NOTE 5 – STOCK OPTIONS
During the year ended December 31, 2013, the Company issued 4,535,714 warrants as part of the offering of the senior secured convertible notes. The Company issued 100,000 options to each of the Company’s directors, Bernard Stolar and Robert Fireman. The stock options allow each director to purchase 100,000 shares of the Company’s common stock at $0.19 per share per each individual option. The options expire on December 31, 2017. The Company did not grant any registration rights with respect to any shares of common stock issuable upon exercise of the options.
During the year ended December 31, 2013, 800,000 warrants were exercised for cash proceeds of $120,000. During the year ended December 31, 2013, 100,000 stock options were exercised for cash proceeds of $11,000 and 900,000 stock options were exercised through a cashless exercise of options resulting in the issuance of 639,606 shares of common stock.
During the year ended December 31, 2012, the Company issued 8,000,000 stock options to directors and officers of the Company. 7,500,000 stock options were issued as part of the employment agreement with its President and CEO, Thom Kidrin. The stock option allows Mr. Kidrin to purchase 7,500,000 shares of the Company’s common stock at $0.076 per share per each individual option. The options were to expire on March 31, 2014. In January 2014 the options were extended for 2 years and now expire on March 31, 2016. The Company issued 300,000 stock options to Chris Ryan, the Company’s CFO. The stock option allows Mr. Ryan to purchase 300,000 shares of the Company’s common stock at $0.0115 per share per each individual option. The options expire on September 30, 2017. The Company issued 100,000 shares to each of the Company’s directors, Bernard Stolar and Robert Fireman. The stock options allow each director to purchase 100,000 shares of the Company’s common stock at $0.0115 per share per each individual option. The options expire on September 30, 2017. The Company did not grant any registration rights with respect to any shares of common stock issuable upon exercise of the options.
During the year ended December 31, 2013, the Company recorded an option expense of $34,691, equal to the estimated fair value of the options at the date of grants. The fair market value was calculated using the Black-Scholes options pricing model, assuming approximately 0.76% risk-free interest, 0% dividend yield, 232% volatility, and expected life of 5 years. For the year ended December 31, 2012, the Company recorded an expense of $705,918, equal to the estimated fair value of the options at the date of grants.
| Stock Warrants and Options | ||||||||
| Stock warrants/options outstanding and exercisable on December 31, 2013 are as follows: | ||||||||
| Exercise Price per Share | Shares Under Option/warrant | Remaining Life in Years | ||||||
| Outstanding | ||||||||
| $ | 1.00 | 4,535,714 | 4.21 | |||||
| $ | 0.19 | 200,000 | 4.00 | |||||
| $ | 0.15 | 737,500 | 1.00 | |||||
| $ | 0.115 | 300,000 | 3.83 | |||||
| $ | 0.11 | 150,000 | 1.30 | |||||
| $ | 0.076 | 7,500,000 | 0.25 | |||||
| $ | ||||||||
| Exercisable | ||||||||
| $ | 1.00 | 4,535,714 | 4.21 | |||||
| $ | 0.19 | 200,000 | 4.00 | |||||
| $ | 0.15 | 737,500 | 1.00 | |||||
| $ | 0.115 | 300,000 | 3.83 | |||||
| $ | 0.11 | 150,000 | 1.30 | |||||
| $ | 0.076 | 7,500,000 | 0.25 | |||||