XML 56 R15.htm IDEA: XBRL DOCUMENT
v2.4.0.8

9. Stock Options and Warrants | 12 Months Ended
--- | ---
Dec. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] |
9. Stock Options and Warrants | The Company periodically issues stock options and warrants to employees and non-employees in capital raising transactions, for services and for financing costs. Options vest and expire according to terms established at the grant date. Options The Company currently issues stock options to employees, directors and consultants under its 2004 Stock Option Plan (the Plan). The Company could issue options under the Plan to acquire up to 7,000,000 shares of common stock as amended in May 2006. From the Plan’s inception in 2004 up to December 31, 2013, the Company granted options to purchase 9,091,815 shares under the Plan, of which 4,293,574 shares were subsequently cancelled or forfeited and made available for grants under the Plan. As of December 31, 2013, 2,201,759 shares were available to be granted under the Plan. From the Company’s inception in February 1998 up to December 31, 2013, a total of 37,050,000 shares were granted outside of the Plan, of which, 17,430,000 shares were subsequently cancelled or forfeited. During the year ended December 31, 2013, there were no shares granted outside the Plan while 7,040,000 shares granted outside the Plan in 2011 were cancelled. During the year ended December 31, 2012, 4,000,000 shares were granted outside the Plan. Employee options vest according to the terms of the specific grant and expire from 5 to 10 years from date of grant. Non-employee option grants have vested upon issuance and up to 2 years from the date of grant. The weighted-average, remaining contractual life of employee and Non-employee options outstanding at December 31, 2013 was 7.1 years. Stock option activity for the period January 1, 2011 to December 31, 2013, was as follows:
|  | Weighted Avg. Options |  |  | Weighted Avg. Exercise Price |
Options, January 1, 2011 |  |  | 4,837,488 |  |  | $ | 0.52 |
Options granted |  |  | 19,800,000 |  |  |  | 0.26 |
Options exercised |  |  | (77,778 | ) |  |  | 0.27 |
Options forfeited |  |  | (310,000 | ) |  |  | 0.76 |
Options cancelled |  |  | (181,818 | ) |  |  | 0.55 |
Options, December 31, 2011 |  |  | 24,067,892 |  |  | $ | 0.30 |
Options granted |  |  | 4,858,000 |  |  |  | 0.30 |
Options exercised |  |  | (776,667 | ) |  |  | 0.47 |
Options forfeited |  |  | (871,127 | ) |  |  | 0.98 |
Options, December 31, 2012 |  |  | 27,278,098 |  |  | $ | 0.27 |
Options granted |  |  | 207,819 |  |  |  | 1.17 |
Options exercised |  |  | (115,000 | ) |  |  | 0.60 |
Options forfeited |  |  | (7,061,009 | ) |  |  | 0.25 |
Options, December 31, 2013 |  |  | 20,309,908 |  |  | $ | 0.28 |
The weighted average exercise prices, remaining contractual lives for options granted, exercisable, and expected to vest under the Plan as of December 31, 2013 were as follows:
|  | Outstanding Options |  | Exercisable Options
Option Exercise Price Per Share |  | Shares |  |  | Life (Years) |  | Weighted Average Exercise Price |  | Shares |  |  | Weighted Average Exercise Price
$ 0.21 - $ 0.99 |  |  | 20,041,679 |  |  | 7.1 |  | $0.27 |  |  | 17,041,679 |  |  | $0.27
$ 1.00 - $ 1.99 |  |  | 268,229 |  |  | 6.1 |  | $1.22 |  |  | 124,601 |  |  | $1.27
|  |  | 20,309,908 |  |  |  |  | $0.28 |  |  | 17,166,280 |  |  | $0.28
As of December 31, 2013 the market price of the Company’s stock was $1.07 per share. At December 31, 2013 the aggregate intrinsic value of the options outstanding was $16,060,907. Future unamortized compensation expense on the unvested outstanding options at December 31, 2013 is approximately $705,500. 2013
| · | From April up to September 2013, options to acquire 115,000 shares of common stock were exercised resulting in net proceeds of $19,500. Included in the exercise was issuance of 50,000 shares of common stock valued at $49,000 pursuant to an exercise of options and accounted for as partial settlement of a liability recorded in prior years.
| · | In July 2013, the Company issued options to purchase 36,364 shares of common stock to consultants with an estimated fair value of approximately $25,000 using the Black-Scholes Option Pricing model. The options are exercisable at $1.10/share, vest over a period of one year and expire in two years from the date of grant. During the year ended December 31, 2013, the Company recognized compensation costs of $16,000 based on the fair value of options that vested.
| · | From July up to September 2013, the Company issued options to purchase 171,455 shares of common stock to employees, officers and members of the Board of Directors with a fair value of approximately $176,000 using the Black-Scholes Option Pricing model. The options are exercisable at $1.09/share up to $1.71/share, vest over a period of one year and expire in ten years from the date of grant. During the year ended December 31, 2013, the Company recognized compensation costs of $85,157 based on the fair value of options that vested.
| · | In November 2013, pursuant to separation agreement with an Officer of the Company, the Company cancelled unvested option to purchase 7,040,000 shares of common stock at $0.25 and modified the vesting period of unvested option to purchase 3,520,000 shares of common stock at $0.25, both granted 2011 (see Note 13).
| · | During year ended December 31, 2013, the Company amortized $403,127 of compensation cost based on the vesting of the options granted to employees, directors and consultants in prior years.
