Stockholders' Equity

12 Months Ended

Dec. 31, 2013

Stockholders' Equity (Deficit) [Abstract]

Stockholders' Equity

Note 6. Stockholders’ Equity

Earnings (loss) per share

A reconciliation of the numerator and the denominator used in the calculation of earnings (loss) per share is as follows:

	For the Years Ended December 31,
	2013		2012
Basic and Diluted:
Reported net loss (in thousands)	$	(923)	$	(1,514)
Less unpaid and undeclared preferred stock dividends		(266)		(266)
Net loss applicable to common stockholder	$	(1,189)	$	(1,780)
Weighted average common shares outstanding		197,214,005		74,224,186
Net loss per common share	$	(0.01)	$	(0.02)

Warrants to purchase 39,000 and 922,667 shares in 2013 and 2012, respectively and preferred stock convertible into 634,586 and 604,214 shares for the years ended December 31, 2013 and 2012, respectively, were not included in the computation of diluted loss per share applicable to common stockholders, as they are anti-dilutive as a result of net losses for the years ended December 31, 2013 and 2012.

Preferred Stock

A summary of the Company’s preferred stock as of December 31 is as follows:

		Shares Issued &		Preferred Stock Dividends
	Shares	Outstanding		Undeclared and Unpaid
Offering	Authorized	2013	2012	2013	2012
Series A convertible	590,197	47,250	47,250	—	—
Series B convertible, 10% cumulative	1,500,000	93,750	93,750	37,500	37,500
Series C convertible, 10% cumulative	1,666,666	38,333	38,333	11,500	11,500
Series D convertible, 10% cumulative	300,000	175,000	175,000	175,000	175,000
Series E convertible, 10% cumulative	800,000	19,022	19,022	42,000	42,000
Undesignated Preferred Series	5,143,137	—	—	—	—
Total Preferred Stock	10,000,000	373,355	373,355	266,000	266,000

Summary of Preferred Stock Terms

Series A Convertible Preferred Stock

Liquidation Value:	$4.50 per share, $212,625
Conversion Price:	$103.034 per share
Conversion Rate:	0.04367—Liquidation Value divided by Conversion Price ($4.50/$103.034)
Voting Rights:	None
Dividends:	None
Conversion Period:	Any time

Series B Convertible Preferred Stock

Liquidation Value:	$4.00 per share, $375,000
Conversion Price:	$10.00 per share
Conversion Rate:	0.40—Liquidation Value divided by Conversion Price ($4.00/$10.00)
Voting Rights:	None
Dividends:	10%—Quarterly—Commencing March 31, 2001
Conversion Period:	Any time

Cumulative dividends in arrears at December 31, 2013 were $482,000

Series C Convertible Preferred Stock

Liquidation Value:	$3.00 per share, $115,000
Conversion Price:	$6.00 per share
Conversion Rate:	0.50—Liquidation Value divided by Conversion Price ($3.00/$6.00)
Voting Rights:	None
Dividends:	10%—Quarterly—Commencing March 31, 2002
Conversion Period:	Any time

Cumulative dividends in arrears at December 31, 2013 were $140,000

Series D Convertible Preferred Stock

Liquidation Value:	$10.00 per share, $525,000
Conversion Price:	$10.00 per share
Conversion Rate:	1.00—Liquidation Value divided by Conversion Price ($10.00/$10.00)
Voting Rights:	None
Dividends:	10%—Quarterly—Commencing April 30, 2002
Conversion Period:	Any time

Cumulative dividends in arrears at December 31, 2013 were $629,400

Series E Convertible Preferred Stock

Liquidation Value:	$22.00 per share, $418,488
Conversion Price:	$8.00 per share
Conversion Rate:	2.75—Liquidation Value divided by Conversion Price ($22.00/$8.00)
Voting Rights:	Equal in all respects to holders of common shares
Dividends:	10%—Quarterly—Commencing May 31, 2002
Conversion Period:	Any time

Cumulative dividends in arrears at December 31, 2013 were $512,000

Issuance of Securities

Common Stock

Issuance of Common Stock for Cash

During the quarter ended December 31, 2013, the Company issued 1,000,000 shares of restricted, unregistered common stock to a qualified investor for $20,000, or $0.02 per share.

        During the year ended December 31, 2013, the Company issued an aggregate of 15,000,000 shares of restricted, unregistered common stock to qualified investors in three separate private placements aggregating $300,000, or $0.02 per share.

Issuance of Common Stock as Payment for Services

During the year ended December 31, 2013, the Company issued to two of the Company’s directors, Mauro Scimia (“Scimia”) and Xavier Carbonell (“Carbonell”), 902,764 and 1,805,528 shares of restricted, unregistered common stock, respectively, for consulting services rendered, and the Company recorded a charge of $52,500, or $0.02 per share, as a selling, general and administrative expense.

The Company during the year ended December 31, 2013, also issued 2,346,148 shares of restricted, unregistered common stock to a consultant for services rendered, and recorded $36,000 as a selling, general and administrative expense.

Also, during the year ended December 31, 2013, the Company reversed $48,000 of consulting compensation expense from a consulting agreement issued several years prior.  The consultant never completed any of the tasks required under the contract and therefore did not meet the requirements to vest any of the 2,055,527 shares granted, but never issued, under the contract.  The $48,000 was a reduction in selling, general & administrative expense. 

During the year ended December 31, 2012, the Company issued to two of the Company’s directors, Mauro Scimia (“Scimia”) and Xavier Carbonell (“Carbonell”), 2,252,415 and 3,817,736 shares of restricted, unregistered common stock, respectively, for consulting services rendered, and the Company recorded a charge of $91,000, or $0.00 per share, as a selling, general and administrative expense.

Also, during the year ended December 31, 2012, the Company issued 849,838 shares of restricted, unregistered common stock to a consultant for services rendered, and recorded $15,000, or $0.00 per share, as a research and development expense.

In addition, during the year ended December 31, 2012, the Company issued 1,066,667 shares of restricted, unregistered common stock to two other consultants for services rendered, and recorded $12,000, or $0.00 per share, as a research and development expense and $10,000, or $0.00 per share, as a selling, general and administrative expense.

Issuance of Common Stock as Settlement of Debt

During the year ended December, 2013, Robert McCullough, our Chief Executive Officer and Chief Financial Officer, converted $3,250,000 of debt owed to him into 162,500,000 shares of restricted, unregistered common stock at a price of $0.02 per share. As a result of this transaction, Mr. McCullough beneficially owns 167,690,706 shares of common stock which is 61.99% of our outstanding common stock.

Also during the year ended December 31, 2013, the Company issued to two current independent directors, Alexander Milley and Dr. John Abeles, an aggregate 7,500,000 shares of restricted, unregistered common stock, respectively, for past directors fees totaling $150,000, or $0.02 per share. In addition, the Company recorded the payment of $50,000 for services rendered to a former director in the form of 2,500,000 shares of restricted, unregistered common stock valued at $0.02 per share. These shares have not yet been issued.

The shares issued to the Company’s CEO and members of the board of directors in the debt settlements described above were issued at a price higher than the trading price of the common stock the day the Board authorized the settlement. The Company has not treated the transaction as a troubled debt restructuring nor as an extinguishment of the debt, but as essentially a recapitalization of the Company, and therefore no gain or loss has been recorded on the difference in the fair value of the stock as it traded to the amount used to settle the debt.

Issuance of Common Stock to Directors for Services Provided

During the year ended December 31, 2013, the Company issued to Augusto Ocana (“Ocana”), a director and vice president of the Company, 1,805,528 shares of restricted, unregistered common stock, for services rendered. The Company recorded a charge of $35,000, or $0.02 per share, as a selling, general and administrative expense.

For the year ended December 31, 2012, the Company issued Ocana 3,731,198 shares of restricted, unregistered common stock, and recorded a charge of $55,000, or $0.014 per share, as a selling, general and administrative expense.

Our officers and directors own an aggregate 199,199,145 shares of common stock which is 73.64% of our outstanding common stock. 

As of December 31, 2013, we have a total of 4,863,194 shares of common stock issuable from the current and prior periods.

Warrants

For the year ended December 31, 2013, the Company issued warrants to a non-executive employee to purchase an aggregate 11,000 shares of restricted, unregistered common stock at an average exercise price of $0.01 per share. No amounts were recorded for compensation as the amount is immaterial.  These warrants have a term of three years and are immediately exercisable.

During the year ended December 31, 2012, the Company issued warrants to purchase 13,000 shares of common stock with a weighted average exercise price of $0.01 per share to an employee. CCI valued the warrants at $185 using the Black-Scholes valuation model. These warrants have a term of three years and are immediately exercisable.

Warrants

At December 31, 2013, the Company had the following outstanding warrants to purchase shares of Common Stock:

Total Warrant	Warrant Shares	Exercise Price		Weighted Average
Shares Outstanding	Exercisable	(not weighted)		Years until Expiration
39,000	39,000	$	0.01	1.50

As of December 31, 2013, there were no unrecognized compensation costs related to unvested share-based compensation arrangements since all costs related to grants in 2013 or previous years were fully recognized as of December 31, 2013.

A summary of the Company’s stock option activity and related information follows:

Warrants and options issued outside of the Plan for employee compensation

					Weighted
		Weighted			Average
		Average		Aggregate	Remaining
	Options and	Exercise		Intrinsic	Contractual
	Warrants	Price		Value	Life (Years)
Outstanding at December 31, 2011	39,000	$	0.08	—
Granted	13,000	$	0..01	—
Exercised	—
Forfeited	(13,000)
Outstanding at December 31, 2012	39,000	$	0.01	—
Granted	11,000	$	0.01
Exercised	—
Forfeited	(11,000)
Outstanding at December 31, 2013	39,000	$	0.01	—	1.50