SHAREHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2014 |
Stockholders' Equity Note [Abstract] | |
SHAREHOLDERS' EQUITY | NOTE 7 – SHAREHOLDERS’ EQUITY |
|
Preferred Stock |
|
Simultaneous with the Shea Exchange Agreement, Wits Basin exchanged 19,713,544 shares of our common stock it held for 10,000,000 shares ($.001 par value each) of “Series A Preferred Stock” with an original issue price of $1.00 per share. |
|
Series A Preferred Stock |
|
Attributes of Series A Preferred Stock include but are not limited to the following: |
|
Distribution in Liquidation |
|
The Series A Preferred Stock has a liquidation preference of $10,000,000, payable only upon certain liquidity events or upon achievement of a market value of our equity equaling $200,000,000 or more. Upon any liquidation, dissolution or winding up of the Corporation, and after paying or adequately providing for the payment of all its obligations, the remainder of the assets of the Corporation shall be distributed, either in cash or in kind, first pro rata to the holders of the Series A Preferred Stock in an amount equal to the Liquidation Value (as described below); then, to any other series of Preferred Stock, until an amount to be determined by a resolution of the Board of Directors prior to issuances of such Preferred Stock, has been distributed per share, and, then, the remainder pro rata to the holders of the Common Stock. Upon the occurrence of any Liquidation Event (as defined below), each holder of Series A Preferred Stock will receive a payment equal to the Original Issue Price for each share of Series A Preferred Stock held by such holder (the “Liquidation Value”). A “Liquidation Event” will have occurred when: |
|
• The Corporation has an average market capitalization (calculated by adding the value of all outstanding shares of Common Stock valued at the Corporation’s closing sale price on the OTCBB or other applicable bulletin board or exchange, plus the value of the outstanding Series A Preferred Stock at the Original Issues Price per share) of $200,000,000 or more over any 90 day period. The holders of the Series A Preferred Stock would have the right, for 30 days after the end of such qualifying 90 day measurement period, to require the Corporation to purchase the Series A Preferred Stock for an amount equal to the Liquidation Value. |
|
• Any Liquidity Event in which the Corporation receives proceeds of $50,000,000 or more. For purposes hereof, a “Liquidity Event” means any (a) liquidation, dissolution or winding up of the Corporation; (b) acquisition of the Corporation by means of any transaction or series of related transactions (including, without limitation, any reorganization, merger, share exchange, share purchase or consolidation) provided that the applicable transaction shall not be deemed a liquidation unless the Corporation’s stockholders constituted immediately prior to such transaction hold less than 50% of the voting power of the surviving or acquiring entity; or (c) the sale, lease, transfer or other disposition, in a single transaction or series of related transactions, by the Corporation or any subsidiary of the Corporation of all or substantially all the assets of the Corporation and its subsidiaries taken as a whole, or the sale or disposition (whether by merger or otherwise) of one or more subsidiaries of the Corporation if substantially all of the assets of the Corporation and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries. |
|
Written notice of any Liquidation Event (the “Liquidation Notice”) shall be given by mail, postage prepaid, or by facsimile to non-U.S. residents, not less than five days prior to the anticipated payment date state therein, to the holders of record of Series A Preferred Stock, such notice to be addressed to each such holder at its address as shown by the records of the Corporation. The Liquidation Notice shall state (i) the anticipated payment date, and (ii) the total Liquidation Value available for distribution to Series A Preferred Stock shareholders upon the occurrence of the Liquidation Event. |
|
Redemption |
|
The Series A Preferred Stock may be redeemed in whole or in part as determined by a resolution of the Board of Directors at any time, at a price equal to the Liquidation Value. |
|
Voting Rights |
|
Shares of Series A Preferred Stock shall have no rights to vote on any matter submitted to a vote of shareholders, except as required by law, in which case each share of Series A Preferred Stock shall be entitled to one vote. |
|
Conversion Rights |
|
Holders of Series A Preferred Stock will have no right to convert such shares into any other equity securities of the Company. |
|
Series B Preferred Stock |
|