2012
| · | On February 1, 2012, the Company issued 4,000,000 options to its Chief Financial Officer, valued at $1,207,193 using Black-Scholes Option Pricing model. The options have an exercise price of $0.25 per share, vest over a four year period, and expire ten years from date of grant. Twelve and a half percent vested immediately, twelve and a half percent will vest on the first anniversary date, and twenty-five percent will vest on the following three anniversary dates. During the year ended December 31, 2012, the Company recognized compensation costs of $289,223 based upon its vesting.
| · | On May 18, 2012, the Company issued 850,000 options to its employees, valued at $242,963 using Black-Scholes Option Pricing model. The options have an exercise price of $0.30 per share, vesting immediately, and expire ten years from date of grant.
| · | On October 1, 2012, the Company issued 8,000 options to its employees, valued at $5,851 using Black-Scholes Option Pricing model. The options have an exercise price of $0.83 per share, vesting immediately, and expire ten years from date of grant.
| · | During year ended December 31, 2012, the Company amortized $1,366,846 of compensation cost based on the vesting of the options granted to employees, directors and consultants in prior years
2011
| · | In March 2011, the Company granted 17,600,000 options to the Company’s Chairman and Chief Executive Officer with a fair value of $6,834,231 using the Black-Scholes Option Pricing model. The options have an exercise price of $0.25 per share, vest over a five year period, and expire ten years from date of grant. Twenty percent of the options shall vest on each of the first five anniversary dates. In the event of a change of control of the Company, all unvested options shall vest on the date of the change of control. During the year ended December 31, 2011, the Company amortized $1,252,942 of compensation cost based on the vesting of the options.
| · | During the year ended December 31, 2011, the Company granted 2,200,000 options to certain of its director and officers. The options have an exercise price of $0.30 per share, vest immediately and expire ten years from date of grant. The options were valued at $541,134 or $0.25 per share using the Black-Scholes Option Pricing model and were expensed at the time of grant.
| · | During the year ended December 31, 2011, the Company recognized amortization expense of $8,058 based upon its vesting of options granted to an employee in prior years.
Black-Scholes Option Pricing During the years ended December 31, 2013, 2012 and 2011, the Company used the following average assumptions in its calculation using the Black-Scholes Option Pricing model:
|  | 2013 |  |  | 2012 |  |  | 2011 |
Expected life (years) |  |  | 1.5 – 5.5 |  |  |  | 5.0 – 7.0 |  |  |  | 6 |
Risk free interest rate |  |  | 0.34 – 1.65% |  |  |  | 0.62 – 1.27% |  |  |  | 1.95% |
Volatility |  |  | 127 – 130% |  |  |  | 125 – 140% |  |  |  | 141.97% |
Expected dividend yield |  |  | 0% |  |  |  | 0% |  |  |  | 0% |
The weighted average fair value for options granted in 2013, 2012 and 2011 were $0.96, $0.30 and $0.37, respectively. Warrants The following table summarizes certain information about the Company’s stock purchase warrants.
|  | Warrants |  |  | Weighted Avg. Exercise Price
Warrants outstanding, January 1, 2011 |  |  | 22,979,068 |  |  | $0.52
Warrants granted |  |  | 29,781,916 |  |  | 0.30
Warrants exercised |  |  | (224,000 | ) |  | 0.47
Warrants cancelled |  |  | (3,430,704 | ) |  | 0.56
Warrants outstanding, December 31, 2011 |  |  | 49,106,280 |  |  | $0.32
Warrants granted |  |  | 9,273,316 |  |  | 0.31
Warrants exercised |  |  | (12,039,846 | ) |  | 0.29
Warrants cancelled |  |  | (4,134,243 | ) |  | 0.49
Warrants outstanding, December 31, 2012 |  |  | 42,205,507 |  |  | $0.31
Warrants granted |  |  | 150,000 |  |  | 0.31
Warrants exercised |  |  | (29,037,389 | ) |  | 0.29
Warrants cancelled |  |  | (1,554,152 | ) |  | 0.49
Warrants outstanding, December 31, 2013 |  |  | 11,763,966 |  |  | $0.31
At December 31, 2013 the price of the Company’s common stock was $1.07 per share and the aggregate intrinsic value of the warrants outstanding was $8,585,149. Future unamortized compensation expense on the unvested outstanding warrants at December 31, 2013 is approximately $162,500.
|  |  | Outstanding Warrants |  | Exercisable Warrants
Warrant Exercise Price Per Share |  |  | Shares |  |  | Life (Years) |  | Weighted Average Exercise Price |  | Shares |  |  | Weighted Average Exercise Price
$ 0.30 - $ 0.99 |  |  |  | 11,263,966 |  |  | 2.7 |  | $0.31 |  |  | 10,380,632 |  |  | $0.31
$ 1.00 - $ 1.99 |  |  |  | 500,000 |  |  | 0.5 |  | $1.00 |  |  | 500,000 |  |  | $1.00
|  |  |  |  | 11,763,966 |  |  |  |  | $0.34 |  |  | 10,880,632 |  |  | $0.34
2013
| · | In March 2013, pursuant to a settlement of debt agreement, the Company granted a consultant a warrant to purchase 150,000 shares of its common stock with an exercise price of $0.30 per share, vesting immediately and expiring in two years from grant date. The fair value of the warrant amounted to $129,622 using the Black-Scholes Option Pricing model with the following average assumptions: risk-free interest rate of 0.26%; dividend yield of 0%; volatility of 132%; and an expected life of two years. The fair value of the warrant of $129,622 was recorded as part of Settlement of litigation and debt in the accompanying Consolidated Statement of Operations.
| · | During the year ended December 31, 2013, warrants to acquire 29,307,389 shares of common stock were exercised resulting in proceeds of $8,408,718, net of direct costs incurred of $78,521.
| · | During year ended December 31, 2013, the Company recorded $84,694 of compensation cost based on the vesting of the warrants granted to a consultant in 2011 using the Black-Scholes Option Pricing model with the following average assumptions: risk-free interest rate of 2.21%; dividend yield of 0%; volatility of 129%; and an expected life of 8 years. Unamortized compensation expense on the unvested outstanding options at December 31, 2013 is approximately $8,600.
| · | During year ended December 31, 2013, the Company amortized $97,242 of compensation cost based on the vesting of the warrants granted to employees, directors and consultants in prior years.
2012
| · | During the year ended December 31, 2012, the Company granted warrants to consultants to purchase 1,850,000 shares of its common stock. The warrants have an exercise price of $0.30 per share, fully vested and will expire in two to three years from grant date. Total fair value of the warrant amounted to $517,777 using the Black-Scholes Option Pricing model with the following average assumptions: risk-free interest rate of 0.23% to 0.39%; dividend yield of 0%; volatility of 111%; and an expected life of three years.
| · | During the year ended December 31, 2012, the Company granted 7,423,316 warrants to acquire share of its common stock in connection of its issuance of convertible notes. The warrants have an average exercise price of $0.29 per share, fully vested, and will expire in two to three years from date of grant.
| · | During the year ended December 31, 2012, the Company recognized amortization expense of $289,513 based upon its vesting of warrants granted in prior years.
2011
| · | In August 2011, the Company granted a warrant to an employee to purchase 2,000,000 shares of its common stock pursuant to an employment agreement. The warrant is exercisable at $0.30/share, vests over five years and will expire in ten years from grant date. Total fair value of the warrant was determined to be $486,202 at the date of grant using a Black-Scholes Option Pricing model with the following assumptions: risk-free interest rate of 2.05%; dividend yield of 0%; volatility of 126%; and an expected life of seven years. During the year ended December 31, 2011, the Company recognized amortization expense of $69,457 based upon vesting of the warrants.
| · | In December 2011, the Company granted a warrant to an employee to purchase 1,000,000 shares of its common stock pursuant to a separation agreement. The warrant is exercisable at $0.30/share, vest immediately and will expire in ten years from grant date. Total fair value of the warrant was determined to be $369,370 at the date of grant using a Black-Scholes Option Pricing model with the following assumptions: risk-free interest rate of 1.89%; dividend yield of 0%; volatility of 196%; and an expected life of ten years. During the year ended December 31, 2011, the Company recognized the full value of the warrant.
| · | During the year ended December 31, 2011, the Company granted warrants to consultants to purchase 1,850,000 shares of its common stock. The warrants have an average exercise price of $0.31/share, vests over a period up to three years and will expire in one to ten years from grant date. Total fair value of the warrant amounted to $463,898 using the Black-Scholes Option Pricing model with the following average assumptions: risk-free interest rate of 0.71%; dividend yield of 0%; volatility of 136%; and an expected life of four years. During the year ended December 31, 2011, the Company recognized amortization expense of $411,888 based upon vesting of the warrants.
| · | During the year ended December 31, 2011, the Company granted issued 24,931,916 warrants to acquire shares of its common stock in connection of its issuance of convertible notes. The warrant is exercisable at $0.25/share, fully vested, and will expire in two years for date of grant.

X
- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Details
Name: | us-gaap_ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsAdditionalDisclosuresAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration