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Stockholders' Equity
 3 Months Ended
Mar. 31, 2016
Stockholders' Equity [Abstract]  
Stockholders' Equity
6.Stockholders’ Equity

 

Service-Based Stock Options

 

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

 

   Number of Options 
 Balance at December 31, 2015  11,025,273 
 Cancelled  (250,000)
      
 Balance at March 31, 2016  10,775,273 

 

All outstanding options 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 intrinsic value of options outstanding and exercisable at March 31, 2016 amounted to $1,111,805.

 

The following is a summary of outstanding service-based options at March 31, 2016:

 

 Exercise Price Number of Options  Weighted Average Remaining Contractual Life
       
 $0.10  1,680,273  2 years
 $0.20 - $0.25  7,945,000  6 years
 $0.40  1,150,000  5 years
 Total  10,775,273   

 

Performance-Based Stock Options

 

The Company had granted performance-based options to purchase 4,530,000 shares of common stock at exercise prices of $0.40 to $0.80. The options expire at various dates between 2021 and 2025 and are exercisable upon the Company achieving annual sales revenue of $5,000,000 and $10,000,000. The fair value of these performance-based options aggregated $135,567 to be expensed over the implicit service period commencing once management believes the performance criteria will be met.

 

Management believes the performance criteria for options exercisable upon the Company achieving annual sales revenue of $5,000,000, with a fair value amounting to $116,600, will be met during the year ended December 31, 2016. Accordingly, stock based compensation expense for the three months ended March 31, 2016 includes $38,867 related to such options. At March 31, 2016, the unearned compensation for the performance based options, based upon achieving annual sales of $5,000,000, is $96,700.

 

Stock based compensation expense amounted to $38,867 and $2,000 for the three month periods ended March 31, 2016 and 2015, respectively. Such amounts are included in compensation and related expenses in the accompanying statement of operations.

 

Warrants

 

Warrants outstanding and exercisable amounted to 1,750,000 at December 31, 2015 and March 31, 2016. The weighted average exercise price of warrants outstanding at March 31, 2016 is $0.16. The warrants expire during November 2016 and December 2017.