Stockholders' Equity

12 Months Ended

Dec. 31, 2018

Equity [Abstract]

Stockholders' Equity

Note 11. Stockholders’ Equity

At December 31, 2018 and 2017, the Company had a stock option plan and non-plan options, which are described below.

Non-Plan Stock Options

On January 3, 2018, the Board of Directors voted to extend from March 13, 2018 to December 31, 2020, the expiration date for a total of 3,115,000 currently outstanding options previously issued to the Chairman, the President, the Vice President and two former employees of the Company. The Company recorded stock-based compensation expense of $21,570.

Stock Option Plan

On December 19, 1988, the Company adopted a stock option plan (the “Plan”) for its officers and management personnel under which options could be granted to purchase up to 1,000,000 shares of the Company’s common stock. Accordingly, the Company reserved 1,000,000 shares for issuance under the Plan. The exercise price may not be less than 100% of the market value of the shares on the date of the grant. The options expire within ten years from the date of grant. At December 31, 2018, no options from this plan were issued or exercised.

Summary of Stock Options

A summary of the status of the Company’s fixed Plan and non-plan options as of December 31, 2018 and 2017, and changes during the years ended December 31, 2018 and 2017 is presented below.

	December 31, 2018				December 31, 2017
			Weighted				Weighted
			Average				Average
			Exercise				Exercise
	Shares		Price		Shares		Price
Outstanding at beginning of year		3,415,000	$	.44		3,415,000	$	.44
Granted		-		-		-		-
Exercised		-		-		-		-
Expired		-		-		-		-
Outstanding at end of year		3,415,000	$	.44		3,415,000	$	.44
Options exercisable at year-end		3,415,000				3,415,000
Weighted-average fair value of options granted during the year			$	.00			$	.00

The following tables summarize information about stock options outstanding and exercisable at December 31, 2018 and 2017:

December 31, 2018

		Options Outstanding					Options Exercisable
				Weighted-
		Number		Average	Weighted		Number		Weighted-
Range of		Outstanding		Remaining	Average		Exercisable		Average
Exercise		At		Contractual	Exercise		At		Exercise
Prices		12/31/18		Life (Yrs.)	Price		12/31/18		Price
$	.19		2,000,000	2.0	$	.19		2,000,000	$	.19
$	.30		750,000	2.0		.30		750,000		.30
$	.75		215,000	2.0		.75		215,000		.75
$	1.25		150,000	2.0		1.25		150,000		1.25
$	1.75		300,000	(a)		1.75		300,000		1.75
			3,415,000					3,415,000

December 31, 2017

		Options Outstanding					Options Exercisable
				Weighted-
		Number		Average	Weighted		Number		Weighted-
Range of		Outstanding		Remaining	Average		Exercisable		Average
Exercise		At		Contractual	Exercise		At		Exercise
Prices		12/31/17		Life (Yrs.)	Price		12/31/17		Price
$	.19		2,000,000	.20	$	.19		2,000,000	$	.19
$	.30		750,000	.20		.30		750,000		.30
$	.75		215,000	.20		.75		215,000		.75
$	1.25		150,000	.20		1.25		150,000		1.25
$	1.75		300,000	(a)		1.75		300,000		1.75
			3,415,000					3,415,000

(a) These options expire upon payment in full of an outstanding note payable with an original due date of November 1, 2012. The note payable remains outstanding at December 31, 2018 and 2017.

Warrants

The Company has previously issued warrants to purchase shares of the Company’s common stock in conjunction with convertible promissory notes issued in private placements dated March 25, 2010 and October 25, 2010. The Company also issued warrants in conjunction with a private placement of shares of the Company’s common stock dated July 1, 2012. The Company also issued warrants for brokerage services rendered for issuance of convertible debentures in 2014.

A total of 1,061,500 warrants expired during the year ended December 31, 2017 and as of December 31, 2018, there are no warrants outstanding.

Preferred Stock

Series S Preferred Stock

On June 14, 1993, the Company issued 926,000 shares of $.01 par value Series S Voting, Non-Convertible Preferred Stock to Austroinvest International, Inc. in exchange for proceeds of $1,000,080. The Company is required to pay quarterly cumulative dividends of three percent per annum on these shares.

These shares may be redeemed at the option of the Company at $1.08 per share plus $.0108 per share for each quarter that such shares are outstanding for a total of $2.18 per share at December 31, 2018. The shares also have a $1.08 per share preference in involuntary liquidation of the Company. At December 31, 2018 and 2017, outstanding Series S preferred stock totaled 926,000 shares. Cumulative dividends in arrears at December 31, 2018 and 2017 amounted to $225,000 and $195,000 respectively.

Series S-NR Preferred Stock

On September 13, 1993, the Company issued 900,000 shares of its $.01 par value Series S-NR Voting, Non-Convertible, Non-Redeemable, Preferred Stock to Serco International Limited (a wholly-owned subsidiary of Austroinvest International, Inc.), in exchange for proceeds of $999,000. The Company is required to pay quarterly, non-cumulative dividends of three percent per annum on these shares. Upon involuntary liquidation of the Company, the liquidation preference of each share is $1.11. At December 31, 2018 and 2017, outstanding Series S-NR preferred stock totaled 900,000 shares. Non-cumulative dividends in arrears at December 31, 2018 and 2017 amounted to $225,000 and $195,000 respectively.

Series S-PIK Preferred Stock

In March 1994, the Company offered, pursuant to Regulation S, one million units at $5.50 per unit, each unit consisting of one share of the Company’s $.001 par value common stock and two shares of the Company’s Series S-PIK Junior, cumulative, convertible, non-redeemable, non-voting $.01 par value preferred stock. Each share of Series S-PIK preferred stock is convertible into one share of the Company’s common voting stock at any time after February 15, 1995. No shares were converted during 2018 or 2017. The Series S-PIK preferred stock ranks junior to the Series S and Series S-NR preferred shares as to the distribution of assets upon liquidation, dissolution, or winding up of the Company. Upon liquidation of the Company, the S-PIK preferred stock will have a liquidation preference of $2.00 per share. A cumulative quarterly dividend of $0.04 per share is payable on Series S-PIK preferred stock. At December 31, 2018 and 2017, outstanding Series S-PIK preferred stock totaled 260,000 shares. Cumulative dividends in arrears at December 31, 2018 and 2017 amounted to $312,000 and $270,400, respectively.

Payment of Preferred Dividends

The Company did not pay any dividends due on its preferred stock in 2018 or 2017. However, payment of all cumulative and non-cumulative preferred stock dividends, outstanding at any time, is required before the Company can issue any dividends on its common stock.