XML 39 R15.htm IDEA: XBRL DOCUMENT
v2.4.0.8

9. STOCKHOLDERS EQUITY | 12 Months Ended
--- | ---
Dec. 31, 2013
Equity [Abstract] |
STOCKHOLDERS EQUITY | Preferred Stock There are currently 5,000,000 shares of Series A Preferred Stock authorized, with no shares of Series A Preferred Stock issued or outstanding as of December 31, 2013 and 2012. Effective June 24, 2010, the Company filed a Certificate of Designations, Number, Voting Power, Preferences and Rights of Series B Convertible Redeemable Preferred Stock (the “Certificate”) with the Texas Secretary of State, designating 7,500 shares of Series B Preferred Stock, par value $10.00 per share (the “Series B Shares”). The Series B Shares rank senior to shares of all other common and preferred stock with respect to dividends, distributions, and payments upon dissolution. Each of the Series B Shares is convertible at the option of the holder into shares of common stock as provided in the Certificate. There were no Series B Shares issued or outstanding as of December 31, 2013 and 2012. On October 11, 2013, the Company filed a Certificate of Designations, Number, Voting Power, Preferences and Rights of Series C Convertible Preferred Stock (the “Certificate of Designations”), under which it designated 100,000 shares of Series C Preferred Stock, par value $10.00. The Series C Preferred Stock is entitled to accruing dividends (payable, at the Company’s options, in either cash or stock) of 5% per annum until October 10, 2016, and 3% per annum until October 10, 2018. The Series C Preferred Stock is senior to the Company’s common stock and any other currently issued series of the Company’s preferred stock upon liquidation, and is entitled to a liquidation preference per share equal to the original issuance price of such shares of Series C Preferred Stock together with the amount of all accrued but unpaid dividends thereon. Each of the Series C Shares is convertible at the option of the holder into 1,000 shares of common stock as provided in the Certificate. Additionally, each holder of Series C Preferred Stock shall be entitled to vote on all matters submitted for a vote of the holders of Common Stock a number of votes equal to the number of full shares of Common Stock into which such holder’s Series C shares could then be converted. As of December 31, 2013 there are 38,232 shares of Series C Preferred Stock issued and outstanding. On November 13, 2013, the Company filed a Certificate of Designations, Number, Voting Power, Preferences and Rights of Series D Convertible Preferred Stock (the “Certificate of Designations”), under which it designated 25,000 shares of Series D Preferred Stock. Shares of Series D Preferred Stock are not entitled to any preference with respect to dividend or upon liquidation, and will automatically convert (at a ratio of 1,000-to-1) into shares of the Company’s common stock, par value $0.001 upon approval of the Company’s stockholders (and filing of) and amendment to the Company’s Certificate of Incorporation increasing the number of authorized shares of Common Stock from 100,000,000 to 250,000,000. During the year ended December 31, 2013, the Company issued an aggregate of 27,660 shares of Series C preferred stock for the conversion of $1,660,822 of principal and $275,378 of accrued interest on related party and unrelated party notes payable. During the year ended December 31, 2013, the Company issued an aggregate of 10,572 shares of Series C preferred stock for cash proceeds of $740,030. The Series C preferred stock earned dividends of $6,271 during the year ended December 31, 2013. As of December 31, 2013, these dividends were not yet declared or paid. During the year ended December 31, 2013, the Company granted an aggregate of 15,000 shares of Series D preferred stock to employees and nonemployees for services. 13,000 of the shares were granted to employees and vest immediately upon grant, 1,000 of the shares were granted to an employee and vest in equal tranches over three years through October 1, 2016 and 1,000 of the shares were granted to a nonemployee and vest in equal tranches over three years through September 15, 2016. The aggregate fair value of the awards was determined to be $1,085,000 of which $925,787 was recognized during the year ended December 31, 2013 and $159,213 will be recognized over the remaining vesting periods. The Company evaluated the Series C and Series D preferred stock under FASB ASC 815 and determined that they do not qualify as derivative liabilities. The Company then evaluated the Series C and Series D preferred stock for beneficial conversion features under FASB ASC 470-30 and determined that none existed. Common Stock During the year ended December 31, 2013, $5,760 was received and 240,000 common shares were issued for the exercise of 240,000 