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Stockholders' Equity
 9 Months Ended
Sep. 30, 2015
Stockholders' Equity [Abstract]  
Stockholders' Equity
6.Stockholders’ Equity

 

In July, 2015 the Company granted 300,000 options to a shareholder in conjunction with the issuance of a $75,000 note payable. The options are fully vested and expire in three years. In September 2015, the Company satisfied $10,200 of notes payable to a director through the issuance of 60,000 shares of Company common stock. The Company issued 40,800 options to the director in conjunction with this transaction. The options are fully vested and expire in three years.

 

In May 2015 the Company purchased and retired 120,000 shares of outstanding Company common stock from an investor for $10,800.

 

Service-Based Stock Options

 

A summary of the outstanding service-based stock options are as follows:

 

   Number of Options 
     
 Balance at December 31, 2014  10,335,000 
 Granted  340,800 
      
 Balance at September 30, 2015  10,675,800 

 

All outstanding options have are exercisable and have a cashless exercise provision, and certain options provide for accelerated vesting provisions and modifications, as defined, if the Company is sold or acquired. The options outstanding and exercisable at September 30, 2015 have no intrinsic value.

 

The following is a summary of outstanding service-based options at September 30, 2015:

 

 Exercise Price Number of Options  Weighted Average Remaining Contractual Life
       
 $0.10  1,340,800  3 years
 $0.20 - $0.25  8,185,000  7 years
 $0.40  1,150,000  7 years
 Total  10,675,800   

 

Performance-Based Stock Options

 

In August 2014, the Company issued 300,000 options with an exercise price of $0.20 to a consultant. The vesting of the options are contingent upon the completion of a clinical study as defined. Management has valued these options at $8,000 and has amortized them over the implicit service period of one year.

 

As of September 30, 2015 in addition to the 300,000 options above, the Company had granted performance-based options to purchase 9,375,000 shares of common stock at exercise prices ranging from $0.20 to $5.00. The options expire at various dates between 2021 and 2024 and are exercisable upon the Company achieving annual sales revenue ranging from $2,000,000 and $100,000,000. The fair value of these performance-based options aggregated $340,000 and will be expensed over the implicit service period commencing once management believes the performance criteria will be met. Accordingly, at September 30, 2015, the unearned compensation for performance based options is $340,000.

 

Stock based compensation expense amounted to $10,500 and $6,500 for the three months ended September 30, 2015 and 2014, respectively. Stock based compensation expense amounted to $14,500 and $10,000 for the nine months ended September 30, 2015 and 2014, respectively. Such amounts are included in compensation and related expenses and interest expense in the accompanying statement of operations.

 

The fair value of options granted during the nine months ended September 30, 2015, was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

 

 Expected volatility  50%
 Risk free interest rate  2%
 Expected dividend yield  - 
 Expected option term (in years)  1.5 
 Weighted average grant date fair value $0.025 

 

Warrants

 

The following is a summary of outstanding and exercisable warrants:

 

   Number of Shares  Weighted Average Exercise Price Year
of 
Expiration
         
 Balance at December 31, 2014  3,772,720  0.29 2015 - 2016
 Expired  (2,022,720) 0.40 2015
          
 Balance at September 30, 2015  1,750,000  0.16 2015 - 2016