Nevada
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87-0412648
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Large accelerated filer ¨
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Accelerated filer ¨
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Non-accelerated filer ¨ (Do not check if a smaller reporting company)
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Smaller Reporting Company þ
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Page No.
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||
Part I — Financial Information
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|||
Item 1.
|
Financial Statements (Unaudited) |
3
|
|
3
|
|||
4
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|||
|
5
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||
|
7
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||
Item 2.
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Management's Discussion and Analysis of Financial Condition and Results of Operations |
12
|
|
Item 3.
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Quantitative and Qualitative Disclosures About Market Risk |
14
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Item 4.
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Controls and Procedures |
15
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|
Part II — Other Information
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|||
Item 1.
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Legal Proceedings |
16
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|
Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds |
16
|
|
Item 5.
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Other Information |
16
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Item 6.
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Exhibits |
16
|
|
17
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June 30,
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December 31,
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|||||||
2013
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2012 (1)
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|||||||
ASSETS
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||||||||
Current Assets:
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||||||||
Cash
|
$
|
320,279
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$
|
12,456
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||||
Inventory
|
-
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45,548
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||||||
Prepaid expenses
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269,477
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118,344
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||||||
Total Current Assets
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589,756
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176,348
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||||||
Property and Equipment, net
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9,054
|
5,964
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||||||
Other Assets:
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||||||||
Trademark and patents, net
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199,675
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208,490
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||||||
Lease deposit
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4,272
|
4,272
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||||||
Total Other Assets
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203,947
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212,762
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||||||
Total Assets
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$
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802,757
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$
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395,074
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||||
LIABILITIES AND STOCKHOLDERS' DEFICIT
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||||||||
Current Liabilities:
|
||||||||
Accounts payable
|
$
|
555,631
|
$
|
453,885
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||||
Accounts payable – related parties
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234,534
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234,572
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||||||
Accrued expenses
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499,518
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487,690
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||||||
Accrued expenses – related parties
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1,937,941
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1,975,084
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||||||
Customer deposits
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30,000
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34,554
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||||||
Notes payable
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292,996
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298,536
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||||||
Total Current Liabilities
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3,550,620
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3,484,321
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||||||
Other Payables
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224,852
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224,852
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||||||
Total Liabilities
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3,775,472
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3,709,173
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||||||
Commitments and Contingencies (Notes 4 and 5)
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||||||||
Stockholders’ Deficit:
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||||||||
Preferred stock, 50,000,000 shares authorized of $0.00001
par value, no shares issued or outstanding
|
-
|
-
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||||||
Common stock, 395,000,000 shares authorized of $0.001
par value, 310,662,639 and 288,771,227 shares issued
and outstanding, respectively
|
310,663
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288,771
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||||||
Additional paid-in capital
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27,439,631
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26,506,566
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||||||
Accumulated other comprehensive loss
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(25,812
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)
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(24,444
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)
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||||
Accumulated deficit
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(30,697,197
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)
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(30,084,992
|
)
|
||||
Total Stockholders' Deficit
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(2,972,715
|
)
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(3,314,099
|
)
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||||
Total Liabilities and Stockholders’ Deficit
|
$
|
802,757
|
$
|
395,074
|
(1)
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The consolidated balance sheet as of December 31, 2012 has been prepared using information from the audited balance sheet as of that date.
|
For the Three Months Ended
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For the Six Months Ended
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|||||||||||||||
June 30,
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June 30,
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|||||||||||||||
2013
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2012
|
2013
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2012
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|||||||||||||
Revenues
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$ | 375,000 | $ | - | $ | 379,554 | $ | - | ||||||||
Operating Expenses:
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||||||||||||||||
Cost of revenues
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235,436 | - | 239,436 | - | ||||||||||||
General and administrative
|
308,068 | 251,380 | 593,279 | 1,581,146 | ||||||||||||
Research and development
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34,111 | 290,679 | 119,882 | 358,928 | ||||||||||||
Depreciation and amortization
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15,903 | 9,067 | 26,407 | 16,927 | ||||||||||||
Total Operating Expenses
|
593,518 | 551,126 | 979,004 | 1,957,001 | ||||||||||||
Loss from Operations
|
(218,518 | ) | (551,126 | ) | (599,450 | ) | (1,957,001 | ) | ||||||||
Interest Expense
|
(6,389 | ) | (6,161 | ) | (12,755 | ) | (12,347 | ) | ||||||||
Net Loss
|
(224,907 | ) | (557,287 | ) | (612,205 | ) | (1,969,348 | ) | ||||||||
Other Comprehensive Loss: | ||||||||||||||||
Loss on foreign currency translation
|
(1,196 | ) | (1,638 | ) | (1,368 | ) | (2,546 | ) | ||||||||
Total Comprehensive Loss
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$ | (226,103 | ) | $ | (558,925 | ) | $ | (613,573 | ) | $ | (1,971,894 | ) | ||||
Basic and Diluted Net Loss per Common Share
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$ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.01 | ) | ||||
Weighted Average Number of Common Shares Outstanding
|
305,341,194 | 279,937,782 | 300,432,370 | 278,791,946 |
For the Six Months Ended
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||||||||
June 30,
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||||||||
2013
|
2012
|
|||||||
Cash Flows from Operating Activities:
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||||||||
Net loss
|
$
|
(612,205
|
)
|
$
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(1,969,348
|
)
|
||
Adjustments to reconcile net loss to net cash
used in operating activities:
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||||||||
Depreciation and amortization
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26,219
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16,896
|
||||||
Value of stock options granted
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94,707
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1,157,738
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||||||
Changes in operating assets and liabilities:
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||||||||
Prepaid expenses
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(123,883
|
)
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(81,068
|
)
|
||||
Customer deposits
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(4,554)
|
-
|
||||||
Inventory
|
45,548
|
-
|
||||||
Accounts payable (includes related parties)
|
101,708
|
(44,888
|
)
|
|||||
Accrued expenses (includes related parties)
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(25,315
|
)
|
(10,759
|
)
|
||||
Net Cash Used in Operating Activities
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(497,775
|
)
|
(931,429
|
)
|
||||
Cash Flows from Investing Activities:
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||||||||
Purchase of trademark and patents
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(12,954
|
)
|
(66,085
|
)
|
||||
Purchase of property and equipment
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(7,540
|
)
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(3,148
|
)
|
||||
Net Cash Used in Investing Activities
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(20,494
|
)
|
(69,233
|
)
|
||||
Cash Flows from Financing Activities:
|
||||||||
Principal payments on notes payable
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(32,790