warrants and 1,029,334 common shares were issued for the cashless exercise of 1,299,769 warrants. During the year ended December 31, 2013, an aggregate of 288,140 common shares with a fair value of $16,612 were issued according to the terms of the Forbearance Agreement related to the June 21, 2011 Note Payable (see Note 4). During the year ended December 31, 2013, the Company issued an aggregate of 4,084,615 common shares for services valued at $275,927. During the year ended December 31, 2013, the Company issued an aggregate of 11,239,999 common shares for the conversion of principal of $401,145 and accrued interest of $5,500 of unrelated party debt. During the year ended December 31, 2012, the Company issued 7,420,733 common shares for the conversion of $1,687,726 of debt and accrued interest, issued 311,913 common shares associated with a Forbearance Agreement valued at $56,072, issued 500,000 common shares for services valued at $72,500, issued 1,500,000 common shares for cash proceeds of $100,000, issued 160,000 common shares for the exercise of warrants and received cash proceeds of $38,448 and the Company issued 300,000 common shares for advertising services valued at $45,000. During the year ended December 31, 2012, 164,286 common shares valued at $100,214 were returned to the Company and cancelled related to advertising services that were not provided. Warrants At December 31, 2013, there were 15,670,143 warrants outstanding with a weighted average exercise price of $0.37. At December 31, 2012, there were 12,099,968 warrants outstanding with a weighted average exercise price of $0.65. A summary of the status of the warrants granted at December 31, 2013 and 2012 and changes during the years then ended is presented below:
For the Year Ended December 31, 2012 |
|  | Shares |  |  | Weighted Average Exercise Price |
Outstanding at beginning of period |  |  | 8,938,668 |  |  | $ | 0.82 |
Granted |  |  | 3,321,300 |  |  |  | 0.22 |
Exercised |  |  | (160,000 | ) |  |  | 1.00 |
Forfeited |  |  | - |  |  |  | - |
Expired |  |  | - |  |  |  | - |
Outstanding at end of period |  |  | 12,099,968 |  |  | $ | 0.65 |
For the Year Ended December 31, 2013 |
|  | Shares |  |  | Weighted Average Exercise Price |
Outstanding at beginning of period |  |  | 12,099,968 |  |  | $ | 0.65 |
Granted |  |  | 6,990,544 |  |  |  | 0.15 |
Exercised |  |  | (1,539,769 | ) |  |  | 1.38 |
Forfeited |  |  | (750,000 | ) |  |  | 0.09 |
Expired |  |  | (1,130,600 | ) |  |  | 0.83 |
Outstanding at end of period |  |  | 15,670,143 |  |  | $ | 0.37 |
On June 19, 2013, the Company issued a total of 600,000 stock purchase warrants with a five year term to a lender as part of a note payable agreement. Of the 600,000 warrants issued, 225,000 are immediately exercisable at $0.09 per share. The remaining 375,000 warrants are exercisable at $0.09 per share only upon the Company’s default under the terms of the note payable agreement. The fair value of the warrants was determined to be $29,365 using the Black-Scholes Option Pricing Model and it was recorded as a discount to the associated debt. On June 25, 2013, the company issued 175,000 stock purchase warrants to a lender related to a note purchase agreement. The five year warrants are immediately exercisable into common stock at $0.09 per share. The fair value of the warrants was determined to be $11,947 using the Black-Scholes Option Pricing Model and it was recorded as a discount to the associated debt. On August 12, 2013 the Company issued 200,000 stock purchase warrants with a five year term to a lender as part of a note payable agreement. The warrants are immediately exercisable at $0.075 per share. The fair value of the warrants was determined to be $10,331 using the Black-Scholes Option Pricing Model and it was recorded as a discount to the associated debt. On September 26, 2013, the Company issued the WelldDyne Warrant (see Note 4). The warrant allows the purchase shares of the Company’s Common Stock equal to 4,500,000 shares. The WellDyne Warrant has a term of five years and an exercise price of $0.06, subject to adjustment as provided for therein. The fair value of the warrants was determined to be $287,599 using the Black-Scholes Option Pricing Model and it was recognized as warrant expense during the year ended December 31, 2013. During the fourth quarter of 2013, the Company discovered 1,515,544 outstanding warrants that were originally granted in 2011 for services, but never recognized. The warrants are exercisable at $0.44 per share, vested on August 22, 2011 and expire on August 22, 2016. The initial grant date fair value of the warrants was determined to be $489,614 using the Black-Scholes Option Pricing Model and it was recognized as a true-up related to warrants expense during the year ended December 31, 2013.
