RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2013

RELATED PARTY TRANSACTIONS [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 20 – RELATED PARTY TRANSACTIONS

On February 6, 2012 the Company issued 238,800 shares of common stock to its four non-executive directors (59,700 each) – Mark Hershhorn, Brian Israel, Morris Garfinkle and Edward Smith III. The Company recognized a total expense of $160,000 related to these issuances.  These shares were valued based on the closing price of the grant date.

On August 15, 2012, Morris Garfinkle, a Director of the Company, converted $34,800 (including accrued dividends) of Series I Convertible, Redeemable Preferred Stock into 34,800 shares of the Company’s Common Stock.

On December 11, 2012, the Company’s external Directors, Mark Hershhorn, Morris Garfinkle, Brian Israel and Edward Smith each agreed to convert $17,403 (including accrued dividends) of Series I Convertible, Redeemable Preferred Stock into 17,403 shares of the Company’s Common Stock prior to its maturity.  The aggregate conversion by the directors was $69,612.  As a result of this early conversion the Company recorded a loss of $728 for the twelve months ended December 31, 2012.

On January 22, 2013 the Company issued 114,944 shares of common stock to its four non-executive directors, Mark Hershhorn, Morris Garfinkle, Brian Israel and Edward Smith (28,736 shares each). The Company recognized a total of expense of $200,002 related to these issuances.  These shares were valued based on the closing price on the grant date.

On February 27, 2013 Morris Garfinkle, a Director of the Company, participated in a warrant exercise program in which all holders of $1.50 warrants were allowed to exercise their warrants for a $1.25 strike price during February 2013.  Mr. Garfinkle exercised 200,000 warrants and received 200,000 shares of Common Stock.  As a result of this warrant modification the Company recognized $45,596 of additional expense during the quarter ended March 31, 2013 relating to Mr. Garfinkle’ s warrants based on the fair value of the warrant modification at the date the offer was made to all warrant holders calculated by using the Black-Scholes Model.  On March 6, 2013, Mr. Garfinkle exercised other warrants, with various exercise prices, and received 26,571 shares of Common Stock. During August 2013, Mark Hershhorn, Edward Smith and Brian Israel, Directors of the Company, participated in a warrant exercised program offered to all holders of $1.50 warrants such that each warrant holder, on a cashless basis, can receive 4.5 shares of Common Stock for every ten warrants exercised.  Messrs. Hershhorn, Smith and Israel, in the aggregate, exercised 127,695 warrants and received 58,395 shares of Common Stock.  As a result of the warrant modification the Company recognized $24,281 of additional expense during the quarter ended September 30, 2013 relating to the difference in value between the $1.50 warrants exercised by Messrs. Hershhorn, Smith and Israel and the Common Stock issued.

See also Notes 9 and 12 with respect to transactions involving our largest shareholder, Brightline Ventures I, LLC.