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11. Stockholders Deficit
 3 Months Ended
Mar. 31, 2015
Equity [Abstract]  
11. Stockholders Deficit

Note 11 Stockholders Deficit

 

(A) Common Stock

 

During the three-months ended March 31, 2015 and the year-ended December 31, 2014, the Company issued the following common stock:

 

Transaction Type  Quantity  Valuation  Range of Value per Share
          
December 31, 2014         
Common stock issued in exercise of warrants   (1)    1,000,000   $1,000   $0.001 
Common stock issued per mutual release and waiver   (2)   250,000   $62,500   $0.25 
         1,250,000   $63,500   $0.001 - 0.25 
March 31, 2015                    
Common stock issued per Agreement and Waiver and Agreement to Convert   (3)   1,601,243   $400,311   $0.25 
         1,601,243   $400,311   $0.25 
                     
Total        2,851,243   $463,811   $0.001 - 0.025 

  

The following is a more detailed description of the Company’s stock issuance from the table above:

 

(1) Exercise of Warrants

 

During 2014, the Company received $1,000 in connection with an exercise of 1,000,000 warrants that had been assigned from one investor (who originally held 2,400,000 and exercised 1,400,000 in 2013). There was no additional compensation expense recorded on this transaction.

 

(2) Services Rendered - Related Party

 

In November 2014, the Company issued 750,000 of restricted, non-vested shares to its new Chief Executive Officer. The shares are to vest as follows: 250,000 in May 2015 and 500,000 shares in December 2015. The shares are valued at $0.25 per share.

 

The Company’s former Chief Executive Officer received 1,250,000 restricted unvested shares in association with an employment contract. These restricted shares were to vest as follows: 500,000 on November 15, 2013 with the remaining 750,000 shares to vest evenly (250,000 shares each vesting period) on December 31, 2014, 2015 and 2016. The shares were valued based on recent third party cash offering of convertible debt containing an exercise price of $0.25/share. In November 2014, the agreement was terminated and the Company entered into a new Agreement and Mutual Release with that former CEO. As of that date (November 2014), 750,000 of the aforementioned 1,250,000 shares were fully vested. In accordance with this new Agreement, the Company issued 250,000 shares that vested on December 31, 2014 and the executive retained 500,000 shares of the previous granted (fully vested) shares. The remaining 500,000 unvested shares were forfeited by the former CEO.

 

(3) Agreement and Waiver and Agreement to Convert

 

The Company issued 1,601,243 shares at $0.25 per share, representing $400,311 in penalties and interest, in connection with the Agreement and Waiver and the Agreement to Convert. For a complete description of the Agreement and Waiver and the Agreement to Convert, see Note 6 above.

 

(B) Additional Paid in Capital and Other Equity Transactions

 

The following transactions occurred during the period:

 

(1) Derivative Liability

 

Reclassification of derivative liability associated with warrants of $3,043 for the three months ended March 31, 2015 and $214,769 for the year ended December 31, 2014.

 

(2) Services Rendered – Related Parties

 

Common stock issued for services – related party of $76,312 for the year ended December 31, 2014.

 

(C) Stock Options

 

The following is a summary of the Company’s stock option activity:

 

   Options  Weighted Average Exercise Price  Weighted Average Remaining Contractual Life (In Years)  Aggregate Intrinsic Value
                       
 Balance - December 31, 2013 - outstanding    300,000    0.375    4.67    —   
 Exercised    —      —      —      —   
 Granted    —      —      —      —   
 Forfeited/Cancelled    (100,000)   —      —      —   
 Balance- December 31, 2014    200,000    0.375    3.67    —   
 Exercised    —      —      —      —   
 Granted    —      —      —      —   
 Forfeited/Cancelled    —      —      —      —   
 Balance- March 31, 2015    200,000    0.375    3.43    —   

  

Of the total options granted, 100,000 were cancelled in February 2014 as a Board Director resigned.

  

(D) Stock Warrants

 

All warrants issued during the year ended December 31, 2014 were accounted for as derivative liabilities as the warrants contained a ratchet feature. See Note 7. No warrants were issued during the three-months ended March 31, 2015.

  

During 2014, the Company issued 5,390,100 warrants. The warrants granted expire 5 years from issuance on various dates during 2019.

 

During 2014, of the total warrants granted 4,740,100 granted to third parties, while 650,000 were granted to related parties, consisting of the Company’s former Chief Executive Officer.

 

During 2014, the Company entered into convertible, secured note agreements. As part of these agreements, the Company issued warrants to purchase 5,390,100 shares of common stock. The warrants vest immediately and expire on various dates in 2019, with an exercise price of $0.375. 

 

The following is a summary of the Company’s warrant activity:

 

   Number of Warrants  Weighted Average Exercise Price  Weighted Average Remaining Contractual Life (in Years)
                  
 Balance, December 31, 2013    4,338,884   $0.242    4.9 
 Granted    5,390,100    0.375    5.0 
 Exercised    —      —      —   
 Cancelled/Forfeited    —      —      —   
 Balance, December 31, 2014    9,728,984   $0.375    4.4 
 Exercised    —      —      —   
 Cancelled/Forfeited    —      —      —   
 Balance, December 31, 2013    9,728,984   $0.375    3.9