Quarterly report pursuant to Section 13 or 15(d)

STOCKHOLDERS' DEFICIENCY

v3.7.0.1
STOCKHOLDERS' DEFICIENCY
 3 Months Ended
Mar. 31, 2017
STOCKHOLDERS' DEFICIENCY  
STOCKHOLDERS' DEFICIENCY

NOTE 7 - STOCKHOLDERS’ DEFICIT

 

Board of Directors fees

 

As compensation for serving as a member of the board of directors, the Company granted warrants to purchase 125,000 shares of common stock to Robert O. Rondeau, a new Director, in March 2016, at an exercise price of $.09 per share. The warrants have a term of five years and vested immediately. The warrants were valued at $10,588 using the Black Scholes pricing model relying on the following assumptions: volatility 168.01%; annual rate of dividends 0%; discount rate 0.97%. In addition, Mr. Rondeau will receive $10,000 for each annual term served, paid quarterly.

 

The Company recorded directors’ fees of $10,000 and $20,588 during the three months ended March 31, 2017 and 2016, representing the cash fees and the value of the vested warrants described above.

 

Stock Based Compensation

 

During the three months ended March 31, 2017, the Company issued warrants to purchase 500,000 shares of common stock at an exercise price of $.10 with a term of 5 years pursuant to an agreement with a financial consultant at an exercise price of $.10 with a term of 5 years. The warrants were valued at $16,574 using the Black Scholes pricing model relying on the following assumptions: volatility 175.05%; annual rate of dividends 0%; discount rate 1.87%.

 

Stock Issuances

 

During the three months ended March 31, 2016, in connection with the issuance of $1,000,000 in principal of 11% Convertible Debenture the Company issued to HEP Investments 517,500 shares of common stock valued at $36,000 and a five-year warrant to purchase 1,000,000 shares of common stock at an exercise price of $.10 per share.

 

During the three months ended March 31, 2017, in connection with the issuance of $1,000,000 in principal of 11% Convertible Debenture the Company issued to HEP Investments 450,000 shares of common stock valued at $36,000 and a five-year warrant to purchase 1,000,000 shares of common stock at an exercise price of $.10 per share. The Company also issued 250,000 shares of common stock valued at $22,500 as discussed in Note 10 - Settlement of Litigation – Related Party.

 

Executive Compensation

 

As compensation for serving as Chief Financial Officer, the Company, quarterly, issues warrants to purchase 50,000 shares of common stock to Philip M. Rice at the prevailing market price with a term of 5 years, provided that the preceding quarterly and annual filings were submitted in a timely and compliant manner, at which time such warrants would vest.

 

On March 29, 2016, the Company issued warrants to purchase 50,000 shares of common stock at $.08. The warrants were valued at $3,771 using the Black Scholes pricing model relying on the following assumptions: volatility 169.28%; annual rate of dividends 0%; discount rate 0.78%.

 

On March 31, 2017, the Company issued warrants to purchase 50,000 shares of common stock at $.08. The warrants were valued at $3,317 using the Black Scholes pricing model relying on the following assumptions: volatility 175.53%; annual rate of dividends 0%; discount rate 1.93%.

 

Common Stock Warrants

 

A summary of the status of the Company’s warrants is presented below.

 

 

March 31, 2017

 

December 31, 2016

 

Number of

Warrants

 

Weighted

Average

Exercise

Price

 

Number of

Warrants

 

Weighted

Average

Exercise

Price

 

 

 

 

Outstanding, beginning of year

32,071,901

$

0.13

 

14,705,818

$

0.16

Issued

1,550,000

 

0.10

 

20,350,000

 

0.09

Exercised

-

 

-

 

-

 

-

Cancelled

-

 

-

 

-

 

0.14

Expired

(50,000)

 

0.38

 

(2,983,917)

 

0.13

Outstanding, end of period

33,571,901

$

0.10

 

32,071,901

$

0.13

 

Warrants outstanding and exercisable by price range as of March 31, 2017 were as follows:

 

 

Outstanding Warrants

 

 

Exercisable Warrants

 

 

 

 

 

Average

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

Weighted Average Exercise Price

 

 

 

 

 

Remaining

 

 

 

 

 

 

 

Exercise Price

 

Number

 

Contractual Life in Years

 

 

Exercise Price

 

Number

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

0.05

1,250,000

4.45

 

$

0.05

1,250,000

$

0.05

0.08

17,925,000

4.05

 

0.08

17,925,000

0.08

0.09

709,110

3.13

 

0.09

709,110

0.09

0.10

9,177,200

3.83

 

0.10

9,177,200

0.10

0.12

99,041

1.92

 

0.12

99,041

0.12

0.14

50,000

2.37

 

0.14

50,000

0.14

0.15

2,485,274

1.05

 

0.15

2,485,274

0.15

0.17

50,000

2.00

 

0.17

50,000

0.17

0.19

100,000

1.21

 

0.19

100,000

0.19

0.20

250,000

0.08

 

0.20

250,000

0.20

0.22

269,276

1.50

 

0.22

269,276

0.22

0.25

707,000

1.27

 

0.25

707,000

0.25

0.30

250,000

1.66

 

0.30

250,000

0.30

0.33

250,000

1.25

 

0.33

250,000

0.33

33,571,901

1.29

 

33,571,901

$

0.10