The Company designated a class of Series B Preferred shares effective November 4, 2013. As of the date of this filing, no shares of our Series B Preferred Stock are issued and outstanding. Shares of our Series B Preferred Stock are entitled to receive, when and as declared by our Board of Directors, dividends at a rate of 8% per share annually, payable on the October 1 of each year. Such dividends shall be cumulative and shall accrue, whether or not earned or declared, from and after the date of issuance of the Series B Preferred Stock, whichever is later. Each share of Series B Preferred Stock shall be convertible, at any time and at the option of the holder, into ten shares of common stock (the “Stock Conversion Rate”). The Stock Conversion Rate is subject to certain adjustments for stock-splits, combinations, reclassifications, exchanges, substitutions, reorganizations, mergers and/or consolidations. |
|
Upon any liquidation, dissolution, or winding up of the Company, before any payment of cash or distribution of other property shall be made to the holders of common stock or any other class or series of stock subordinate in liquidation preference to the Company’s preferred stock, the assets of the Company shall be distributed as follows: first, the holders of the Series A Preferred Stock shall be entitled to the preferences detailed in the Certificate of Designation of Series A Preferred Stock; second, the holders of the Series B Preferred Stock shall be entitled to receive, pro rata according to the stated value of their shares, out of the assets of the Company legally available for distribution to its shareholders, the greater of: (i) the stated value per share or (ii) the amount such holder of Series B Preferred Stock would be entitled to receive if the shares of Series B Preferred Stock were converted into Common Stock at the Stock Conversion Rate. |
|
Shares of Series B Preferred Stock shall have no rights to vote on any matter submitted to a vote of shareholders, except as required by law, in which case each share of Series B Preferred Stock shall be entitled to one vote. |
|
Additional details regarding the Series B Preferred Stock can be found in our Articles of Amendment, which are on file with the Nevada Secretary of State. |
| | | | | | | | | | | | | |
|
Common Stock Issuances |
|
For Services |
|
On June 18, 2014, the Company issued 1,000,000 restricted common shares to a service provider. These shares were valued at fair market value of $1.67 per share and have been charged as stock compensation to general and administrative expense. |
|
On June 18, 2014, the Company issued 250,000 restricted common shares to the President of our subsidiary, Tonopah Custom Processing, Inc. These shares were valued at fair market value of $1.67 per share and have been charged as stock compensation to general and administrative expense. |
|
On June 18, 2014, the Company issued 1,500,000 restricted common shares to an officer of the Company. These shares were valued at fair market value of $1.67 per share and have been charged as stock compensation to general and administrative expense. |
|
Conversion of Secured Creditor |
|
On October 10, 2013 we issued 27,000,000 shares of restricted common stock in connection with a settlement with our secured creditor. (See Note 9 Related Party Transactions). |
|
Conversion of Unsecured Note |
|
In connection with the Company’s tender offer, 3,916,848 shares of common stock were issued on August 2, 2013 in exchange for $1,762,582 of the 2011 unsecured convertible notes. |
|
A holder of a convertible promissory note dated January 26, 2011 converted the entirety of the note consisting of $100,000 of principal and $18,559 of interest on February 28, 2014 into 237,118 shares of the Company’s common stock. |
|
Conversion of Promissory Note |
|
On October 29, 2013, we issued 53,995 shares of common stock from the conversion of $25,000 of principal and $1,997 interest of promissory note. |
|
On December 5, 2013, we issued 57,463 shares of common stock for the conversion of $25,000 of principal and $3,732 interest of a promissory note. |
|
Debt Settlements |
|
During the three months ended March 31, 2013, the Company issued 2,087,562 shares for the conversion of outstanding debts. |
|
During the three months ended September 30, 2013, the Company issued 1,500,000 shares for settlement of outstanding debts and issued 400,000 shares pursuant to a warrant exercise. |
|
On December 5, 2013, we issued 56,649 shares of common stock for the settlement of $28,343 of existing debt of the Company. |
|
On January 17, 2014, the Company entered into a Debt Settlement Agreement with a debt holder wherein a $273,910 debt was settled for 387,820 shares of restricted common stock. |
|
On January 17, 2014, the Company entered into a Debt Settlement Agreement with a debt holder wherein a $125,000 debt was settled for 250,000 shares of restricted common stock. |
|
On January 17, 2014, the Company settled a $225,000 debt by converting the entire debt into 800,000 shares of restricted common stock of the Company. Pursuant to a Debt Settlement Agreement previously executed on April 3, 2013 the debt was converted at a per share price of $0.28125. |
|
On February 13, 2014, the Company entered into an agreement with a debt holder wherein $458,250 of accrued expenses was settled for 300,000 shares of restricted common stock and $21,750 was charged as loss on settlement of debt to general and administrative expense. |
|
On March 4, 2014, the Company entered into a Debt Settlement Agreement with a debt holder wherein a $100,000 debt was settled for 200,000 shares of restricted common stock. |
|
On April 22, 2014, the Company entered into a Debt Settlement Agreement with a debt holder wherein a $100,000 debt was settled for 112,360 shares of restricted common stock. |
|
On June 10, 2014, the Company issued 50,000 unregistered shares of common stock to a former consultant for the settlement of consulting fees. |
|
On July 15, 2014, the Company entered into a Settlement Agreement with a former director wherein the parties agreed on the number of options issued to the former director under the 2010 Plan, resolved any and all claims against the Company and the Company issued 150,000 warrants at an exercise price of $2.00 per share that expire July 15, 2017. The fair value of the options of $147,468 was recorded as loss on settlement of debt. The fair value was determined using Black-Scholes using an exercise price of $2.00, volatility 75%, and a risk free rate of return of 0.98%. |
|
The Company recorded non-cash loss on settlement of debt of $1,106,487 and $1,372,977 for the years ended December 31, 2014 and 2013, respectively. |
|
Stock Warrants |
|
In the fourth quarter of 2013, we issued 1,775,138 shares of unregistered common stock pursuant to the exercise of outstanding common stock purchase warrants at a price of $0.25 per share and 100,000 at $0.50 per share for an aggregate purchase price of $493,785. |
|
On July 15, 2014, a holder with an option to purchase a total of 400,000 shares under the 2010 Plan originally granted on September 14, 2010 executed a cashless exercise wherein 282,000 restricted shares were issued and 118,000 shares were surrendered as payment for the issued shares. |
|
During the year ended December 31, 2014, a total of 7,025,227 warrants to purchase common stock were exercised: 1,830,867 warrants were exercised at a price of $0.25 per share; 520,000 warrants exercised at $0.50 per share; 4,000,000 warrants exercised at $0.60 per share, 244,360 warrants exercised at $0.89 per share and 430,000 at $1.00 per share for an aggregate total of $3,790,197. |
|
Option Grants |
|
2010 Plan |
|
The Company had one stock option plan: the 2010 Stock Incentive Plan, as amended (the “Plan”). Stock options, stock appreciation rights, restricted stock and other stock and cash awards may be granted under the Plan. In general, options vest over a period ranging from immediate vesting to five years and expire 10 years from the date of grant. Effective January 21, 2011, the Company’s Board of Directors (the “Board”) authorized an amendment to the 2010 Stock Incentive Plan, to increase the number of options available for granting under the Plan from 3,000,000 to 13,500,000 and authorized the Company to file an S-8 Registration Statement with the U.S. Securities and Exchange Commission (subsequently filed on January 27, 2011, File No. 333-171906) for the registration of the shares available in the Plan. On March 15, 2011, with the closing of the Shea Exchange Agreement a “change of control” event was deemed to have occurred and 13,500,000 previously granted stock options vested in full. Effective July 25, 2011, the Plan was amended to increase the total shares of stock which may be issued under the Plan from 13,500,000 to 14,500,000. |
|
The Company has been receiving files from former officers and attorneys. Upon review of the files, the original Plan and Board Resolution were located. The Plan approved by the Board of Directors on March 22, 2010 authorized 3,000,000 shares of common stock for issuance under the Plan. The Board of Directors voted to increase the number of shares available under the Plan on January 21, 2011. Section 9.11 of the Plan as approved by the Board states: |
|
9.11 Amendment of the Plan. The Board of Directors may amend or discontinue the Plan at any time. However, no such amendment or discontinuance shall adversely change or impair, without the consent of the recipient, an Incentive previously granted. Further, no such amendment shall, without approval of the stockholders of the Company, (a) increase the maximum number of shares of Common Stock which may be issued to all participants under the Plan, (b) change or expand the types of Incentives that may be granted under the Plan, (c) change the class of persons eligible to receive Incentives under the Plan, or (d) materially increase the benefits accruing to participants under the Plan. |