|  |  | As of December 31, 2013 |  |  | As of December 31, 2013 |
|  |  | Warrants Outstanding |  |  | Warrants Exercisable |
Range of Exercise Prices |  |  | Number Outstanding |  |  | Weighted-Average Remaining Contract Life |  |  | Weighted- Average Exercise Price |  |  | Number Exercisable |  |  | Weighted-Average Exercise Price |
$ | 0.06 |  |  |  | 4,500,000 |  |  |  | 4.8 |  |  | $ | 0.06 |  |  |  | 4,500,000 |  |  | $ | 0.06 |
| 0.08 |  |  |  | 550,000 |  |  |  | 4.2 |  |  |  | 0.08 |  |  |  | 550,000 |  |  |  | 0.08 |
| 0.09 |  |  |  | 625,000 |  |  |  | 4.3 |  |  |  | 0.09 |  |  |  | 625,000 |  |  |  | 0.09 |
| 0.15 |  |  |  | 1,571,300 |  |  |  | 3.6 |  |  |  | 0.15 |  |  |  | 1,571,300 |  |  |  | 0.15 |
| 0.25 |  |  |  | 120,000 |  |  |  | 1.8 |  |  |  | 0.25 |  |  |  | 120,000 |  |  |  | 0.25 |
| 0.40 |  |  |  | 1,299,999 |  |  |  | 0.7 |  |  |  | 0.40 |  |  |  | 1,299,999 |  |  |  | 0.40 |
| 0.44 |  |  |  | 1,515,544 |  |  |  | 2.6 |  |  |  | 0.44 |  |  |  | 1,515,544 |  |  |  | 0.44 |
| 0.50 |  |  |  | 2,236,650 |  |  |  | 0.5 |  |  |  | 0.50 |  |  |  | 2,236,650 |  |  |  | 0.50 |
| 0.60 |  |  |  | 975,000 |  |  |  | 2.7 |  |  |  | 0.60 |  |  |  | 975,000 |  |  |  | 0.60 |
| 0.75 |  |  |  | 120,000 |  |  |  | 1.8 |  |  |  | 0.75 |  |  |  | 120,000 |  |  |  | 0.75 |
| 1.00 |  |  |  | 2,156,650 |  |  |  | 0.5 |  |  |  | 1.00 |  |  |  | 2,156,650 |  |  |  | 1.00 |
$ | 0.06-$1.00 |  |  |  | 15,670,143 |  |  |  | 2.7 |  |  | $ | 0.37 |  |  |  | 15,670,143 |  |  | $ | 0.37 |
Stock Options During the year ended December 31, 2012, the Company granted 850,000 stock options to employees and contractors which vest over a three year period based upon continued employment with the Company, granted 3,193,500 stock options to board members which vest immediately upon grant and granted 1,000,000 stock options to an officer and Director which vest upon certain revenue performance conditions being met by June 30, 2013. The options are exercisable over a 5 year period at $0.15 per share. As of December 31, 2012, $309,450 was recorded as deferred compensation associated with the unvested options granted during 2012. During the year ended December 31, 2013, 100,000 unvested options were forfeited due to a resignation and 1,000,000 unvested options were forfeited due to the vesting performance conditions not being met. These forfeitures resulted in $184,800 of the deferred compensation being reversed during 2013. During the year ended December 31, 2013, $86,350 of the deferred compensation was recognized as expense due to options vesting. The remaining deferred compensation associated with unvested options of $38,300 was written-off to equity during the year ended December 31, 2013. A summary of the status of the stock options granted for the years ended December 31, 2013 and 2012, and changes during the periods then ended is presented below:
For the Year Ended December 31, 2012 |
|  | Options |  |  | Weighted Average Exercise Price |
Outstanding at beginning of period |  |  | - |  |  | $ | - |
Granted |  |  | 5,043,500 |  |  |  | 0.15 |
Exercised |  |  | - |  |  |  | - |
Forfeited |  |  | - |  |  |  | - |
Expired |  |  | - |  |  |  | - |
Outstanding at end of period |  |  | 5,043,500 |  |  | $ | 0.15 |
For the Year Ended December 31, 2013 |
|  | Options |  |  | Weighted Average Exercise Price |
Outstanding at beginning of period |  |  | 5,043,500 |  |  | $ | 0.15 |
Granted |  |  | - |  |  |  | - |
Exercised |  |  | - |  |  |  | - |
Forfeited |  |  | (1,100,000 | ) |  |  | 0.15 |
Expired |  |  | - |  |  |  | - |
Outstanding at end of period |  |  | 3,943,500 |  |  | $ | 0.15 |
|  |  | As of December 31, 2013 |  |  | As of December 31, 2013 |
|  |  | Stock Options Outstanding |  |  | Stock Options Exercisable |
Exercise Price |  |  | Number Outstanding |  |  | Weighted-Average Remaining Contract Life |  |  | Weighted- Average Exercise Price |  |  | Number Exercisable |  |  | Weighted-Average Exercise Price |
$ | 0.15 |  |  |  | 3,943,500 |  |  |  | 3.62 |  |  |  | 0.15 |  |  |  | 3,826,833 |  |  | $ | 0.15 |

X
- Details
Name: | us-gaap_EquityAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.29-31) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21506-112644 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 29, 30, 31 -Article 5 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB TOPIC 4.E) -URI http://asc.fasb.org/extlink&oid=27010918&loc=d3e74512-122707 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section S99 -Paragraph 4 -Subparagraph (SAB TOPIC 4.C) -URI http://asc.fasb.org/extlink&oid=27012166&loc=d3e187143-122770 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Article 4 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 4 -Section C Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 4 -Section E Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(d),(e)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Glossary Preferred Stock -URI http://asc.fasb.org/extlink&oid=6521494 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Article 3 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21463-112644 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.3-04) -URI http://asc.fasb.org/extlink&oid=27012166&loc=d3e187085-122770 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 11 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21564-112644 Reference 16: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21488-112644 Reference 17: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21484-112644 Reference 18: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph d -Article 4 Reference 19: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6405834&loc=d3e23285-112656 + Details
Name: | us-gaap_StockholdersEquityNoteDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration