STOCK TRANSACTIONS

12 Months Ended

Dec. 31, 2015

STOCK TRANSACTIONS

STOCK TRANSACTIONS

NOTE 6 - STOCK TRANSACTIONS

Series C Preferred Stock

On July 9, 2009, the Company authorized and issued 1,000 shares of Series C Preferred Stock in exchange for $700,000.  The 1,000 shares of Series C Stock were convertible into 67,979,425 common shares.  The par value of the Series C Preferred shares is $1.00.

On May 5, 2015, the 1,000 Series C Preferred shares were fully converted into 67,979,425 common shares.

Common Stock

During 2014 the Company entered into a settlement agreement with a consultant under which 3,750,000 shares of previously issued common stock were surrendered and canceled in consideration for a payment to the consultant in the amount of $50,000.

Warrants

During September and October 2007, the Company issued 31,823,529 shares of common stock for cash at $0.017 per share, or $541,000 total as part of a Private Placement under Rule 506 of Regulation D. Along with the stock, each investor also received a warrant to purchase 30% of the shares purchased in the Private Placement.  A total of 9,547,055 warrants were issued.  The warrants are ten year warrants and have an exercise price of $0.017 per share.

Options

In 2005, the Company authorized the 2005 Equity Plan that made available 10,000,000 shares of common stock for issuance through awards of options, restricted stock, stock bonuses, stock appreciation rights and restricted stock units.

On January 1, 2014, the Company granted 3,000,000 stock options to two directors of the Company and 150,000 stock options to the Company Secretary.  The options vested on August 5, 2014.

On January 2, 2015, the Company granted 3,000,000 stock options to two directors of the Company and 150,000 stock options to the Company Secretary.  The options vested on August 5, 2015.

On August 6, 2015, the Company granted 3,000,000 stock options to two directors of the Company and 150,000 stock options to the Company Secretary.  The options will vest on August 5, 2016.

The Binomial Lattice (Suboptimal) option pricing model was used to calculate the fair value of the options granted.  The following assumptions were used in the fair value calculations of options granted during the years ended December 31, 2015 and 2014:

Risk free rate – 1.61 – 2.23%

Expected term – 5 to 10 years

Expected volatility of stock – 500%

Expected dividend yield – 0%

Suboptimal Exercise Behavior Multiple – 2.0

Number of Steps – 150

For the year ended December 31, 2015, the Company recognized compensation expense of $95,469 related to these stock options. A further compensation expense of $33,981 will be recognized for these options in 2016.

The following table sets forth the Company's stock options outstanding as of December 31, 2015 and December 31, 2014 and activity for the years then ended:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
				Exercise		Contractual		Intrinsic
	Shares			Price		Term (Years)		Value
Outstanding, January 1, 2014		74,383,333		$	0.029		3.28	$	-
Granted		3,150,000			0.029		-		-
Exercised		-			-		-		-
Forfeited/expired		-			-		-		-
Outstanding, December 31, 2014		77,533,333		$	0.029		2.36	$	-
Granted		6,300,000			0.029		-		-
Exercised		-			-		-		-
Forfeited/expired		(4,750,000	)		0.029		-		-
Outstanding, December31, 2015		79,083,333		$	0.029		1.73	$	-
Vested/exercisable at December, 31, 2014		77,533,333		$	0.029		2.36	$	-
Vested/exercisable at December, 31, 2015		75,933,333		$	0.029		1.60	$	-

The following table summarizes the information with respect to options granted, outstanding and exercisable under the 2005 plan:

Exercise Price		Options Outstanding		Remaining Contractual Life in Years		Average Exercise Price		Number of Options Currently Exercisable
$	.029		54,983,333		1.33	$	.029		54,983,333
$	.029		2,500,000		2.33	$	.029		2,500,000
$	.029		700,000		3.33	$	.029		700,000
$	.029		1,000,000		1.83	$	.029		1,000,000
$	.029		150,000		2.08	$	.029		150,000
$	.029		850,000		3.42	$	.029		850,000
$	.029		300,000		4.42	$	.029		300,000
$	.029		4,500,000		0.50	$	.029		4,500,000
$	.029		150,000		5.50	$	.029		150,000
$	.029		4,500,000		1.58	$	.029		4,500,000
$	.029		3,000,000		3.00	$	.029		3,000,000
$	.029		150,000		8.00	$	.029		150,000
$	.029		3,000,000		4.00	$	.029		3,000,000
$	.029		150,000		9.00	$	.029		150,000
$	.029		3,000,000		4.58	$	.029		-
$	.029		150,000		9.58	$	.029		-