|
Pursuant to the terms of the Plan, the stockholders of the Company must approve this increase. As the stockholders of the Company did not approve the increase of shares available under the Plan, the increase on January 21, 2011 was not effective. |
|
As of January 21, 2011 the Company had issued a total of 2,800,000 options to purchase shares under the Plan and had 200,000 shares remaining authorized and unissued. However, also on January 21, 2011, the Board of Directors authorized the issuance of 10,500,000 options. This issuance far exceeded the number of shares available and the excess issuances were not valid. As a correction measure, the Company has divided the 200,000 shares that were available pro-rata between the persons named in the resolution. |
|
As a result of this correction there are a total of 1,631,842 options granted and available for exercise under the Plan outstanding as of the date of this filing. |
|
The Board of Directors terminated the 2010 option plan on August 23, 2013. |
|
Options issued in 2013 |
|
The following options were issued in 2013 outside of any option plan: |
|
The Company executed an Employment Agreement with Sharon Ullman dated effective November 13, 2013. As compensation for her employment as the Chief Executive Officer of the Company, Ms. Ullman was granted a total of 4,500,000 options to purchase common stock of the Company at an exercise price of $0.40 per share, with a grant term of 7 years. A total of 1,500,000 options vest upon each of the following: (i) November 13, 2013; (ii) June 1, 2014; and (iii) June 1, 2015. |
|
The Company executed an Employment Agreement with Jim Stieben dated effective October 15, 2013. Pursuant to the agreement, Mr. Stieben was appointed the President and Director of Operations of Tonopah Custom Processing, Inc. As compensation for his services, Mr. Stieben was granted a total of 1,500,000 options to purchase common stock of the Company at an exercise price of $0.60 per share, with a grant term of 7 years. A total of 750,000 options vested on October 15, 2013, and 375,000 options will vest upon each of the following: (i) the completed construction of a permitted processing building on the Miller’s Mill site; and (ii) the Company achieving profitability. |
| | | | | | | | | | | | | |
|
2014 Option Plan |
|
By Board Resolution effective January 27, 2014, the Company adopted a 2014 Stock Incentive Plan (the “Plan”) to compensate employees and consulting groups in their efforts to enhance the long-term shareholder value of the Company. Pursuant to the Plan, selected persons are offered opportunities to participate in the Company's growth and success and are encouraged to acquire and maintain stock ownership in the Company. The Plan grants options to purchase shares of our common stock vesting at dates beginning on the date of grant and issuable at chronological or performance increments. The Plan Administrator may also grandfather in existing options granted during 2013. The shareholders approved the 2014 Plan at the 2014 annual meeting. |
|
Under administration by the Compensation Committee (the “Plan Administrator”), a maximum of 75,000,000 shares of common stock are available for issuance under the Plan, subject to adjustment from time to time. Awards may be granted under the Plan to officers, directors, employees and consultants of the Company and as the Plan Administrator selects. The Plan Administrator is authorized, in its sole discretion, to issue options as incentive stock options, which shall be appropriately designated. The term of each option to purchase common stock of the Company is established by the Plan Administrator or, if not so established, is 10 years from the grant date. |
|
The Plan Administrator establishes the time at which each option shall vest and become exercisable. If not established in the instrument evidencing the option, the option shall vest and become exercisable according to the following schedule: (i) after one year of the participant’s continuous employment or service with the company or its related corporations, one quarter of the total options will be vested and exercisable; (ii) after each additional six-month period of continuous service completed thereafter, an additional one eighth of the total options will be vested and exercisable; and (iii) after four years, 100% of the options will be vested and exercisable. Under the terms of the Plan, the exercise price for shares shall be paid in cash or check to the Company unless the Plan Administrator determines otherwise. |
|
The Plan Administrator shall determine whether the options will continue to be exercisable, and the terms and conditions of such exercise, if a participant ceases to be employed or provide services to the Company. If not so established in the instrument evidencing such options, any portion of an option that is not vested and exercisable on the date of termination of the participant’s employment or service relationship (the “Employment Termination Date”) shall expire on such date. Any portion of an option that is vested and exercisable on the Employment Termination Date shall expire upon the earliest to occur of: (i) if the participant’s Employment Termination Date occurs by reason of retirement, disability or death, the one-year anniversary of such Employment Termination Date; (ii) if the participant’s Employment Termination Date occurs for reasons other than cause, retirement, disability or death, the three-month anniversary of such Employment Termination Date; or (iii) the last day of the option term. Notwithstanding the foregoing, if the participant dies after the Employment Termination Date while the Option is otherwise exercisable, the portion of the option that is vested and exercisable on such Employment Termination Date shall expire upon the earlier to occur of: (a) the last day of the option term; or (b) the first anniversary of the date of death, unless the Plan Administrator determines otherwise. |
|
If a participant is terminated for cause, the options shall automatically expire at the time the Company first notifies the participant of the termination. If a participant’s employment is suspended pending investigation of whether they will be terminated for cause, the participant’s rights under any option shall be suspended during the period of investigation. Awards granted under the Plan may not be assigned, except, to the extent permitted by Section 422 of the Internal Revenue Code (the “IRC”), and the Plan Administrator may permit such assignment, transfer and exercisability, and may permit a participant to designate a beneficiary who may exercise the award or receive compensation under the award after the participant’s death. Any award permitted to be assigned shall be subject to the terms and conditions contained in the instrument evidencing the award. |
|
The Plan may only be amended by the Company’s Board of Directors, as it deems advisable. Shareholder approval shall be required for any amendment to the extent required for compliance with Section 422 of the IRC, as amended or any applicable law or regulation. The Board may suspend or terminate the Plan at any time. Incentive stock options may not be granted more than 10 years after the later of the Plan’s adoption by the Board or the adoption by the Board of any amendment to the Plan that constitutes adoption of a new plan for the purpose of Section 422 of the IRC. Participants who are residents of California shall be subject to additional terms and conditions until the Common Stock becomes a publicly traded security, under the California Securities Code. |
|
The Company grandfathered the following options issued to consultants during the 4th quarter of 2013 in to the 2014 Plan: |
|
The Company entered into a Strategic Advisory Services Agreement with P5, LLC (“P5”) dated effective October 15, 2013, to provide strategic advisory services. As consideration for such services, the Company granted P5 a total of 17,500,000 options to purchase common stock of the Company, with 7,500,000 shares available for purchase at an exercise price of $0.65 per share and 10,000,000 shares available for purchase at an exercise price of $1.25 per share, with a grant term of seven years and subject to a vesting schedule. With respect to the options to purchase up to 7,500,000 shares at $0.65 per share, 2,500,000 options vest upon each of the following: (i) October 15, 2013 (the “P5 Grant Date”); (ii) 90 days after the P5 Grant Date; and (iii) 180 days after the P5 Grant Date. With respect to the options to purchase up to 10,000,000 shares at an exercise price of $1.25 per share, 2,500,000 options vest upon each of the following: April 1, 2014, July 1, 2014, October 1, 2014 and January 1, 2015. |
|
The Company entered into a Strategic Advisory Services Agreement with a consultant dated effective October 15, 2013. As consideration for the consultant’s assistance in expanding the Company’s operations and securing new business arrangements, the Company granted the consultant an aggregate of 3,500,000 options to purchase common stock of the Company, with 1,500,000 shares available for purchase at an exercise price of $0.65 per share and 2,000,000 shares available for purchase at an exercise price of $1.25 per share, with a grant term of seven years and subject to a vesting schedule. With respect to the options to purchase up to 1,500,000 shares at $0.65 per share, 500,000 options vest upon each of the following: (i) October 15, 2013 (the “Consultant Grant Date”); (ii) 90 days after the Consultant Grant Date; and (iii) 180 days after the Consultant Grant Date. With respect to the options to purchase up to 2,000,000 shares at an exercise price of $1.25 per share, 500,000 options vest upon each of the following: April 1, 2014, July 1, 2014, October 1, 2014 and January 1, 2015. |
