transaction with an independent third-party, the value of any such issued shares is based on the trading
value of the stock at the date on which such transactions or agreements are consummated. The Company expenses the fair value of
all such issuances in the period incurred. During the quarter ended June 30, 2015, the Company issued i) 5,814 shares of common
stock subscribed for services rendered by directors that elected to take their board fees in shares of common stock in lieu of
cash payment and recorded an expense of $10,000 for the fair value of services rendered, and ii) 0 shares of common stock for services
rendered by the Chief Executive Officer subject to time-based vesting that vested during the quarter, for which the Company recorded
an expense of $0. In addition to the foregoing, the Company also repurchased 39,446 shares of common stock during the quarter ended
June 30, 2015 for aggregate purchase price, excluding transaction costs, of $68,706.76. |
