12. Stockholder's Equity

9 Months Ended

Sep. 30, 2014

Equity [Abstract]

Stockholder's Equity

Issuance of Common Stock for Cash

During the nine months ended September 30, 2014, the Company sold an aggregate of 2,217,571 shares of its common stock pursuant to a Form S-3 registration statement for $1.40 per share. The sales resulted in $2,831,134 of net proceeds to the Company.

Issuance of Common Stock for Notes Payable

In the fourth quarter of 2013, the Company borrowed $150,000 from Mr. and Mrs. Robert Detwiler, stockholders of the Company. Prior to the end of 2013, the Detwiler’s converted their notes into 120,000 shares common stock and 60,000 stock purchase warrants. The terms of the conversion were identical to those offered other investors that purchased common stock and warrants near the time of the conversion and no gain or loss on the conversion resulted. During the three months ended June 30, 2014, the Company issued 235,717 shares of its commons stock to Mr. and Mrs. Robert Detwiler and two other shareholders in satisfaction of $330,000 of additional debt that the Detwilers and two other shareholders had loaned the Company. Again, the terms of the share payment were identical to those offered other investors that purchased common stock during the second quarter offering.

Warrant Exercise

During the quarter ended June 30, 2014, the Company issued an aggregate of 310,625 shares of its common stock to existing shareholders of the Company for their exercise of common stock purchase warrants. Of the shares issued, 182,500 generated cash proceeds of $239,000; 3,125 shares were issued in connection with a cashless exercise of warrants; and 125,000 shares were issued in connection with the receipt of notes receivable promising to pay $150,000 to the Company.

Issuance of Common Stock for Services

Directors

On December 27, 2013, the Company declared, but did not issue, shares of unregistered common stock to be paid to its directors for services during 2013, having a fair value of $150,000, based on the current stock price at the date declared.  During the nine months ended September 30, 2014, the Company issued 83,334 shares in satisfaction of the obligation.

Consultants

During the nine months ended September 30, 2014, the Company issued 24,000 shares to Herbert Denton for investor relations services provided. The shares estimated fair value at the time of issue was approximately $39,000.

Common Stock Warrants

The Company's Board of Directors has the authority to issue stock warrants for the purchase of preferred or unregistered common stock to directors and employees of the Company.

Transactions in common stock warrants are as follows:

	Number of Warrants			Exercise Prices
Balance, December 31, 2011		600,000		$	.30 - $.60
Warrants issued		1,734,667		$	2.50 - $4.50
Warrants exercised		(250,000	)	$	.30 - $2.50
Warrants expired		(150,000	)	$	.30 - $.40
Balance, December 31, 2012		1,934,667		$	.25 - $4.50
Warrants issued		629,740		$	1.20-$1.60
Warrants exercised		(25,000	)	$	1.20
Warrants expired		(50,000	)	$	4.50
Balance, December 31, 2013		2,489,407		$	0.25 - $4.50
Warrants exercised		(320,000	)	$	1.20-$1.60
Warrants expired		(1,337,750	)
Balance, September 30, 2014		831,657		$	0.25 - $4.50
The above common stock warrants expire as follows:
Year ended December 31:
2014		179,740
2015		401,917
Thereafter		250,000
		831,657