Note 11 - Options and warrants |
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Jun. 30, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disclosure of Compensation Related Costs, Share-based Payments [Text Block] |
Note 11 – Options and warrants
Options
As of June 30, 2015 and December 31, 2014 there were no outstanding options.
Warrants
On January 1, 2014, there were 13,376,623 warrants outstanding.
During the year ended December 31, 2014, there were 500,000 warrants issued with notes payable, 7,000,000 warrants issued with debentures, 175,000 warrants issued for debenture conversions, and 560,000 warrants issued for broker fees. There were no warrants exercised.
As of December 31, 2014, there were 21,611,623 warrants outstanding.
During the first quarter of 2015, 115,000 warrants were exercised at $0.25 per share.
In conjunction with the sale of 1,096,800 shares of common stock for $548,400 in the first quarter 2015, the Company issued 1,096,800 warrants to purchase common shares at $0.50 for a period of five years. These shares and warrants were purchased by and issued to executives and members of the Board of Directors of the Company.
In connection with the duly exercised Amendment to Securities Purchase Agreement dated June 2, 2015 the Company reduced the exercise price of all of its Class C Warrants from $0.50 per share to $0.10 per share. The Company valued its Class C warrants on the date of change using the Black-Scholes option pricing model and bifurcated out of the note proceeds and recorded as additional paid in capital in the amount of $535,100. The assumptions used in the pricing model were: term 1.17 years, risk free interest rate .26%%, volatility 119.05%, and a trading price $0.14 per share and exercise price $0.10. The discount will be amortized over the remaining thirteen months to maturity on July 31, 2016.
In March 2015, the Company changed its exercise price of its Class A and B warrants from prices ranging from $0.55 to $0.75 per share to $0.50 per share. The Company valued these warrants at $220,141 on the date of change using the Black-Scholes option pricing model and treated the change in value as additional compensation which is being expensed over the remaining lives of the various warrants. The assumptions used in the pricing model were: terms ranging from approximately 5 months to four years and three months, risk free interest rate .ranging from 1.10% to 1.62%, volatility ranging from 112.04% to 125.00%, and a trading price $0.45 per share and exercise price $0.50. Amortization charged to operations during the six months ended June 30, 2015 amounted $35,711.
Also in connection with the duly exercised Amendment to Securities Purchase Agreement dated June 2, 2015 the Company reduced the exercise price of all of its remaining outstanding warrants from $0.50 per share to $0.10 per share. The Company valued the change in the fair value of these warrants at June 2, 2015 at $512,713, which is being amortized into operations over the remaining terms of the various warrants. The Company valued these warrants on the date of change using the Black-Scholes option pricing model and. The assumptions used in the pricing model were: term ranging from 2 months to 8.5 years, risk free interest rates ranging from 0.28%%, to 2.07%, volatility ranging from 117.73%, to 189.34%, trading price $0.14 per share and exercise price $0.10.
Amortization charged to operations on the increase in the above warrant values due to the reduction in the exercise prices during the six months ended June 30, 2015 amounted $35,711.
In June 2015, 267,500 warrants were issued in conjunction with debenture conversions.
In June 2015, 625,000 warrants were issued in conjunction with the sale of additional debentures.
As a result of the $0.50 unit offering in February 2015, the Company was required to adjust the exercise price on all of its Class A, B and C warrants (18,532,500 warrants in the aggregate) down to $0.50. In June 2015 the exercise price of the Class A, B and C warrants were further adjusted down to $0.075 per share. See Note 10 for the explanation of the revaluation of the Class A, B and C warrants.
A summary of warrants as of June 30, 2015 is as follows:
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