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Note 10 - Stockholders' Equity
 9 Months Ended
Sep. 30, 2013
Stockholders' Equity Note [Abstract]  
Stockholders' Equity Note Disclosure [Text Block]

NOTE 10 - STOCKHOLDERS' EQUITY


Common Stock


Parent has authorized 100,000,000 shares of common stock, $0.001 par value. As of September 30, 2013 and December 31, 2012, there were 24,811,500 and 24,111,500 shares of common stock issued and outstanding, respectively.


Voting


Holders of Parent common stock are entitled to one vote for each share held of record on each matter submitted to a vote of stockholders, including the election of directors, and do not have any right to cumulate votes in the election of directors.


Dividends


Subject to the rights and preferences of the holders of any series of preferred stock which may at the time be outstanding, holders of Parent common stock are entitled to receive ratably such dividends as our Board of Directors from time to time may declare out of funds legally available.


Liquidation Rights


In the event of any liquidation, dissolution or winding-up of affairs of Parent, after payment of all of our debts and liabilities and subject to the rights and preferences of the holders of any outstanding shares of any series of our preferred stock, the holders of Parent common stock will be entitled to share ratably in the distribution of any of our remaining assets.


 Other Matters


Holders of Parent common stock have no conversion, preemptive or other subscription rights, and there are no redemption rights or sinking fund provisions with respect to the common stock. All of the issued and outstanding shares of common stock on the date of this report are validly issued, fully paid and non-assessable. 


Preferred Stock


Our Board of Directors has the authority to issue Parent preferred stock in one or more classes or series and to fix the designations, powers, preferences and rights, the qualifications, limitations or restrictions thereof, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting any class or series, without further vote or action by the stockholders. The issuance of Parent preferred stock may have the effect of delaying, deferring or preventing a change in control of us without further action by the stockholders and may adversely affect the voting and other rights of the holders of common stock.


Common Stock Issuance


During the nine months ended September 30, 2013, the Company issued 100,000 shares of common stock valued at $320,000 for services rendered.


During the nine months ended September 30, 2013, the Company issued 300,000 shares of common stock upon the exercise of warrants at $1.50 per share.


The Company issued an additional 300,000 shares of restricted stock valued at $960,000 for services provided and to be provided by the board of directors. The Company will recognize the non-cash compensation of the award over the requisite service period, of which 133,333 shares will vest on December 31, 2013, 133,333 shares will vest on December 31, 2014 and 33,334 shares will vest on December 31, 2015. As of September 30, 2013, the Company has recorded deferred compensation of $675,556 and non-cash compensation expense of $284,444 relating to the awards.  


Common Stock Purchase Warrants


As of September 30, 2013, there are outstanding warrants to purchase 7,025,575 shares of Parent common stock, of which 6,500,000 warrants are exercisable for cash at a price of $1.50 per share of common stock and will expire on December 31, 2016, 125,575 warrants are exercisable for cash at a price of $4.0625 per share of Parent common stock and will expire on March 7, 2017 and 400,000 warrants are exercisable for cash at a price of $2.35 per share of Parent common stock and will expire on March 31, 2014. At September 30, 2013 the Company had 200,000 non-vested warrants with a weighted average exercise price of $2.35, resulting in unrecognized compensation expense of $118,800, which is expected to be expensed over a weighted-average period of 0.50 years. We have recorded a non-cash compensation expense of $118,800 for the period ended September 30, 2013. The exercise price of the warrants and the number of shares underlying the warrants are subject to adjustment for stock dividends, subdivisions of the outstanding shares of common stock and combinations of the outstanding shares of common stock. For so long as the warrants remain outstanding, we are required to keep reserved from our authorized and unissued shares of common stock a sufficient number of shares to provide for the issuance of the shares underlying the warrants. At September 30, 2013, the Company issued 300,000 new warrants equal to the number of warrants exercised by the warrant holder having the same terms and conditions as the warrants exercised by the warrant holder, respectively, except each warrant issued has a strike price of $2.70 per share, the closing bid  price of Parent’s common stock as quoted on the OTCBB on September 23, 2013.  The warrants had a fair value of $ 349,389 and were recorded as stock offering costs.


Stock Options  


In August 2011, Parent’s Board of Directors adopted a Stock Option Plan (the “Plan”). Under the terms and conditions of the Plan, the board is empowered to grant stock options to employees, officers and directors of the Company. At September 30, 2013, 2,564,130 options were granted and outstanding under the Plan.


The Company recognizes compensation costs for stock option awards based on their grant-date fair value. The value of each stock option is estimated on the date of grant using the Black-Scholes option-pricing model. The weighted-average assumptions used to estimate the fair values of the stock options granted during 2013 using the Black-Scholes option-pricing model are as follows:


 

 

LiqTech

International, Inc.

 

Expected term (Years)

 

 

 

4

 

 

Volatility

 

 

 

40.74

 

 

Risk free interest rate

 

 

 

0.67%

 

 

Dividend yield

 

 

 

0%

 

 


The Company recognized stock based compensation expense of $613,057 and $97,805 for the nine months ended September 30, 2013 and 2012, respectively. At September 30, 2013 the Company had approximately $1,154,619 of unrecognized compensation cost related to non-vested options expected to be recognized through March 31, 2017.


A summary of the status of the options outstanding under the Company’s stock option plans at September 30, 2013 is presented below:


 

 

 

 

 

 

Options Outstanding

 

 

Options Exercisable

 

 

Range of

Exercise

Prices

 

 

Number

Outstanding

 

 

Weighted

Average

Remaining

Contractual

Life (years)

 

 

Weighted

Average

Exercise

Price

 

 

Number

Exercisable

 

 

Weighted

Average

Exercise

Price

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$1.50  

 

 

 

452,500

 

 

 

1.40

 

 

$

1.50

 

 

 

452,500

 

 

$

1.50

 

 

 

 

$2.35 

 

 

 

600,000

 

 

 

3.50

 

 

$

2,35

 

 

 

150,000

 

 

$

2,35

 

 

$3.00

 -

$3.60

 

 

 

1,511,630

 

 

 

1.43

 

 

$

3.06

 

 

 

1,440,253

 

 

$

3.04

 

 

 

Total 

 

 

 

 

2,564,130

 

 

 

1.89

 

 

$

2.62

 

 

 

2,042,753

 

 

$

2.65

 


A summary of the status of the options at September 30, 2013, and changes during the period is presented below:


   

September 30, 2013

 
   

Shares

   

Weighted

Average

Exercise

Price

   

Average

Remaining

Life

   

Weighted

Average

Intrinsic

Value

 
                                 

Outstanding at beginning of period

    1,964,130     $ 2.70       2.15     $ 0  

Granted

    600,000       2.35       3.50       -  

Exercised

    -       -       -       -  

Forfeited

    -       -       -       -  

Expired

    -       -       -       -  

Outstanding at end of period

    2,564,130     $ 2.62       1.89     $ 700,375  

Vested and expected to vest

    2,564,130     $ 2.62       1.89     $ 700,375  

Exercisable end of period

    2,042,753     $ 2.65       1.63     $ 565,375  

At September 30, 2013 the Company had 521,377 non-vested options with a weighted average exercise price of $2.48 and with a weighted average grant date fair value of $1.15, resulting in unrecognized compensation expense of $468,539, which is expected to be expensed over a weighted-average period of 3.28 years.


The total intrinsic value of options at September 30, 2013 was $700,375. Intrinsic value is measured using the fair market value at the date of exercise (for shares exercised) or at September 30, 2013 (for outstanding options), less the applicable exercise price.