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12. Stockholder's Equity
 12 Months Ended
Dec. 31, 2015
Equity [Abstract]  
Stockholder's Equity

Issuance of Common Stock for Cash

 

The Company did not issue any common stock for cash in 2015.

 

In 2014, the Company sold, and issued in connection with the exercise of warrants, an aggregate of 2,400,071, shares of its common stock to existing stockholders and other parties for $3,070,134.  No warrants to purchase shares of the Company’s common stock were granted in 2014.

 

Issuance of Common Stock for Notes Receivable

 

During 2014, the Company issued Mr. and Mrs. Robert Detwiler, stockholders of the Company, 100,000 shares of the Company’s common stock in exchange for two notes receivable totaling $120,000. The notes receivable mature in one year and bear interest at five percent. In addition, during 2014, the Company issued Herbert Denton, the Company investor relations consultant, 25,000 shares of the Company’s common stock in exchange for a notes receivable of $30,000. Mr. Denton’s note bears interest of six percent and is due in monthly payments of $2,000.   During 2015, the Company received $120,000 as payment on these notes.   The remaining $30,000 due from Mr. Denton was forgiven in connection with a Settlement Agreement and Supplemental Settlement Agreement (the “Settlement Agreement”), entered into during 2015 related to terminating Mr. Denton’s services for the Company. (See Note 16).

 

Issuance of Common Stock for Notes Payable

 

During the year ended December 31, 2014, Mr. and Mrs. Robert Detwiler along with two other shareholders loaned the Company $330,000.  The Company issued 235,717 shares of its common stock in satisfaction of these notes during the year ended December 31, 2014.  The terms of the share payment were identical to those offered other investors that purchased common stock during the time of the issuance.

 

Issuance of Common Stock for Services to Directors and Consultants

 

On December 30, 2015, the Company declared, but did not issue approximately 474,000 shares of unregistered common stock to be paid to its directors for services during 2015, having a fair value of $125,000, based on the stock price at the date declared.

 

During 2015, the Company issued 105,000 shares to Herbert Denton for investor relations services provided and in connection with the Settlement Agreement.  The shares estimated fair value at the time of issue was approximately $27,950.

 

On December 30, 2014, the Company declared, but did not issue 186,825 shares of unregistered common stock to be paid to its directors for services during 2014, having a fair value of $125,000, based on the current stock price at the date declared.  These shares were issued on March 23, 2015.

 

During the year ended December 31, 2014, the Company issued 24,000 shares to Herbert Denton for investor relations services he provided. The shares estimated fair value at the time of issue was approximately $39,000.

 

 Common Stock Warrants

 

The Company's Board of Directors has the authority to issue stock warrants for the purchase of preferred or unregistered common stock to directors and employees of the Company.

 

Transactions in common stock warrants are as follows:

 

    Number of Warrants     Exercise Prices  
Balance, December 31, 2013     2,489,407     $ 0.25 - $4.50  
Warrants exercised     (310,625 )   $ 1.20-$1.60  
   Warrants expired     (1,451,865 )        
Balance, December 31, 2014     726,917     $ 0.25 - $4.50  
   Warrants expired     (476,917 )        
Balance, December 31, 2015     250,000     $ 0.25  

 

At December 31, 2015, warrants for purchase of 250,000 shares of the Company’s common stock for $0.25 per share are outstanding and have no expiration date.   These warrants are owned by the Company’s president.

 

Preferred Stock

 

The Company's Articles of Incorporation authorize 10,000,000 shares of $0.01 par value preferred stock available for issuance with such rights and preferences, including liquidation, dividend, conversion, and voting rights, as the Board of Directors may determine.

 

Series B

 

During 1993, the Board established a Series B preferred stock, consisting of 750,000 shares.  The Series B preferred stock has preference over the Company's common stock and Series A preferred stock; has no voting rights (absent default in payment of declared dividends); and is entitled to cumulative dividends of $0.01 per share per year, payable if and when declared by the Board of Directors.  During the years ended December 31, 2015 and 2014 the Company recognized $7,500 in Series B preferred stock dividend.  In the event of dissolution or liquidation of the Company, the preferential amount payable to Series B preferred stockholders is $1.00 per share plus dividends in arrears. No dividends have been declared or paid with respect to the Series B preferred stock. The Series B Preferred stock is no longer convertible to shares of the Company’s common stock.  At December 31, 2015 and 2014, cumulative dividends in arrears on the outstanding Series B shares were $157,500 and $150,000, respectively.

 

Series C

 

During 2000, the Board established a Series C preferred stock, consisting of 205,996 shares.  In 2002, 28,092 shares were converted to common stock and cancelled, leaving 177,904 Series C preferred shares authorized and outstanding.  The Series C preferred stock has preference over the Company’s common stock and has voting rights equal to that number of shares outstanding, but no conversion or dividend rights.  In the event of dissolution or liquidation of the Company, the preferential amount payable to Series C preferred stockholders is $0.55 per share.

 

Series D

 

During 2002, the Board established a Series D preferred stock, authorizing the issuance of up to 2,500,000 shares.  The Series D preferred stock has preference over the Company’s common stock but is subordinate to the liquidation preferences of the holders of the Company’s outstanding Series A, Series B and Series C preferred stock.  Series D preferred stock carries voting rights and is entitled to annual dividends of $0.0235 per share. The dividends are cumulative and payable after payment and satisfaction of the Series A, B and C preferred stock dividends.  No dividends have been declared or paid with respect to the Series D preferred stock.  At December 31, 2015 and 2014, the cumulative dividends in arrears on the 1,751,005 outstanding Series D shares were $501,515 and $460,366 respectively, payable if and when declared by the Board of Directors.  In the event of dissolution or liquidation of the Company, the preferential amount payable to Series D preferred stockholders is $2.50 per share.  At December 31, 2015 and 2014, the liquidation preference for Series D preferred stock was $4,879,029 and $4,837,880, respectively.  Holders of the Series D preferred stock have the right, subject to the availability of authorized but unissued common stock, to convert their shares into shares of the Company's common stock on a one-to-one basis without payment of additional consideration and are not redeemable unless by mutual consent.   The majority of Series D preferred shares are held by John Lawrence, president of the Company.