Share-based Compensation

9 Months Ended

Sep. 30, 2015

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Note 9 - Share-based Compensation

Options

At our Annual Meeting of Shareholders during the year ended December 31, 2013, our shareholders approved an amendment to our 2010 Stock Plan to increase the number of shares of common stock reserved thereunder by 2,000,000 shares. In addition, during the three months ended March 31, 2014 the board approved an additional 2,000,000 shares to be available for award under the 2010 Stock Plan, subject to shareholder approval, which brought the total available for award under the 2010 Stock Plan to 7,000,000 shares. The exercise price of an option is established by the Board of Directors on the date of grant and is generally equal to the market price of the stock on the grant date. The Board of Directors may determine the vesting period for each new grant. Options issued are exercisable in whole or in part for a period as determined by the Board of Directors of up to ten years from the date of grant.

During the nine months ended September 30, 2015, we awarded options to purchase 3.3 million shares of our common stock at an exercise price of $0.30 and 600,000 shares of our common stock at an exercise price of $0.27, to our leadership team. The right to exercise these options vested in 90 days of the award. We estimated the fair value of these options to be $800,826 which was charged to expense in our statement of operations during the period. We use the Black-Scholes option pricing model to estimate the fair values, with the following range of assumptions: (i) no dividend yield, (ii) expected volatility of 90%, (iii) risk-free interest rates of 1.5%, and (iv) expected lives of five years. In addition, certain options that we amortize over multiple vesting periods, where amortized over the nine months ended September 30, 2015 and we charged to operating expenses $44,339 during the nine months ended September 30, 2015.

During the three months ended September 30, 2015, the board of directors approved a modification to the exercise price of certain outstanding options, resetting those exercise prices to the closing price of the stock on the date of board approval. The effect of this modification was an increase of $172,761 to the fair value of those options when compared to the unmodified options immediately before the modification. During the three months ended September 30, 2015, we charged $159,069 of this increase to operations with the remainder amortized over the vesting period through November 2016.

The following table summarizes our stock option activity for the nine months ended September 30, 2015:

			Weighted-
	Number		Average
	of Shares		Exercise
	Issuable		Price

Balance, January 1, 2015		4,128,128	$	1.04
Granted		3,900,000		0.10
Exercised		-		-
Cancelled		(488,128)		0.57
Balance, September 30, 2015		7,540,000	$	0.20

The following table summarizes options outstanding at September 30, 2015:

					Weighted-
			Weighted-		Average
	Number		Average		Remaining		Aggregate
	of Shares		Exercise		Term		Intrinsic
	Issuable		Price		(Years)		Value

Exercisable		7,010,000	$	0.21		3.4	$	-
Not vested		530,000		0.10		2.5		-
Balance, September 30, 2015		7,540,000	$	0.20		3.3	$	-

Warrants

From time to time, we compensate consultants, advisors and investors with warrants to purchase shares of our common stock, in lieu of cash payments. Net share settlement is available to warrant holders.

The following table sets forth our warrant activity during the nine months ended September 30, 2015:

			Weighted-
	Number		Average
	of Shares		Exercise
	Issuable		Price

Balance, January 1, 2015		1,166,146	$	1.13
Granted		-		-
Exercised		-		-
Expired		(355,313)		1.17
Balance, September 30, 2015		810,833	$	1.11

The following table sets forth the warrants outstanding at September 30, 2015:

			Weighted-
	Number		Average
	of Shares		Exercise
	Issuable		Price

10% convertible preferred stock – warrants		580,000		1.00
Consultants		230,833		1.39
Total		810,833	$	1.11