XML 63 R14.htm IDEA: XBRL DOCUMENT
v3.5.0.2

8. STOCKHOLDERS' EQUITY | 9 Months Ended
--- | ---
Sep. 30, 2016
Statement of Stockholders' Equity [Abstract] |
NOTE 8. STOCKHOLDERS' EQUITY | The Company’s board of directors may, without further action by the Company’s stockholders, from time to time, direct the issuance of any authorized but unissued or unreserved shares of preferred stock in series and at the time of issuance, determine the rights, preferences and limitations of each series. The holders of such preferred stock may be entitled to receive a preference payment in the event of any liquidation, dissolution or winding-up of the Company before any payment is made to the holders of our common stock. Furthermore, the board of directors could issue preferred stock with voting and other rights that could adversely affect the voting power of the holders of our common stock. Convertible Series A Preferred Stock The Company has authorized 1,000,000 shares of Convertible Series A Preferred Stock, $0.01 par value. At September 30, 2016 and December 31, 2015, there were 510,000 shares issued and outstanding, respectively. The Convertible Series A Preferred Stock is convertible at the rate of one share of common stock for one share of Convertible Series A Preferred Stock. Convertible Series B Preferred Stock The Company has authorized 4,000 shares of Convertible Series B Preferred Stock, $1,000 stated value, 7.5% Cumulative dividend. At September 30, 2016 and December 31, 2015, there were no shares issued and outstanding, respectively. Common Stock During the nine months ended September 30, 2015, the Company issued 1,062,930 shares of common stock valued at approximately $441,841 for services rendered (Note 11). In addition, the Company issued 225,000 shares of common stock valued at $101,250 to Harold Paul, Director, as payment for legal services rendered. During the nine months ended September 30, 2015, the Company’s Board of Directors approved the issuance of 225,000 shares of common stock from the 2008 Plan valued at $101,250 as a bonus to Halden Shane, CEO, in August of 2015. During the nine months ended September 30, 2015, the Company issued 50,146 shares of common stock valued at $18,000 to Nick Jennings, CFO, as part of his annual compensation from the Company. In addition, the Company’s Board of Directors approved the issuance of 62,000 shares of common stock under the Company’s 2008 plan valued at $27,900 as a bonus in August of 2015 (Note 11). During the nine months ended September 30, 2015, the Company’s Board of Directors approved the issuance of 100,000 shares of common stock from the 2008 Plan valued at $45,000 as a bonus to Norris Gearhart, COO, in August of 2015 (Note 11). During the nine months ended September 30, 2015, the Company sold, 1,760,002 equity units. Each unit consisted of 1 share of common stock and 2.5 warrants. The warrants have an exercise price of $.29 per share and a term of seven years. Gross proceeds to the Company amounted to $510,213. In connection with the sale, the Company incurred a cash finder’s fee in the amount of $51,000 in addition to a finder’s fee to be paid in common stock of 52,800 shares valued at $15,312. During the nine months ended September 30, 2015, the Company issued 14,913,968 shares of common stock in connection with the conversion of the convertible notes and the related accrued interest (Note 6). During the nine months ended September 30, 2015, the Company directly sold, 17,986,111 shares of common stock. Gross proceeds to the Company in connection with the shares sold amounted to $8,225,000. During the nine months ended September 30, 2016, the Company issued 761,954 shares of common stock valued at $369,654 for professional services rendered. Stock Options The Company issued 40,000 options valued at $10,798 to two directors in January 2015. The options have an exercise price of $0.27 per share. The options expire in January 2025. The options were valued using the Black-Scholes model using the following assumptions: volatility: 237%; dividend yield: 0%; zero coupon rate: 1.61%; and a life of 10 years. The Company issued 100,000 options valued at $54,980 to four directors in February 2016. The options have an exercise price of $0.55 per share. The options expire in February 2026. The options were valued using the Black-Scholes model using the following assumptions: volatility: 224%; dividend yield: 0%; zero coupon rate: 1.47%; and a life of 10 years. The following table summarizes stock options outstanding as of September 30, 2016 and December 31, 2015:
|  | September 30, 2016 (Unaudited) |  |  | Deecmber 31, 2015 |
