| Stock Options and warrants |
The Company periodically
issues stock options and warrants to employees and non-employees in capital raising transactions, for services and for financing
costs. Options vest and expire according to terms established at the grant date.
Options
The Company currently issues
stock options to employees, directors and consultants under its 2004 Stock Option Plan (the Plan). The Company could issue options
under the Plan to acquire up to 7,000,000 shares of common stock as amended in May 2006.
From the Plan’s inception
in 2004 up to March 31, 2014, the Company granted options to purchase 9,111,815 shares under the Plan, of which options to purchase
4,293,574 shares were subsequently cancelled or forfeited and made available for grants under the Plan. As of March 31, 2014, options
to purchase 3,549,908 shares were issued and outstanding and 2,181,759 shares were available to be granted under the Plan.
From
the Company’s inception in February 1998 up to December 31, 2012, options to purchase a total of 37,050,000 shares
were granted outside of the Plan, of which, options to purchase 17,430,000 shares were subsequently cancelled or forfeited.
No options were granted and 55,000 shares were forfeited outside the Plan between January 1, 2013 and March 31, 2014. As of
March 31, 2014, options to purchase 16,705,000 shares were issued and outstanding outside of the plan.
Employee options vest according
to the terms of the specific grant and expire from 5 to 10 years from date of grant. Non-employee option grants have vested
upon issuance and up to 2 years from the date of grant. The weighted-average, remaining contractual life of employee and Non-employee
options outstanding at December 31, 2013 was 7.1 years. Stock option activity for the period January 1, 2013 to March 31,
2014, was as follows:
| |
|
Weighted Avg.
Options
|
|
|
Weighted Avg.
Exercise Price
|
|
| Options, January 1, 2013 |
|
|
27,278,098 |
|
|
$ |
0.27 |
|
| Options granted |
|
|
207,819 |
|
|
|
1.17 |
|
| Options exercised |
|
|
(115,000 |
) |
|
|
0.60 |
|
| Options forfeited |
|
|
(7,061,009 |
) |
|
|
0.25 |
|
| Options, December 31, 2013 |
|
|
20,309,908 |
|
|
$ |
0.28 |
|
| Options granted |
|
|
20,000 |
|
|
|
0.99 |
|
| Options exercised |
|
|
(20,000 |
) |
|
|
0.30 |
|
| Options forfeited |
|
|
(55,000 |
) |
|
|
1.00 |
|
| Options, March 31, 2014 |
|
|
20,254,908 |
|
|
$ |
0.28 |
|
The weighted average exercise
prices, remaining contractual lives for options granted, exercisable, and expected to vest under the Plan as of March 31, 2014
were as follows:
| |
|
Outstanding Options |
|
Exercisable Options |
Option
Exercise Price
Per Share
|
|
Shares |
|
|
Life
(Years)
|
|
Weighted
Average Exercise
Price
|
|
Shares |
|
|
Weighted
Average Exercise
Price
|
| $ 0.21 - $ 0.99 |
|
|
19,991,679 |
|
|
6.8 |
|
$0.27 |
|
|
17,991,679 |
|
|
$0.27 |
| $ 1.00 - $ 1.99 |
|
|
263,229 |
|
|
6.0 |
|
$1.22 |
|
|
119,601 |
|
|
$1.27 |
| |
|
|
20,254,908 |
|
|
6.8 |
|
$0.28 |
|
|
18,111,280 |
|
|
$0.28 |
At March 31, 2014 the aggregate
intrinsic value of the options outstanding was $ $12,643,371. Future unamortized compensation expense on the unvested outstanding
options at December 31, 2013 is approximately $577,100.
2014
| |
· |
Options to acquire 20,000 shares of common stock were exercised resulting in net proceeds of $6,000. |
| |
· |
The Company issued options to purchase 20,000 shares of common
stock to an employee with a fair value of approximately $9,200 using the Black-Scholes Option Pricing model with the
following assumptions: life of 1 year; risk free interest rate of 0.12%; volatility of 125% and dividend yield of 0%. The
options are exercisable at $0.99/share, vested immediately and expire in two years from the date of grant. During the three
months ended March 31, 2014, the Company recognized compensation costs of $9,200 based on the fair value of options that
vested. |
| |
· |
During the three-months ended March 31, 2014, the Company amortized $107,907 of compensation cost based on the vesting of the options granted to employees and directors in prior years. |
Warrants
The following table summarizes
certain information about the Company’s stock purchase warrants activity for the period starting January 1, 2013 and ending
March 31, 2014.
| |
|
Warrants |
|
|
Weighted Avg.
Exercise Price
|
|
| Warrants outstanding, January 1, 2013 |
|
|
42,205,507 |
|
|
$ |
0.31 |
|
| Warrants granted |
|
|
150,000 |
|
|
|
0.31 |
|
| Warrants exercised |
|
|
(29,037,389 |
) |
|
|
0.29 |
|
| Warrants cancelled |
|
|
(1,554,152 |
) |
|
|
0.49 |
|
| Warrants outstanding, December 31, 2013 |
|
|
11,763,966 |
|
|
$ |
0.34 |
|
| Warrants granted |
|
|
120,000 |
|
|
|
1.01 |
|
| Warrants exercised |
|
|
(4,340,947 |
) |
|
|
0.30 |
|
| Warrants cancelled |
|
|
(291,969 |
) |
|
|
0.30 |
|
| Warrants outstanding, March 31, 2014 |
|
|
7,251,050 |
|
|
$ |
0.38 |
|
At March 31, 2014, the aggregate
intrinsic value of the warrants outstanding was $3,855,525. Future unamortized compensation expense on the unvested outstanding
warrants at March 31, 2014 is approximately $250,000.
| |
|
|
Outstanding Warrants |
|
Exercisable Warrants |
Warrant
Exercise Price Per Share |
|
|
Shares |
|
|
Life
(Years) |
|
Weighted
Average Exercise
Price |
|
Shares |
|
|
Weighted
Average Exercise
Price |
| $ 0.30 - $ 0.99 |
|
|
|
6,631,050 |
|
|
4.3 |
|
$0.32 |
|
|
5,747,716 |
|
|
$0.31 |
| $ 1.00 - $ 1.99 |
|
|
|
620,000 |
|
|
0.5 |
|
$1.00 |
|
|
500,000 |
|
|
$1.00 |
| |
|
|
|
|
7,251,050 |
|
|
|
|
$0.38 |
|
|
6,247,716 |
|
|
$0.38 |
2014
| |
· |
During the three-month period ended March 31, 2014, warrants to acquire 4,340,947 shares of common stock were exercised resulting in proceeds of $1,302,284. |
| |
· |
During the three-month period ended March 31, 2014, the Company
granted warrants to consultants to purchase 120,000 shares of its common stock. The warrants have an exercise price of $1.01
per share, vest over six months and will expire two years from the grant date. Total fair value of the warrant amounted to
$42,000 using the Black-Scholes Option Pricing model with the following average assumptions: risk-free interest rate of
0.44%; dividend yield of 0%; volatility of 119%; and an expected life of one year. During the three months ended March
31, 2014, the Company recognized compensation costs of $21,000 based on the fair value of warrants that vested. |
| |
· |
During the three-months ended March 31, 2014, the Company amortized $17,271 of compensation cost based on the vesting of the warrants granted to an employee and consultants in prior years. |
|