Stockholders' Equity Note Disclosure [Text Block] | NOTE 9 – STOCKHOLDERS’ EQUITY (DEFICIT) Preferred Stock On May 26, 2011, our board of directors designated 350,000 shares of our authorized preferred stock as Series A preferred stock, $0.001 par value per share. The Series A preferred stock is entitled to a liquidation preference, votes on an as-converted basis with our common stock on all matters as to which holders of common stock are entitled to vote, and is convertible into common stock on a one-for-ten basis. In September 2015, our new executive management became aware that the 2011 designation of the Series A preferred stock by our board of directors was not authorized by the Company’s Articles of Incorporation. As a result, the shares of Series A preferred stock issued by the Company were not duly authorized and, further, uncertainty exists as to the validity of the subsequent conversion by certain holders of Series A preferred stock of some of these shares into common stock. On October 1, 2015, Nevada’s corporations statute was amended by means of Nevada Senate Bill No. 446 so as to allow retroactive correction of the aforementioned authorization issue through a ratification vote or consent of our shareholders (which excludes the vote or consent as to any shares of Series A preferred stock or any shares of common stock issued upon conversion of the Series A preferred stock). We are undertaking to receive such ratification through a written consent solicitation of our shareholders. We believe that we will be successful in obtaining this ratification, at which point all outstanding shares of our Series A preferred stock and, as the case may be, the common stock into which any of our Series A preferred stock has been converted will be validly issued and outstanding. Common stock o 15,000 shares of common stock for conversion of 1,500 shares of Series A preferred stock, o 418,750 shares of common stock with a value of $82,838 for services rendered, o 193,856 shares of common stock in exchange for conversion of accounts payable in the amount of $22,776, o 322,500 shares of common stock in exchange for conversion of notes payable in the amount of $30,000 plus accrued interest of $2,250, o 567,901 shares of common stock for $40,168 cash, and o 111,683 shares of common stock with a value of $14,072 in payment of accrued payroll. o 80,000 shares of common stock for conversion of 8,000 shares of Series A preferred stock, o 4,350,000 shares of common stock issued for $435,000 in cash, o 1,550,000 shares of common stock issued to the board of directors and executives valued at $310,000, o 1,900,000 shares of common stock in exchange for conversion of notes payable in the amount of $175,000 plus accrued interest of $12,500, o 2,050,923 shares of common stock in a cashless exchange for 2,158,867 warrants, o 305,165 shares of common stock with a value of $96,732 in exchange for conversion of accounts payable, and o 365,000 shares of common stock with a value of $78,913 for services rendered. o 28,000 shares of common stock for a value of $10,383 for services rendered, o 430,000 shares of common stock issued for $85,005 in cash, o 846,382 shares of common stock in exchange for conversion of notes payable in the amount of $67,500 plus accrued interest of $1,720, and o 55,500 shares with a value of $11,100 in exchange for conversion of accounts payable. o 645,885 shares of common stock with a value of $77,200 upon conversion of $75,500 of convertible notes payable along with accrued interest of $1,700, o 300,000 shares of common stock for conversion of 30,000 shares of Series A preferred stock, o 2,592,570 shares of common stock in exchange for converting $777,770 of accrued salary to two key employees, o 400,000 shares of common stock with a value of $107,882 in exchange for conversion of notes payable, o 7,813 shares of common stock with a value of $5,000 for the conversion of accounts payable, o 50,000 shares of common stock in conjunction with a distributor agreement value at $21,500. This