|  | Number of Options |  |  | Weighted Average Exercise Price |  |  | Number of Options |  |  | Weighted Average Exercise Price |
Outstanding, beginning of period |  |  | 100,000 |  |  | $ | 0.96 |  |  |  | 60,000 |  |  | $ | 1.42 |
Granted |  |  | 100,000 |  |  |  | 0.55 |  |  |  | 40,000 |  |  |  | 0.27 |
Exercised |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Outstanding, end of period |  |  | 200,000 |  |  | $ | 0.76 |  |  |  | 100,000 |  |  | $ | 0.96 |
Options outstanding and exercisable by price range as of September 30, 2016 were as follows:
| Outstanding Options |  |  | Average Weighted |  |  | Exercisable Options |
| Range |  |  | Number |  |  | Remaining Contractual Life in Years |  |  | Number |  |  | Weighted Average Exercise Price |
| $ | 2.10 |  |  |  | 40,000 |  |  |  | 3.26 |  |  |  | 40,000 |  |  | $ | 2.10 |
| $ | 0.05 |  |  |  | 20,000 |  |  |  | 4.27 |  |  |  | 20,000 |  |  | $ | 0.05 |
| $ | 0.27 |  |  |  | 40,000 |  |  |  | 8.27 |  |  |  | 40,000 |  |  | $ | 0.27 |
| $ | 0.55 |  |  |  | 100,000 |  |  |  | 9.35 |  |  |  | 100,000 |  |  | $ | 0.55 |
|  |  |  |  |  | 200,000 |  |  |  | 7.41 |  |  |  | 200,000 |  |  | $ | 0.76 |
Stock Warrants For the nine months ended September 30, 2015, the Company recognized equity based compensation of approximately $237,000 on the warrants issued to the CEO in connection with his employment agreement. In addition, the Company recognized approximately $10,800 for director options (See Note 8-Stock Options), $1,350,000 to consultants (Note 11), and $22,000 on the vesting of warrants issued to the CFO on October 1, 2014 (Note 9). During the nine months ended September 30, 2015, the Company issued 4,400,005 warrants in connection with the equity units sold to investors. See note 8 (common stock) for additional details. In addition, the Company issued 3,150,000 warrants to two consultants during the 9 months ended September 30, 2015. See note 11 (contracts and agreements) for additional details. For the nine months ended September 30, 2016, the Company recognized total equity based compensation of approximately $333,000 on warrants issued to the CEO in connection with his current and previous employment agreements (Note 9). For the nine months ended September 30, 2016, the Company recognized $39,000 in stock compensation expense for the warrants issued to the CEO in February 2014 that vested in February 2016. In addition, on March 31, 2016, the Company issued warrants to purchase up to 250,000 shares of common stock to the CEO with a term of five years that vest upon issuance and have an exercise price of $.50 per share. The Company utilized the Black-Scholes method to fair value the warrants to purchase up to 250,000 shares of common stock received by the CEO totaling approximately $129,000 with the following assumptions: volatility, 162%; expected dividend yield, 0%; risk free interest rate, 1.47%; and a life of 5 years. The grant date fair value of each warrant was $0.51. On June 30, 2016, , the Company issued warrants to purchase up to 250,000 shares of common stock to the CEO with a term of five years that vest upon issuance and have an exercise price of $.42 per share. The Company utilized the Black-Scholes method to fair value the warrants to purchase up to 250,000 shares of common stock received by the CEO totaling approximately $99,000 with the following assumptions: volatility, 157%; expected dividend yield, 0%; risk free interest rate, 1.17%; and a life of 5 years. The grant date fair value of each warrant was $0.40. On September 30, 2016, , the Company issued warrants to purchase up to 250,000 shares of common stock to the CEO with a term of five years that vest upon issuance and have an exercise price of $.32 per share. The Company utilized the Black-Scholes method to fair value the warrants to purchase up to 250,000 shares of common stock received by the CEO totaling approximately $66,000 with the following assumptions: volatility, 155%; expected dividend yield, 0%; risk free interest rate, 1.27%; and a life of 5 years. The grant date fair value of each warrant was $0.27. (See note 11 for additional details) For the nine months ended September 30, 2016, the Company recognized total equity based compensation of approximately $73,000 on warrants issued to the CFO in connection with his current and previous employment agreements (Note 11). For the nine months ended September 30, 2016, the Company recognized $22,000 in stock compensation expense for the accrued but not vested portion of the warrants issued to the CFO under his previous agreement with the Company. In addition, on January 26, 2016, the Company issued warrants to purchase up to 100,000 shares of common stock to the CFO with a term of five years that