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Stock Options and Warrants
 9 Months Ended
Sep. 30, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock Options and Warrants

NOTE 4 STOCK OPTIONS AND WARRANTS

 

Stock Options

 

We have granted non-qualified stock options to employees, contractors, and directors as equity compensation and to debenture holders for the extension of debenture maturity dates. All non-qualified options are generally issued with an exercise price no less than the fair market value of the common stock on the date of the grant as determined by our Board of Directors. Options may be exercised up to ten years following the date of the grant, with vesting schedules determined by us upon grant. Vesting schedules vary by grant, with some fully vesting immediately upon grant and others vesting ratably over a period of time up to four years. Standard vested options may be exercised up to three months following the date of termination of the relationship with the employee, contractor, or director unless alternate terms are specified at grant. The fair values of options are determined using the Black-Scholes option-pricing model. The estimated fair value of options is recognized as expense on the straight-line basis over the options’ vesting periods.

 

Stock option transactions during the nine months ended September 30, 2015 were as follows:

 

    Nine months ended September 30, 2015  
    Shares     Weighted-
Average Exercise Price		  
Outstanding at Beginning of Year     5,953,227     $ 1.03  
Granted     291,000       0.77  
Exercised     (1,140 )     0.10  
Forfeited or Canceled     (429,083 )     1.16  
Outstanding at End of Period     5,814,004       0.97  
Options Exercisable at End of Period     5,750,379     $ 0.98  
Weighted-Average Fair Value of Options Granted During the Period   $ 0.16          

 

Information with respect to stock options outstanding and exercisable as of September 30, 2015 is as follows:

 

      Options Outstanding     Options Exercisable  
Range of
Exercise
Prices		     Number
Outstanding
at September 30, 2015		     Weighted-
Average
Remaining
Contractual Life		     Weighted-
Average
Exercise
Price		     Number
Exercisable at
September 30, 2015		     Weighted-
Average Exercise
Price		  
  $0.10 - $1.75       5,814,004       7     $ 0.97       5,750,379     $ 0.98  
                                             

 

The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for options granted:

 

    2015  
Expected Life     6.25 yrs  
Dividend Yield     0 %
Expected Volatility     18.35 %
Risk-Free Interest Rate     1.99 %

 

Expected volatility for 2015 and 2014 was estimated by using the Dow Jones U.S. Industry Indices sector classification methodology for industries similar to that in which we operate. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the grant date. The expected life of the options is based on the actual expiration date of the grant.

 

Warrants

 

We have periodically issued warrants to purchase shares of common stock as equity compensation to officers, directors, employees, and consultants. We have also issued warrants as incentive in connection with the purchase of debt and equity securities.

 

As of September 30, 2015, warrants to purchase 7,610,303 shares of common stock were outstanding, all of which were issued either as equity compensation or in connection with financing transactions. Vesting schedules vary by grant, with some fully vesting immediately upon grant and others vesting ratably over a period of time up to four years. The warrants expire during a range from two to ten years following the date of the grant. The fair value of warrants is determined using the Black-Scholes option-pricing model. The estimated fair value of warrants is recognized as expense on the straight-line basis over the warrants’ vesting periods.

 

Warrant transactions during the nine months ended September 30, 2015 were as follows:

 

Outstanding at December 31, 2014     3,749,550  
Granted     4,369,162  
Exercised     -  
Forfeited or Canceled     (508,409 )
Warrants Redeemable at September 30, 2015     7,610,303