EQUITY | 12 Months Ended |
Dec. 31, 2013 |
Equity [Abstract] | ' |
EQUITY | ' |
7. EQUITY |
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Common Stock |
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On October 8, 2012, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Secretary of State of Nevada, pursuant to which (i) the Company effected a 5,000-to-1 reverse split of its common stock and (ii) the number of authorized shares of the Company’s common stock decreased from 75,000,000,000 to 100,000,000. The market effective date of the reverse split was October 9, 2012. The effect of the stock split has been applied retroactively. On December 19, 2013 the Company increased its authorized shares of common stock from 100,000,000 to 500,000,000 |
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2012 |
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On March 1, 2012, the Company issued 10,714 shares of common stock to a consultant. The market value of the shares was $42,859, |
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On April 18, 2012, the Company entered into a Securities Purchase Agreement with accredited investors pursuant to which, on April 18, 2012, the Company sold 1,000,000 shares of common stock for an aggregate purchase price of $500,000, and the Company issued four-year warrants to purchase 1,000,000 shares of common stock to the investors with an exercise price of $0.50. The investors were purchasers under the Company’s Securities Purchase Agreements entered into in July 2011. |
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On April 23, 2012, the Company issued an aggregate of 7,980,133 shares of common stock to certain shareholders of the Company, in accordance with anti-dilution rights held by such shareholders, including 5,383,594 shares to Lyle Hauser valued at par $539, 1,632,000 shares to Kevin Hauser valued at fair market value for compensation expense of $9,792,000, and 964,539 shares valued at par $96 to purchasers under Securities Purchase Agreements entered into by the Company in July 2011. Lyle Hauser is the Company’s largest shareholder and the brother of Kevin Hauser, the Company’s chief executive officer. |
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On May 15, 2012, the Company entered into a Securities Purchase Agreement with accredited investors pursuant to which, on May 15, 2012, the Company sold 600,000 shares of common stock for an aggregate purchase price of $300,000, and the Company issued four-year warrants to purchase 600,000 shares of common stock to the investors with an exercise price of $0.50. The investors were purchasers under the Company’s Securities Purchase Agreements entered into in July 2011. |
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On June 26, 2012, the Company entered into a Securities Purchase Agreement with accredited investors pursuant to which, on June 26, 2012, the Company sold 200,000 shares of common stock for an aggregate purchase price of $100,000, and the Company issued four-year warrants to purchase 200,000 shares of common stock to the investors with an exercise price of $0.50. The investors were purchasers under the Company’s Securities Purchase Agreements entered into in July 2011. The Company issued 100,000 shares on July 18, 2012 and the remaining 100,000 shares on November 14, 2012. |
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On July 16, 2012, the Company issued 24,000 shares of common stock to a consultant in the amount of $60,000. |
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On September 20, 2012, the Company sold 100,000 shares of common stock for a purchase price of $50,000. The shares were issued on November 14, 2012 |
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On August 24, 2012, the Company entered into a Securities Purchase Agreement with accredited investors pursuant to which, the Company sold 500,000 shares of common stock for an aggregate purchase price of $250,000. |
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2013 |
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On January 17, 2013 the Company entered into a Securities Purchase Agreement pursuant to which, the Company sold 400,000 shares of common stock for an aggregate purchase price of $200,000 |
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On April 15, 2013, the Company entered into a Securities Purchase Agreement with accredited investors pursuant to which the Company sold 2,000,000 shares of common stock for an aggregate purchase price of $400,000. |
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On May 1, 2013 the Company issued an aggregate of 11,872,281shares of common stock to purchasers under the securities purchase agreements entered into by the Company in July 2011 and April 2012 pursuant to anti-dilution rights held by such purchasers. |
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On August 27, 2013, the Company entered into a Securities Purchase Agreement with accredited investors pursuant to which, the Company sold 42,743 shares of common stock for an aggregate purchase price of $29,920. |
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On September 23, 2013, the Company entered into a Securities Purchase Agreement with accredited investors pursuant to which, the Company sold 21,429 shares of common stock for an aggregate purchase price of $15,000. |
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On December 17, 2013, the Company entered into a Securities Purchase Agreement with accredited investors pursuant to which, the Company sold 2,000,000 shares of common stock for an aggregate purchase price of $40,000. The shares are currently unissued. In connection with this sale, the Company will issue an aggregate of 150,129,655 shares of common stock to existing stockholders for no additional consideration pursuant to anti-dilution rights held by such stockholders. These shares have not yet been issued. |
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On December 20, 2013, the Company entered into a Securities Purchase Agreement with accredited investors pursuant to which, the Company sold 15,000,000 shares of common stock for an aggregate purchase price of $300,000. |
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Preferred Stock |
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On April 10, 2012, the Company filed a certificate of designation of Series B Preferred Stock (the “Series B Certificate of Designation”) with the Secretary of State of Nevada, pursuant to which 100,000 shares of the Company’s preferred stock were designated as Series B Convertible Preferred Stock (the “Series B Preferred Stock”). Pursuant to the Series B Certificate of Designation, the Series B Preferred Stock: |
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● | Has a liquidation preference over the common stock equal to the stated value of $1.00 per share. | | | | | | | | | | |
