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v2.4.0.6
Compensation Related Costs, Share Based Payments
12 Months Ended
Dec. 31, 2011
Compensation Related Costs, Share Based Payments  
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Note 10 – Options and Warrants

 

Options

 

Options granted for employee and consulting services - The 2003 Non-Qualified Option Plan was established by the Board of Directors in June 2003 and approved by shareholders in October 2003. A total of 1,500,000 shares of common stock are reserved for issuance under this plan.

 

In June 2006, the Company granted options to buy 750,000 shares of the Company’s common stock at an exercise price of $0.20 with terms ranging from two to five years from the date of issuance to the Directors of the Company, of these options, 250,000 expired in June 2008. Additionally, the Company granted options to purchase 250,000 shares of the Company’s common stock at an exercise price of $0.20 with a term of three years from the date of issuance to an unrelated consultant. On June 19, 2006, the consultant exercised 100,000 options in exchange for cash of $20,000. In June of 2009, the remaining 150,000 options expired.

 

On June 6, 2011, options to purchase 500,000 shares of common stock, exercisable at $0.20 per share, held by our former CEO expired.

 

On June 6, 2011, options to purchase 500,000 shares of common stock, exercisable at $0.16 per share, held by a former employee expired.

 

On June 30, 2011, the Company extended 348,320 previously granted common stock warrants issued to the Company’s former CEO, with an exercise price of $0.15 for an additional 15 months from their expiration on June 30, 2011. These warrants are fully vested and expire on September 30, 2012. The total estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 180% and a call option value of $0.0090, was $3,147 and was recognized as interest expense during the year ended December 31, 2011.

 

On June 30, 2011, the Company extended 2,439,920 previously granted common stock warrants issued to the Company’s CEO, with an exercise price of $0.15 for an additional 15 months from their expiration on June 30, 2011. These warrants are fully vested and expire on September 30, 2012. The total estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 180% and a call option value of $0.0090, was $22,047 and was recognized as interest expense during the year ended December 31, 2011.

 

On June 30, 2011, the Company extended a total of 1,301,312 previously granted common stock warrants issued to the one of the Company’s directors, with an exercise price of $0.15 for an additional 15 months from their expiration on June 30, 2011. These warrants are fully vested and expire on September 30, 2012. The total estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 180% and a call option value of $0.0090, was $11,758 and was recognized as interest expense during the year ended December 31, 2011.

 

On June 30, 2011, the Company extended a total of 2,287,944 previously granted common stock warrants issued amongst a total of five former investors, with an exercise price of $0.15 for an additional 15 months from their expiration on June 30, 2011. These warrants are fully vested and expire on September 30, 2012. The total estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 180% and a call option value of $0.0090, was $20,674 and was recognized as interest expense during the year ended December 31, 2011.

 

In accordance with ASC 505, “Share-Based Payment”; the Company recognized the fair value of the options in the statement of operations on the date of grant. The following is a summary of information about the stock options outstanding at December 31, 2011.

 

 

                               Shares Underlying

Shares Underlying Options Outstanding

                              Options Exercisable

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

Shares

Average

Weighted

Shares

Weighted

Range of

Underlying

Remaining

Average

Underlying

Average

Exercise

Options

Contractual

Exercise

Options

Exercise

Prices

Outstanding

Life

Price

Exercisable

Price

 

 

 

 

 

 

$0.16 - $0.20

-

-0- years

$0.18

-

$-

 

The fair value of each option and warrant grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions used for grants under the fixed option plan:

 

 

 

December 31,

 

December 31

 

 

 

2011

 

2010

 

 

 

 

 

 

 

Average risk-free interest rates

 

 

-

%

 

 

1.02

%

Average expected life (in years)

 

 

-

 

 

 

1.0

 

Volatility

 

 

-

%

 

 

179

%

 

The Black-Scholes option valuation model was developed for use in estimating the fair value of short-term traded options that have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including expected stock price volatility. Because the Company’s employee stock options have characteristics significantly different from those of traded options and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options. During 2011 and 2010, there were no options granted with an exercise price below the fair value of the underlying stock at the grant date.

 

There were no options issued during the years ended December 31, 2011 and 2010, respectively.

 

The following table summarizes the Company’s option activity related to employees and consultants:

 

 

 

Options Outstanding

 

Weighted Average Exercise Price

 

 

 

 

 

 

Balance, January 1, 2010

 

1,000,000

 

$

0.18

  Granted

 

-

 

 

-

  Cancelled

 

-

 

 

-

  Exercised

 

-

 

 

-

  Expired

 

-

 

 

-

Balance, December 31, 2010

 

1,000,000

 

 

0.18

  Granted

 

-

 

 

-

  Cancelled

 

-

 

 

-

  Exercised

 

-

 

 

-

  Expired

 

1,000,000

 

 

0.18

Balance, December 31, 2011

 

-

 

$

-

 

Warrants

 

On January 22, 2010, the Company granted 40,000 stock warrants with an exercise price of $0.15 per share for its common stock. These stock warrants were granted in connection with financing activities relating to stock sold on January 22, 2010. These warrants were exercisable upon issuance and expire on March 31, 2011.

 

On December 31, 2010, the Company granted 2,146,666 common stock warrants with an exercise price of $0.08 per share. These stock warrants were granted in connection with the conversion of $128,800 of previously issued convertible debentures on December 31, 2010 to a total of nine investors in exchange for a total of 2,146,666 shares. These warrants were exercisable upon issuance and expire on December 31, 2012.

 

During the year ended December 31, 2011, the Company granted a total of 5,824,584 common stock warrants with an exercise price of $0.08 per share for its common stock amongst a total of thirty six investors. These stock warrants were granted in connection with financing activities related to the sale of common stock sold at various dates between January 4, 2011 and October 18, 2011. These warrants were exercisable upon issuance and expire two years from the date of grant, consisting of maturity dates between January 4, 2013 and October 18, 2011.

 

A total of 1,064,000 and 2,129,812 warrants expired during the years ended December 31, 2011 and 2010, respectively.

 

The following is a summary of information about the common stock warrants outstanding at December 31, 2011:

 

 

                                  Shares Underlying

Shares Underlying Options Outstanding

                                 Options Exercisable

 

 

 

 

Weighted

 

 

 

 

Shares

Average

Weighted

Shares

Weighted

Range of

Underlying

Remaining

Average

Underlying

Average

Exercise

Options

Contractual

Exercise

Options

Exercise

Prices

Outstanding

Life

Price

Exercisable

Price

 

 

 

 

 

 

$0.08 – $0.15

14,348,746

1.05 years

$0.11

14,348,746

$0.11

 

 

The following is a summary of the common stock warrant activity as of December 31, 2011.

 

 

 

Warrants Outstanding

 

Weighted Average Exercise Price

 

 

 

 

 

 

Balance, January 1, 2010

 

              9,336,596 

 

$

0.15

  Granted

 

              2,186,666 

 

 

0.08

  Cancelled

 

                               - 

 

 

-

  Exercised

 

                               - 

 

 

-

  Expired

 

            (1,935,100)

 

 

0.17

Balance, December 31, 2010

 

              9,588,162 

 

 

0.13

  Granted

 

              5,824,584 

 

 

0.08

  Cancelled

 

                               - 

 

 

-

  Exercised

 

                               - 

 

 

-

  Expired

 

            (1,064,000)

 

 

0.15

Balance, December 31, 2011

 

           14,348,746 

 

$

0.11