Stockholders' Equity | Note 9. Stockholders’ Equity During the year ended March 31, 2014, we completed an offering of common stock units at a price of $0.25 per unit. Each unit consists of one share of common stock and a three year warrant to purchase one-half (1/2) share of our common stock at an exercise price of $0.50 per share (“Unit” or “Units”). We sold 1,600,000 units representing 1,600,000 shares and warrants to purchase 800,000 shares for total consideration of $400,000. The fair value of the warrants, $123,496, was estimated at the date of grant using the Black-Scholes option pricing model, with an allocation of the proceeds applied to the warrants. The difference between the warrant allocation and the proceeds was allocated to the shares of common stock issued. The fair value of the warrants has been included in the total additional paid in capital. The following assumptions were used in the Black-Scholes option pricing model: Expected life (in years) 3 Volatility (based on a comparable company) 100 % Risk Free interest rate 0.36 % Dividend yield (on common stock) - During July and August of 2013 we completed an offering of common stock units at a price of $0.25 per unit. Each unit consisted of one share of common stock, a three-year warrant to purchase one share of our common stock at an exercise price of $0.25 per share (which may be exercised on a cashless basis), and a five-year warrant to purchase one-half (1/2) share of our common stock at an exercise price of $0.50 per share (“Unit” or “Units) for total consideration of $1,906,500 less $267,645 in cost for a net amount received of $1,638,855. The fair value of the warrants, estimated at the date of grant using the Black-Scholes option pricing model was $3,089,919. The estimated value was higher than the proceeds received from the sale of the units. Accordingly, the proceeds received less the par value of the common stock, has been included in the total additional paid in capital. The following assumptions were used in the Black-Scholes option pricing model: Expected life (in years) 3 - 5 Volatility (based on a comparable company) 87 - 106 % Risk Free interest rate 0.67 - 1.38 % Dividend yield (on common stock) - During March 2014 we completed an offering of common stock units at a price of $.50 per unit. Each unit consists of one share of common stock, a three-year warrant to purchase one share of our common stock at an exercise price of $0.60 per share (which may be exercised on a cashless basis), and a five-year warrant to purchase one-half (1/2) share of our common stock at an exercise price of $0.50 per share for total consideration of $2,500,000 less $27,675 in cost for a net amount received of $2,472,325. Included in the cost of the offering is value of Units issued to legal counsel for services in connection with the offering. The fair value of the warrants, estimated at the date of grant using the Black-Scholes option pricing model was $1,001,396. The estimated value was higher than the proceeds received from the sale of the units. Accordingly, the proceeds received less the par value of the common stock, has been included in the total additional paid in capital. The following assumptions were used in the Black-Scholes option pricing model: Expected life (in years) 3 Volatility (based on a comparable company) 83 % Risk Free interest rate 0.91 % Dividend yield (on common stock) - During the year ended March 31, 2014, we terminated a contract with a non-employee. All previously unvested stock option expense attributed to the non-employee, in the amount of $14,747 was reversed and credited to general and administrative expenses. Certain previously granted restricted stock rights and stock options were subject to performance conditions. As a result of the employee termination the performance conditions will not be met. In accordance with ASC Topic 718, Compensation - Stock Compensation (“ASC 718”), previously recognized unvested equity based compensation cost of $103,488 has been reversed during the year ended March 31, 2014. During the year ended March 31, 2014 we issued 600,000 shares of common stock to officers and directors of the Company for services rendered. In accordance with ASC 718 compensation expense in the amount of $240,000 was recognized in the statement of operations for the year ended March 31, 2014. The fair value of the stock was based on the trading value of the shares on the date of grant. During the year ended March 31, 2014, we issued 55,000 shares of our common stock to non-employees for consulting services. Pursuant to the guidance in ASC 505, the value of the shares was charged to expense in the amount of $28,730. The fair value of the stock was based on the trading value of the shares