amount is posted as a reduction in revenues, and o 75,000 shares of common stock with a value of $33,713 for services rendered. o 151,126 shares of common stock with a value of $32,520 upon conversion of $30,000 of convertible notes payable along with accrued interest of $2,520, o 23,000 shares of common stock with a value of $13,113 for services rendered, o 441,620 shares of common stock in exchange for 44,162 shares of Series A preferred stock, and o 80,000 shares of common stock with a value of $46,400 for the settlement of accounts payable in the amount of $149,421. We posted a gain on settlement in the amount of $103,021. o 64,700 shares of common stock for a value of $39,556 for services rendered, o 79,293 shares of common stock for a value of $44,250 for services to be performed in the future, and o 6,717 shares of common stock with a value of $4,501 for the settlement of accounts payable. Stock incentive plan A summary of option activity under the stock option plan as of September 30, 2015 and changes during the nine months then ended is presented below: Weighted Weighted Average Average Remaining Aggregate Number of Exercise Price Exercise Contractual Term Intrinsic Shares Range Price (Years) Value Outstanding, December 31, 2013 2,352,099 $ 0.38 - $1.00 $ 0.51 7.90 199,505 Exercisable, December 31, 2013 1,810,344 $ 0.38 - $1.00 $ 0.52 7.88 138,707 Granted 624,571 $ 0.40 - $0.75 $ 0.52 6.49 - Exercised - - $ - - - Expired/Forfeited 110,200 $ 0.40 - $0.50 $ 0.48 9.51 - Outstanding, December 31, 2014 2,866,470 $ 0.30 - $1.00 $ 0.48 8.96 - Exercisable, December 31, 2014 2,321,001 $ 0.38 - $1.00 $ 0.47 9.50 - Granted 30,000 $ 0.20 $ 0.20 5.00 - Exercised - - $ - - - Expired/Forfeited - - $ - - - Outstanding, September 30, 2015 2,896,470 $ .0.20 - $1.00 $ 0.46 11.24 - Exercisable, September 30, 2015 2,652,799 $ 0.20 - $1.00 $ 0.45 11.66 - Number of Exercise shares Price 190,000 $ 0.20 300,000 $ 0.30 55,000 $ 0.38 1,186,670 $ 0.40 10,000 $ 0.45 631,800 $ 0.50 160,000 $ 0.60 15,000 $ 0.62 100,000 $ 0.75 10,000 $ 0.81 200,000 $ 0.85 38,000 $ 1.00 2,896,470 At September 30, 2015, the Company had 1,803,530 unissued shares available under the Plan. Also, at September 30, 2015, the Company had $119,011 of total unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted average period of 11 years. Warrants – Consulting Agreements Date of Issue September 30, 2015 Exercise Price Expiration July-15 1,445,000 $ 0.125 - $0.15 07/2018 June-15 302,500 $ 0.125 - $0.15 06/2018 May-15 6,160,000 $ 0.125 - $0.23 05/2018 - 05/2022 April-15 6,160,000 $ 0.01 - $0.15 04/2018 - 04/2027 March-15 140,000 $ 0.10 - $0.75 03/2018 - 03/2022 February-15 - $ 0.00 - January-15 70,000 $ 0.30 - $0.50 01/2020 As of December 2014 7,271,454 $ 0.36 - $10.00 05/2015 - 10/2024 Total 21,548,954 Less: Expired 298,509 Exercised 2,158,867 Total 19,091,578 We use the Black-Scholes option-pricing model to determine the fair value of warrants on the date of grant. In determining the fair value of warrants, we employed the following key assumptions: September 30, 2015 December 31, 2014 Risk-Free interest rate 0.28% - 1.72 % 0.28% - 2.97 % Expected dividend yield 0 % 0 % Volatility 166.10% - 204.66 % 182.81% - 222.30 % Expected life 3 - 7 years 3-10 years $ 0.14 $ 0.39 At September 30, 2015 and December 31, 2014, the weighted-average Black-Scholes value of warrants granted was $0.14 and $0.39, respectively. On May 20 2015, the board of directors agreed to extend the warrants and options of all employees and the board of directors by 5 years from original date and to reduce the exercise price to $0.40, if favorable to holder. We calculated a loss on modification of the warrants and options of $56,543 and have posted this expense during the second quarter. In addition, on May 20, 2015, the Company agreed to extend the outstanding options of a consultant for 5 years and reduce their exercise price to $0.20. We have calculated a loss on the modification in the amount of $4,524 and have posted this expense during the second quarter. |