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Stockholders' Equity
 6 Months Ended
Jun. 30, 2014
Stockholders' Equity [Abstract]  
Stockholders' Equity

 

6.        Stockholders’ Equity

 

In January 2014 the Company issued 100,000 shares of restricted common stock valued at $28,000 to a consultant.

 

Service-Based Stock Options

 

Service-based options issued by the Company to various employees and consultants amounted to 9,885,000 at December 31, 2013 and June 30, 2014.

 

Stock based compensation expense amounted to $3,500 and $25,500 for the three months ended June 30, 2014 and 2013, respectively. Stock based compensation expense amounted to $3,500 and $52,500 for the six months ended June 30, 2014 and 2013, respectively. Such amounts are included in compensation and related expenses in the accompanying statement of operations

 

All options outstanding at June 30, 2014 are exercisable and have a cashless exercise provision. Certain options include accelerated vesting provisions and modifications, as defined, if the Company is sold or acquired. The intrinsic value of options outstanding and exercisable at June 30, 2014 amounted to $40,000.

 

The following is a summary of outstanding service-based options at June 30, 2014:

 

Exercise Price  Number of Options  

Weighted Average

Remaining

Contractual Life

 
           
$0.10  $1,000,000   4 years 
 $0.20 - $0.25   7,735,000   8 years 
$0.40   1,150,000   8 years 
 Total  $9,885,000     

 

Performance-Based Stock Options

 

As of June 30, 2014 the Company had granted performance-based options to purchase 6,950,000 shares of common stock at exercise prices ranging from $0.40 to $5.00. The options expire at various dates between 2021 and 2023 and are exercisable upon the Company achieving annual sales revenue ranging from $5,000,000 and $100,000,000. The fair value of these performance-based options aggregated $302,000 and will be expensed over the implicit service period commencing once management believes the performance criteria will be met. Accordingly, at June 30, 2014, the unearned compensation for performance based options is $302,000.

 

Warrants

 

Warrants outstanding and exercisable amounted to 3,887,720 at December 31, 2013 and June 30, 2014. The weighted average exercise price of warrants outstanding at June 30, 2014 is $0.29. The warrants expire between 2014 and 2016.