|
On December 26, 2013, the Company entered into a Consulting Services Agreement with LR Advisors, LLC (“LRA”). Pursuant to the terms of the agreement, LRA agreed to provide the Company advisory services in connection with the Company’s investor relations. As compensation for such services, LRA was granted a total of 1,500,000 options to purchase common stock of the Company at an exercise price of $1.25 per share, with a grant term of seven years. The options vested in full upon execution of the agreement. |
|
The Company entered into a Consulting Agreement with EAS Advisors, LLC (“EAS”) on January 1, 2014, whereby EAS agreed to provide the Company general corporate advice, guidance and strategic services relating to the Company’s milling assets and the development of mining clients and contacts. As consideration for such services, the Company granted EAS an aggregate of 2,000,000 options to purchase common stock of the Company, with 1,000,000 shares available for purchase at an exercise price of $1.25 per share and 1,000,000 shares available for purchase at an exercise price of $2.25 per share, with a grant term of seven years and subject to a vesting schedule. With respect to the options to purchase up to 1,000,000 shares at $1.25 per share, 250,000 options vest upon each of the following: (i) January 1, 2014 (the “EAS Grant Date”); (ii) 90 days after the EAS Grant Date; (iii) 180 days after the EAS Grant Date; and (iv) 270 days after the EAS Grant Date. With respect to the options to purchase up to 1,000,000 shares at an exercise price of $2.25 per share, 250,000 options vest upon each of the following: July 1, 2014, October 1, 2014, November 1, 2014 and December 1, 2014. The Company estimated the fair value of these options of $1,398,584 using the above Black-Scholes pricing model and will amortize over the vesting term. |
|
On June 18, 2014, the Company granted 250,000 options to purchase common stock of the Company at an exercise price of $1.67 per share with a term of seven years to a legal advisor. The options vest in full on grant. |
|
On June 18, 2014, the Company granted 750,000 options to purchase common stock of the Company at an exercise price of $1.67 per share with a term of seven years to the President of our Tonopah Custom Processing, Inc. subsidiary. The options vest in full on grant. |
|
On June 18, 2014, the Company granted 1,000,000 options to purchase common stock of the Company at an exercise price of $1.67 per share with a term of seven years to an officer of the Company. The options vest in full on grant. |
|
The Company uses the Black-Scholes pricing model as a method for determining the estimated fair value for stock awards. Compensation expense for stock awards is recognized on a straight-line basis over the vesting period of service awards and for performance-based awards, the Company recognizes the expense when the performance condition is probable of being met. |
|
In determining the compensation cost of the stock awards granted during fiscal 2014 and 2013, the fair value of each grant had been estimated on the date of grant using the Black-Scholes pricing model and the weighted average assumptions used in these calculations are summarized below: |
|
| | 2014 | | 2013 | | | | | | | | | |
Risk-free interest rate | | 2.21% | | 2.11% | | | | | | | | | |
Expected volatility factor | | 75% | | 75% | | | | | | | | | |
Expected dividend | | — | | — | | | | | | | | | |
Expected option term | | 7 years | | 7 years | | | | | | | | | |
|
The Company reviews its current assumptions on a periodic basis and adjusts them as necessary to ensure an accurate valuation. The risk-free interest rate is based on the Federal Reserve Board’s constant maturities of the U.S. Treasury bond obligations with terms comparable to the expected life of the options at their issuance date. The Company uses historical data to estimate expected forfeitures, expected dividend yield, expected volatility of the Company’s stock and the expected life of the options. |
|
The Company recorded $8,206,286 and $4,107,806 related to compensation expense for the years ended December 31, 2014 and 2013, respectively. All compensation expense is included in general and administrative expense. There was no tax benefit from recording this non-cash expense due to our income tax valuation allowance and due to a portion of the options being incentive stock options. The compensation expense had a $0.08 and $0.04 per share impact on the loss per share for the years ended December 31, 2014 and 2013, respectively. As of December 31, 2014, there was $703,372 in unrecognized compensation expense. |
|
The following tables summarize information about the Company’s stock options: |
|
| | Number of | | Weighted | | | | | | | | |
Options | Average | | | | | | | |
| Exercise | | | | | | | |
| Price | | | | | | | |
