Common Stock, Options and Warrants

6 Months Ended

Jun. 30, 2015

Notes to Financial Statements

Note 9. Common Stock, Options and Warrants

The Company has authorized 150,000,000 shares of its Common Stock, $0.01 par value. The Company had issued and outstanding 65,654,227 and 63,341,163 shares of its Common Stock at June 30, 2015 and December 31, 2014.

On January 2, 2015, the Company issued 73,000 shares of Common Stock to the purchaser of a $36,500 note (see Note 6). Additionally, we issued 500,000 shares of Common Stock to certain investors who purchased Bridge Notes during the year ended December 31, 2014, which were previously classified as shares to-be-issued.

In February 2015, the Company agreed to issue common stock to two consultants for services rendered under the terms of their respective agreements, although neither consultant had fully completed the obligations of their agreements. An aggregate of 925,003 common shares were issued (see Note 10) during the three months ended March 31, 2015.

In February 2015, the Company issued 815,061 shares of Common Stock as payment for accrued interest for the period from July 1, 2014 through December 31, 2014 under certain convertible notes payable.

On February 3, 2015, the Board of Directors granted an aggregate of 2.3 million stock options to its executive management at an exercise price of $0.04 per share.  The options have a five year term and are fully vested on the date of grant.

In May 2013, the executive management received an aggregate of 1 million shares of Common Stock as compensation for the completion of certain objectives. On February 20, 2015, the Board of Directors agreed to cancel these shares, as the Company had failed to meet the specified objectives.  As of June 30, 2015, these shares were still outstanding. 

In June 2015, the Company’s Board of Directors authorized the following issuances of Common Stock: (i) an aggregate total of 286,500 shares issuable to the Bridge Note holders as consideration for the extension of the maturity date of the Bridge Notes to December 31, 2015; (ii) an aggregate total of 1,875,691 shares of Common Stock as payment of accrued but unpaid interest on certain of the Company’s convertible promissory notes; and (iii) an aggregate total of 100,000 shares of Common Stock to certain investors who purchased Bridge Notes in the aggregate principal amount of $50,000 during the three months ended June 30, 2015. Each of these issuances were 2015.

See Note 11 below for a description of issuances of the Company’s Common Stock subsequent to June 30, 2015.

2007 Incentive and Non-Qualified Stock Option Plan.  The fair value of options granted under the Company’s 2007 Incentive and Non-Qualified Stock Option Plan is recorded as compensation expense over the vesting period, or, for performance based awards, the expected service term.  During the six months ended June 30, 2015 and 2014, the Company recorded stock compensation expense related to options issued for director fees in the amount of $56,000 and $0, respectively.