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● | Votes as a single class with the common stock and entitles its holders, for each share of Series B Preferred Stock, to cast such number of votes equal to 0.00051% of the total number of votes entitled to be cast. Accordingly, a holder of all 100,000 shares of Series B Preferred Stock will have the right to cast 51% of the total number of votes entitled to be cast. | | | | | | | | | | |
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● | Will automatically convert into common stock at a ratio of 2 shares of common stock for each share of Series B Preferred Stock, effective upon the Company’s filing of a certificate of amendment to its articles of incorporation. | | | | | | | | | | |
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On April 12, 2012, the Company entered into a securities purchase agreement with Lyle Hauser (the “Preferred Stock Investor”). Lyle Hauser is the Company’s largest shareholder and the brother of Kevin Hauser, the Company’s chief executive officer. Pursuant to the purchase agreement, on April 12, 2012, the Company sold 100,000 shares of Series B Preferred Stock to the Preferred Stock Investor for an aggregate purchase price of $100,000, and the Company issued four-year warrants to purchase 200,000 shares of common stock to the Preferred Stock Investor with an exercise price of $0.50. On April 23, 2012, 100,000 Series B Preferred shares were converted to 200,000 shares of common stock |
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Stock Options |
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2006 Incentive Stock Plan |
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In January 2006, the Board of Directors of the Company approved an Incentive Stock Plan, pursuant to which they have initially reserved 2,000 shares of common Stock for issuance. Under the 2006 Incentive Stock, the Board has granted an aggregate of 1,128 options to employees pursuant to certain employment agreements. All previously granted options have expired unexercised. |
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2008 Amended and Restated Incentive Stock Plan |
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In November 2008, our Board of Directors adopted the 2008 Equity Incentive Plan and subsequently amended it in January 2009, June 2009 and July 2009 (the “2008 Plan”). The purpose of the 2008 Plan was to provide an incentive to attract and retain directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons into our development and financial success. Under the 2008 Plan, the Company is authorized to issue incentive stock options intended to qualify under Section 422 of the Code, non-qualified stock options, stock appreciation rights, performance shares, restricted stock and long term incentive awards. The 2008 Plan will be administered by our Board of Directors until such time as such authority has been delegated to a committee of the board of directors. |
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2010 Incentive Stock Plan |
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In December 2009, our Board of Directors adopted the 2010 Equity Incentive Plan (the “2010 Plan”). The purpose of the 2010 Plan was to provide an incentive to attract and retain directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons into our development and financial success. Under the 2010 Plan, we are authorized to issue incentive stock options intended to qualify under Section 422 of the Code, non-qualified stock options, stock appreciation rights, performance shares, restricted stock and long term incentive awards. The 2010 Plan will be administered by our Board of Directors until such time as such authority has been delegated to a committee of the Board of Directors. |
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Other Warrants |
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During the first quarter of 2008 the Company awarded 35 Common Stock warrants, at an exercise price of $2800 per share, to former Board members at the quoted stock price on the effective date of the awards. The warrants have an expiration date of five years from the issue date and contain provisions for a cash exercise. The estimated value of the compensatory warrants granted to non-employees in exchange for services and financing expenses was determined using the Black-Scholes pricing model and the following assumptions: |
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Risk-free interest rate at grant date | | | 4.75 | % | | | | | | | |
Expected stock price volatility | | | 155 | % | | | | | | | |
Expected dividend payout | | | -- | | | | | | | | |
Expected option in life-years | | | 5 | | | | | | | | |
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On June 22, 2011, the Company awarded 2,000 Common Stock warrants, at an exercise price of $50 per share, to consultants for services at the quoted stock price on the effective date of the awards. The warrants have an expiration date of four years from the issue date and contain provisions for a cash exercise. The estimated value of the compensatory warrants granted to non-employees in exchange for services and financing expenses was determined using the Black-Scholes pricing model and the following assumptions listed below: |
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On July 28, 2011, the Company awarded 27,000 Common Stock Warrants, at an exercise price of $25 per share to consultants for services at the quoted stock price on the effective date of the awards. The warrants have an expiration date of three years from the issue date and contain provisions for a cash exercise. The estimated value of the compensatory warrants granted to non-employees in exchange for services was determined using the Black-Scholes pricing model and the assumptions listed below. |
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Risk-free interest rate at grant date | | | 0.39 | % | | | | | | | |
Expected stock price volatility | | | 172.1 | % | | | | | | | |
Expected dividend payout | | | -- | | | | | | | | |
Expected option in life-years | | | 4 | | | | | | | | |
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Transactions involving warrants are summarized as follows: |
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| | Number of Warrants | | | Weighted-Average Price Per Share | | | | |
Outstanding at December 31, 2011 | | | 29,035 | | | | 30.07 | | | | |
Granted | | | - | | | | - | | | | |
Exercised | | | - | | | | - | | | | |
Canceled or expired | | | - | | | | - | | | | |
Outstanding at December 31, 2012 | | | 29,035 | | | $ | 30.07 | | | | |
Granted | | | - | | | | - | | | | |
Exercised | | | -35 | | | | 28 | | | | |
Canceled or expired | | | - | | | | - | | | | |
Outstanding at September30, 2013 | | | 29,000 | | | $ | 48.27 | | | | |
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Warrants Outstanding | |
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Exercise | | | Number | | | Contractual | |
Prices | | | Outstanding | | | Life (years) | |
| $ | 25 | | | | 2,000 | | | | 1 | |
| | 50 | | | | 27,000 | | | | 2.25 | |
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| | | | | | 29,000 | | | | 2.43 | |