Options outstanding - December 31, 2012 | | 10,438,335 | | $ | 0.64 | | | | | | | | |
| | | | | | | | | | | | | |
Granted | | 28,500,000 | | | 0.89 | | | | | | | | |
Canceled or expired | | -6,187,493 | | | 0.56 | | | | | | | | |
Exercised | | — | | | — | | | | | | | | |
Options outstanding - December 31, 2013 | | 32,750,842 | | $ | 0.88 | | | | | | | | |
| | | | | | | | | | | | | |
Granted | | 4,000,000 | | | 1.71 | | | | | | | | |
Canceled or expired | | -2,337,000 | | | 0.79 | | | | | | | | |
Exercised | | -282,000 | | | 0.6 | | | | | | | | |
Options outstanding – December 31, 2014 | | 34,131,842 | | $ | 0.99 | | | | | | | | |
| | | | | | | | | | | | | |
Weighted average fair value of options granted during the year ended December 31, 2013 | | | | $ | 0.27 | | | | | | | | |
Weighted average fair value of options granted during the year ended December 31, 2014 | | | | $ | 0.94 | | | | | | | | |
| | | | | | | | | | | | | |
|
A summary of the Company’s nonvested options at December 31, 2014, and changes during the year ended December 31, 2014, is presented below: |
|
| | Options | | Weighted | | | | | | | |
Average | | | | | | |
Grant Date | | | | | | |
Fair Value | | | | | | |
Non-vested, beginning of period | | | 21,750,000 | | $ | 0.24 | | | | | | | |
Granted | | | 4,000,000 | | $ | 0.94 | | | | | | | |
Vested | | | -20,500,000 | | $ | 0.24 | | | | | | | |
Forfeited | | | — | | $ | — | | | | | | | |
Non-vested, end of period | | | 5,250,000 | | $ | 0.24 | | | | | | | |
|
The following tables summarize information about stock options outstanding and exercisable at December 31, 2014: |
|
| | Options Outstanding at December 31, 2014 | |
Range of | | Number | | | Weighted | | Weighted | | Aggregate | |
Exercise Prices | Outstanding | Remaining | Average | Intrinsic |
| | Contractual | Exercise | Value(1) |
| | Life | Price | |
| | | | | | | | | | | | | |
$0.40 to $0.60 | | | 6,031,842 | | | 6.1 years | | $ | 0.45 | | $ | 3,415,603 | |
$0.61 to $1.00 | | | 10,600,000 | | | 5.5 years | | $ | 0.69 | | $ | 3,310,000 | |
$1.01 to $1.50 | | | 14,500,000 | | | 6.1 years | | $ | 1.25 | | $ | - | |
$1.51 to $2.25 | | | 3,000,000 | | | 6.6 years | | $ | 1.86 | | $ | - | |
$0.40 to $2.25 | | | 34,131,842 | | | 6.0 years | | $ | 0.99 | | $ | 6,625,603 | |
|
| | Options Exercisable at December 31, 2014 | |
Range of | | Number | | | Weighted | | Weighted | | Aggregate | |
Exercise Prices | Exercisable | Remaining | Average | Intrinsic |
| | Contractual | Exercise | Value(1) |
| | Life | Price | |
| | | | | | | | | | | | | |
$0.40 to $0.60 | | | 3,781,842 | | | 6.1 years | | $ | 0.44 | | $ | 2,115,603 | |
$0.61 to $1.00 | | | 10,600,000 | | | 5.5 years | | $ | 0.69 | | $ | 3,310,000 | |
$1.01 to $1.50 | | | 11,500,000 | | | 6.1 years | | $ | 1.25 | | $ | - | |
$1.51 to $2.25 | | | 3,000,000 | | | 6.6 years | | $ | 1.86 | | $ | - | |
$0.40 to $2.25 | | | 28,881,842 | | | 5.9 years | | $ | 1 | | $ | 5,425,603 | |
|
| -1 | The aggregate intrinsic value in the table represents the difference between the closing stock price on December 31, 2014 and the exercise price, multiplied by the number of in-the-money options that would have been received by the option holders had all option holders exercised their options on December 31, 2014. No options were exercised during 2014. | | | | | | | | | | | |
|
On July 15, 2014, a holder with an option to purchase a total of 400,000 shares under the 2010 Plan originally granted on September 14, 2010 executed a cashless exercise wherein 282,000 restricted shares were issued and 118,000 shares were surrendered as payment for the issued shares. |
|
Common Stock Purchase Warrants |
|
For warrants granted to non-employees in exchange for services, we recorded the fair value of the equity instrument using the Black-Scholes pricing model unless the value of the services is more reliably measurable. |
|
Pursuant to the terms of the employment agreement executed on February 19, 2013, the Company granted Joseph Rosamilia compensatory common stock purchase warrants for the purchase of 500,000 shares of common stock. The compensatory warrants vested quarterly in increments of 125,000 shares. All 500,000 compensatory warrants have vested. The exercise price of the 500,000 warrants is $0.20 per share. If the Company files a registration statement at any time while the compensatory warrants are exercisable, the shares purchasable under the compensatory warrants will be included in such registration statement. The compensatory warrants will be exercisable for seven years from the date of the Agreement. |
|
On August 6, 2013, 3,916,849 warrants to purchase common stock were issued to tender offer participants. These warrants to purchase common stock were issued in an amount equal to the number of shares received under the conversion of the eligible note being exchanged pursuant to an issuer tender offer filed July 2, 2013, exercisable for two years with an exercise price of $0.25 per share for the first 180 days following the tender offer and $0.50 per share thereafter, with substantially the same terms as the original warrants except the new warrants contained a call provision that may be exercised at $0.80 if the Company’s common stock trades above $0.80 for ten consecutive days. |
|
On October 7, 2014, 466,667 warrants to purchase common stock were exercised at a per share price of $0.60 for a total of $280,000. |
|
On October 17, 2014, 112,360 warrants to purchase common stock were exercised at a per share price of $0.89 for a total of $100,000. |
|
On November 26, 2014, 35,000 warrants to purchase common stock were exercised at a per share price of $0.89 for a total of $31,150. |
|
On November 26, 2014, 283,333 warrants to purchase common stock were exercised at a per share price of $0.60 for a total of $170,000. |
|
On December 5, 2014, 57,000 warrants to purchase common stock were exercised at a per share price of $0.89 for a total of $50,730. |
|
In 2013, the Company issued 153,995 warrants to purchase common stock at an exercise price of $0.25 per share exercisable for two years. |
|
On June 20, 2013, the Company issued 4,500,000 warrants to purchase common stock at an exercise price of $0.89 per share expiring on June 20, 2020. |
|
On September 11, 2013, the Company issued 400,000 warrants to purchase common stock at an exercise price of $0.01 cent per share. |
|
On December 5, 2013, the Company issued 63,500 warrants to purchase common stock at an exercise price of $0.25 per share expiring on August 6, 2015. |
|
Using the Black-Scholes pricing model, the following assumptions were used to calculate the fair value of the stock purchase warrants granted, for which the fair value of the services were not more reliably measurable: (ii) during 2013: dividend yield of 0%, risk-free interest rate of the “on-the-run” U.S. Treasury bond of the equivalent tenor, expected life equal to the contractual life of the respective warrant, and volatility of 75% and (ii) during 2012: dividend yield of 0%, risk-free interest rate of 2%, expected life equal to the contractual life of two years, and volatility of 153%. |
|
The Company reviews its current assumptions on a periodic basis and adjusts them as necessary to ensure an accurate valuation. The risk-free interest rate is based on the Federal Reserve Board’s constant maturities of the U.S. Treasury bond obligations with terms comparable to the contractual term of the warrants at their issuance date. The Company uses historical data to estimate expected dividend yield and volatility of the Company’s stock. |
|
The following table summarizes information about the Company’s stock purchase warrants outstanding at December 31, 2014 and 2013: |
|
| | Number | | Weighted | | Range | | | Weighted | |
Average | of | Remaining |
Exercise | Exercise | Contractual |
Price | Price | Life |
Outstanding at December 31, 2012 | | | 11,126,875 | | $ | 0.63 | | $ | 0.25 – 1.00 | | | 1.7 years | |
| | | | | | | | | | | | | |
Granted | | | 9,534,345 | | $ | 0.54 | | $ | 0.01-0.89 | | | | |
Cancelled or expired | | | -4,396,878 | | $ | 0.5 | | $ | 0.50-1.00 | | | | |
Exercised | | | -2,275,138 | | $ | 0.22 | | $ | 0.01-0.50 | | | | |
Outstanding at December 31, 2013 | | | 13,989,207 | | $ | 0.67 | | $ | 0.20 – 1.00 | | | 3.3 years | |
| | | | | | | | | | | | | |
Granted | | | 150,000 | | $ | 2 | | $ | 2 | | | | |
Cancelled or expired | | | -1,630,000 | | | 1 | | $ | 1 | | | | |
Exercised | | | -7,025,227 | | $ | 0.54 | | $ | 0.25 – 1.00 | | | | |
Outstanding at December 31, 2014 | | | 5,483,980 | | $ | 0.79 | | $ | 0.20 – 2.00 | | | 4.8 years | |
| | | | | | | | | | | | | |
Warrants exercisable at December 31, 2014 | | | | | | | | | 5,483,980 | | | | |
|
During the year ended December 31, 2014, a total of 7,025,227 warrants to purchase common stock were exercised: 1,730,867 warrants were exercised at a price of $0.25 per share; 620,000 warrants exercised at $0.50 per share; 4,000,000 warrants exercised at $0.60 per share, 244,360 warrants exercised at $0.89 per share and 430,000 at $1.00 per share for an aggregate total of $3,790,197. |
|
The aggregate intrinsic value of the 5,483,980 outstanding and exercisable warrants at December 31, 2014 was $1,301,875. The intrinsic value is the difference between the closing stock price on December 31, 2014 and the exercise price, multiplied by the number of in-the-money warrants had all warrant holders exercised their warrants on December 31, 2013. |
|
The aggregate intrinsic value of the 13,989,207 outstanding and exercisable warrants at December 31, 2013 was $5,471,473. The intrinsic value is the difference between the closing stock price on December 31, 2013 and the exercise price, multiplied by the number of in-the-money warrants had all warrant holders exercised their warrants on December 31, 2013. |
| | | | | | | | | | | | | |