on the date of grant. During the year ended March 31, 2014, we issued options to purchase 800,000 shares of our common stock at an exercise price of $0.50 per share to a Director of the Company. The options vested immediately and are exercisable for a period of 3 years from the date of issuance, February 14, 2014. The fair value of the options, $115,119, which was charged to expenses, was estimated at the date of grant using the Black-Scholes option pricing model with the following assumptions: Expected life (in years) 3 Volatility (based on a comparable company) 84 % Risk Free interest rate 0.91 % Dividend yield (on common stock) - All other previously outstanding stock options issued to employees were cancelled during the year ended March 31, 2014. During the year ended March 31, 2015 we completed two offerings of common stock units at a price of $0.50 per unit. Each unit consists of one share of common stock and a five year warrant to purchase one-half (1/2) share of our common stock at an exercise price of $0.60 per share (“Unit” or “Units”). We sold a total of 11,044,000 units representing 11,044,000 shares and warrants to purchase 5,522,000 shares for total consideration of $5,522,000. The fair value of the warrants, $1,842,613 was estimated at the date of grant using the Black-Scholes option pricing model, with an allocation of the proceeds applied to the warrants. The difference between the warrant allocation and the proceeds was allocated to the shares of common stock issued. The fair value of the warrants has been included in the total additional paid in capital. The following assumptions were used in the Black-Scholes option pricing model: Expected life (in years) 5 Volatility (based on a comparable company) 100 % Risk Free interest rate 0.36 % Dividend yield (on common stock) - During the year ended March 31, 2015 we issued 900,000 shares of common stock to an officer and two employees of the Company for services rendered. In accordance with ASC Topic 718, Compensation - Stock Compensation (“ASC 718”), compensation expense in the amount of $446,460 was recognized in the statement of operations. Also during the year ended March 31, 2015, we issued 155,000 shares of our restricted common stock to legal counsel and a consultant to the Company. In accordance with ASC Topic 505, Equity-Based Payments to Non-Employees (“ASC 505”), expense in the amount of $113,845 was recognized in the statement of operations. Additionally, during the year ended March 31, 2015 we issued 64,100 shares of our Common Stock to a Director. The fair value of the stock was based on the trading value of the shares on the date of grant. The shares vest over a one year period and are being amortized over that period. The unamortized balance is shown as Unearned Services in the equity section of the Balance Sheet. We also issued options to purchase 600,000 shares of our common stock at an exercise price of $0.45 per share to two officers and directors and a director of the Company. The options vested immediately and are exercisable for a period of 5 years from the date of issuance, January 21, 2014. The fair value of the options, $179,581, which was charged to expenses, was estimated at the date of grant using the Black-Scholes option pricing model with the following assumptions: Expected life (in years) 5 Volatility (based on a comparable company) 91 % Risk Free interest rate 1.35 % Dividend yield (on common stock) - During the year ended March 31, 2015 we issued 150,000 options to a director of the Company. The exercise price of the options is $0.54 per share, which was the fair market value of the option on the date of grant and is exercisable for a period of 5 years. The options vest on the first anniversary of the issuance, October 14, 2015. The unamortized balance is shown as Unearned Services in the equity section of the Balance Sheet. The fair value of the option, $0.3814 per share, ($57,209 in the aggregate) was calculated using the Black-Sholes option pricing model using the following assumptions and is being written off over a 1 year period: Expected life (in years) 5 Volatility (based on a comparable company) 91.8 % Risk Free interest rate 1.45 % Dividend yield (on common stock) - The following is a summary of outstanding stock options issued to employees and directors as of Mach 31, 2015: Number of Options Exercise price per share $ Average remaining term in years Aggregate intrinsic value at date of grant $ Outstanding April 1, 2013 625,000 1.00 - Issued 800,000 0.50 - Cancelled 625,000 1.00 - - Outstanding March 31, 2014 800,000 0.50 - - Issued 750,000 0.45 - 0.54 4.25 - Cancelled - - - - Outstanding March 31, 2015 1,550,000 0.45 - 0.54 4.25 - Exercisable 1,400,000 0.45 – 0.50 3.02 - |