vest upon issuance and have an exercise price of $.55 per share. The Company utilized the Black-Scholes method to fair value the warrants to purchase up to 100,000 shares of common stock received by the CFO totaling approximately $51,000 with the following assumptions: volatility, 164%; expected dividend yield, 0%; risk free interest rate, 1.47%; and a life of 5 years. The grant date fair value of each warrant was $0.51. (See note 11 for additional details) For the nine months ended September 30, 2016, the Company recognized equity compensation expense of approximately $81,000 related to the vested and accrual of unvested warrants contracted to an employee pursuant to his employment agreement with the Company that were issued in April of 2016. The Company utilized the Black-Scholes method to fair value the 300,000 warrants received by the employee totaling approximately $139,000 with the following assumptions: volatility, 159%; expected dividend yield, 0%; risk free interest rate, 1.47%; and a life of 5 years. The grant date fair value of each warrant was $0.46. The following table summarizes the outstanding common stock warrants as of September 30, 2016 and December 31, 2015:
|  | September 30, 2016 (Unaudited) |  |  | December 31, 2015 |
|  | Number of Warrants |  |  | Weighted Average Exercise Price |  |  | Number of Warrants |  |  | Weighted Average Exercise Price |
Outstanding, beginning of period |  |  | 35,676,413 |  |  | $ | 0.30 |  |  |  | 28,051,408 |  |  | $ | 0.23 |
Granted |  |  | 1,150,000 |  |  |  | 0.45 |  |  |  | 7,625,005 |  |  |  | 0.58 |
Outstanding, end of period |  |  | 36,826,413 |  |  | $ | 0.31 |  |  |  | 35,676,413 |  |  | $ | 0.30 |
Warrants outstanding and exercisable by price range as of September 30, 2016 were as follows:
| Outstanding Warrants |  |  | Average Weighted |  |  | Exercisable Warrants |
| Range |  |  | Number |  |  | Remaining Contractual Life in Years |  |  | Number |  |  | Weighted Average Exercise Price |
| $ | 0.01 |  |  |  | 1,575,000 |  |  |  | 0.78 |  |  |  | 1,575,000 |  |  | $ | 0.01 |
| $ | 0.05 |  |  |  | 975,000 |  |  |  | 0.87 |  |  |  | 975,000 |  |  | $ | 0.05 |
| $ | 0.15 |  |  |  | 7,750,000 |  |  |  | 1.05 |  |  |  | 7,750,000 |  |  | $ | 0.15 |
| $ | 0.26 |  |  |  | 100,000 |  |  |  | 1.74 |  |  |  | 100,000 |  |  | $ | 0.26 |
| $ | 0.29 |  |  |  | 10,125,613 |  |  |  | 4.06 |  |  |  | 10,125,613 |  |  | $ | 0.29 |
| $ | 0.30 |  |  |  | 11,925,800 |  |  |  | 2.00 |  |  |  | 11,825,800 |  |  | $ | 0.30 |
| $ | 0.32 |  |  |  | 250,000 |  |  |  | 5.00 |  |  |  | 250,000 |  |  | $ | 0.32 |
| $ | 0.33 |  |  |  | 75,000 |  |  |  | 2.00 |  |  |  | 75,000 |  |  | $ | 0.33 |
| $ | 0.42 |  |  |  | 250,000 |  |  |  | 4.75 |  |  |  | 250,000 |  |  | $ | 0.42 |
| $ | 0.50 |  |  |  | 625,000 |  |  |  | 4.18 |  |  |  | 425,000 |  |  | $ | 0.50 |
| $ | 0.55 |  |  |  | 100,000 |  |  |  | 4.33 |  |  |  | 100,000 |  |  | $ | 0.55 |
| $ | 0.62 |  |  |  | 75,000 |  |  |  | 1.80 |  |  |  | 75,000 |  |  | $ | 0.62 |
| $ | 1.00 |  |  |  | 3,000,000 |  |  |  | 3.59 |  |  |  | 3,000,000 |  |  | $ | 1.00 |
|  |  |  |  |  | 36,826,413 |  |  |  | 2.18 |  |  |  | 36,526,413 |  |  | $ | 0.31 |
Unvested warrants outstanding as of September 30, 2016 were as follows:
| Unvested Warrants |  |  |  |
| Weighted Average Exercise Price |  |  | Number |  |  | Average Weighted Remaining Contractual Life in Years |
| $ | 0.30 |  |  |  | 100,000 |  |  |  | 5.00 |
| $ | 0.50 |  |  |  | 200,000 |  |  |  | 5.00 |
| $ | 0.43 |  |  |  | 300,000 |  |  |  | 5.00 |

X
- References No definition available. + Details
Name: | us-gaap_StatementOfStockholdersEquityAbstract
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 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 2: 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 3: 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 4: 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 5: 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 6: 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 7: 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 8: 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 9: 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 Reference 10: 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 11: 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 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 50 -Paragraph 11 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21564-112644 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 4 -Section E Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 4 -Section C + Details
Name: | us-gaap_StockholdersEquityNoteDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration