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Stockholders' Equity
 12 Months Ended
Dec. 31, 2015
Stockholders' Equity [Abstract]  
Stockholders' Equity
7.Stockholders’ Equity

 

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

 

In July 2015 the Company granted 300,000 options valued at $7,500 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 December 2015, the Company satisfied the $75,000 note payable through the issuance of 441,177 shares of Company common stock.

 

In December 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 valued at $1,000 to the director in conjunction with this transaction. The options are fully vested and expire in three years.


In December 2015, the Company satisfied $84,868 of royalties payable to the Company’s President through the issuance of 499,225 shares of Company common stock (see note 8). In conjunction with this transaction, the Company issued 339,473 options valued at $13,000 to the President of the Company at an exercise price of $0.10 per share. The options are fully vested and expire in 3 years.

 

Service-Based Stock Options

 

In October 2015 the Company issued 110,000 service-based options valued at $2,800 to two consultants at exercise prices of $0.20 per share. The options are fully vested and expire in 10 years.

 

In November 2015 the Company cancelled 100,000 shares of company common stock and 200,000 fully vested service-based options issued to two consultants.

 

In November 2015 the Company issued 500,000 shares of common stock valued at $65,000 to a consultant.

 

Also in 2015, the Company extended the expiration date of 500,000 options held by a director one year from 2015 to 2016 and 1,500,000 warrants held by the Company’s President two years from 2015 to 2017. The fair value of these modifications amounted to $55,000.

 

In January 2014 the Company granted 100,000 shares of restricted common stock valued at $28,000 to a consultant, which were subsequently cancelled in November 2015 (see above), and in September 2014 the Company issued 525,000 shares of restricted stock valued at $52,500 to four additional consultants.

 

During 2014, the Company extended the expiration date of 500,000 options and 1,500,000 warrants one year from 2014 to 2015. Also in 2014, the Company issued an additional 450,000 service-based and 300,000 performance-based options.

 

Service-Based Stock Options

 

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

 

   Number of Options 
     
 Balance at December 31, 2013  9,985,000 
 Granted  450,000 
      
 Balance at December 31, 2014  10,435,000 
 Granted  790,273 
 Cancelled  (200,000)
      
 Balance at December 31, 2015  11,025,273 

 

Options exercisable at December 31, 2015 and 2014 amounted to 11,025,273 and 10,335,000, respectively.

 

All outstanding options 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 intrinsic value of options outstanding and exercisable amounted to $33,605 and $0 at December 31, 2015 and December 31, 2014, respectively.

 

The following is a summary of outstanding service-based options at December 31, 2015:

 

 Exercise Price Number of Options  Weighted Average Remaining Contractual Life 
        
 $0.10  1,680,273   3 years 
 $0.20 - $0.25  8,195,000   6 years 
 $0.40  1,150,000   6 years 
 Total  11,025,273     

 

The fair value of the 790,273 service-based options granted in 2015 amounted to $22,300 which has been expensed during the year. All options granted during 2015 are fully vested. The fair value of the 450,000 service-based options granted in 2014 amounted to $17,500 which has been expensed during 2014. All options granted during 2014 are fully vested.

 

Performance-Based Stock Options

 

As of December 31, 2015 the Company had granted performance-based options to purchase 9,305,000 shares of common stock at exercise prices ranging from $0.20 to $5.00. The options expire at various dates between 2021 and 2025 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 $333,700 and will be expensed over the implicit service period commencing once management believes the performance criteria will be met. Accordingly, at December 31, 2015, the unearned compensation for performance based options is $333,700.

 

In addition to the 9,305,000 above, in August 2014, the Company issued 300,000 options with an exercise price of $0.20 to a consultant. Management valued these options at $8,000 and had amortized them over the implicit service period of one year. The vesting of the options was contingent upon the completion of a clinical study that was not completed. Accordingly, in the fourth quarter of 2015 the Company reversed the $8,000 compensation cost previously expensed.

 

Stock based compensation expense amounted to $142,300 and $125,500 for the years ended December 31, 2015 and 2014, respectively. Such amounts are included in compensation and related expenses ($133,800 in 2015 and $125,500 in 2014) and interest expense ($8,500 in 2015).

 

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, 2013  3,887,720   0.29   2014 - 2016 
 Expired  (115,000)  0.40   2014 
              
 Balance at December 31, 2014  3,772,720   0.29   2015 - 2016 
 Expired  (2,022,720)  0.40   2015 
              
 Balance at December 31, 2015  1,750,000   0.16   2016 - 2017 

 

The fair value of options and warrants granted (or extended) during the years ended December 31, 2015 and 2014, was estimated on the date of grant (or extension) using the Black-Scholes option-pricing model with the following weighted-average assumptions:

 

   2015  2014 
        
 Expected volatility  50%  50%
 Risk free interest rate  2%  2%
 Expected dividend yield  -   - 
 Expected option term (in years)  1 - 5   1 - 5 
 Weighted average grant date fair value $0.03  $0.02