|
)
|
(6,260
|
)
|
||||
Issuance of common stock for cash
|
860,250
|
988,435
|
||||||
Net Cash Provided by Financing Activities
|
827,460
|
982,175
|
||||||
Effect of Foreign Currency Exchange Rates
|
(1,368
|
)
|
(2,546
|
)
|
||||
Net increase (decrease) in cash
|
307,823
|
(21,033
|
)
|
|||||
Cash as of beginning of the period
|
12,456
|
129,759
|
||||||
Cash as of end of the period
|
$
|
320,279
|
$
|
108,726
|
For the Six Months Ended
|
||||||||
June 30,
|
||||||||
2013
|
2012
|
|||||||
SUPPLEMENTAL CASH FLOW INFORMATION:
|
||||||||
Cash Paid for Interest
|
$
|
537
|
$
|
428
|
||||
NON-CASH FINANCING ACTIVITIES:
|
||||||||
Financing of insurance policies
|
$
|
27,250
|
$
|
12,908
|
For the Three Months Ended June 30,
|
||||||||
2013
|
2012
|
|||||||
Numerator: Net loss
|
$
|
(224,907
|
)
|
$
|
(557,287
|
)
|
||
Denominator: Weighted average number of common shares outstanding
|
305,341,194
|
279,937,782
|
||||||
Basic and diluted net loss per common share
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
For the Six Months Ended June 30,
|
||||||||
2013
|
2012
|
|||||||
Numerator: Net loss
|
$
|
(612,205
|
)
|
$
|
(1,969,348
|
)
|
||
Denominator: Weighted average number of common shares outstanding
|
300,432,370
|
278,791,946
|
||||||
Basic and diluted net loss per common share
|
$
|
(0.00
|
)
|
$
|
(0.01
|
)
|
Risk-free interest rate
|
.77 | % | |||||
Expected life
|
5 years
|
||||||
Expected volatility
|
145.6 | % |
to
|
148.9 | % | ||
Dividend yield
|
0.00 | % |
Shares
|
Weighted Average
Exercise Price
|
|||||||
Outstanding, beginning of the period
|
17,300,000
|
$
|
0.17
|
|||||
Granted
|
-
|
-
|
||||||
Expired/Canceled
|
-
|
-
|
||||||
Exercised
|
-
|
-
|
||||||
Outstanding, end of the period
|
17,300,000
|
0.17
|
||||||
Exercisable
|
16,190,000
|
$ |
0.17
|
Exhibit 31.1
|
|
Exhibit 31.2
|
|
Exhibit 32.1
|
|
Exhibit 32.2
|
|
101.INS
|
XBRL Instance Document**
|
101.SCH
|
XBRL Taxonomy Extension Schema**
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase**
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase**
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase**
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase**
|
/s/ | Edwin G. Marshall |
Edwin G. Marshall | |
Chief Executive Officer (Principal Executive Officer) | |
July 29, 2013 |
/s/
|
Tommy E. Auger
|
Tommy E. Auger
|
|
Chief Financial Officer
|
|
(Principal Financial and Accounting Officer) | |
July 29, 2013
|
NOTE 2 CANADIAN FOUNDATION FOR GLOBAL HEALTH (Details)
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Disclosure Text Block [Abstract] | |
Variable Interest Entity, Qualitative or Quantitative Information, Purpose of VIE | (1) to establish an independent not-for-profit foundation intended to have a continuing working relationship with the Company for research purposes that is best positioned to attract the finest scientific, medical and academic professionals possible to work on projects deemed to be of social benefit; and (2) to provide a means for the Company to use a tiered pricing structure for services and products in emerging economies and extend the reach of the Company's technology to as many in need as possible. |
Consolidated Statements of Comprehensive Loss (Unaudited) (USD $)
|
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Revenues | $ 375,000 | $ 0 | $ 379,554 | $ 0 |
Operating Expenses: | ||||
Cost of revenues | 235,436 | 0 | 239,436 | 0 |
General and administrative | 308,068 | 251,380 | 593,279 | 1,581,146 |
Research and development | 34,111 | 290,679 | 119,882 | 358,928 |
Depreciation and amortization | 15,903 | 9,067 | 26,407 | 16,927 |
Total Operating Expenses | 593,518 | 551,126 | 979,004 | 1,957,001 |
Loss from Operations | (218,518) | (551,126) | (599,450) | (1,957,001) |
Interest Expense | (6,389) | (6,161) | (12,755) | (12,347) |
Net Loss | (224,907) | (557,287) | (612,205) | (1,969,348) |
Other Comprehensive Loss: | ||||
Loss on foreign currency translation | (1,196) | (1,638) | (1,368) | (2,546) |
Total Comprehensive Loss | $ (226,103) | $ (558,925) | $ (613,573) | $ (1,971,894) |
Basic and Diluted Net Loss per Common Share (in Dollars per share) | $ 0.00 | $ 0.00 | $ 0.00 | $ (0.01) |
Weighted Average Number of Common Shares Outstanding (in Shares) | 305,341,194 | 279,937,782 | 300,432,370 | 278,791,946 |
NOTE 5 COMMITMENTS AND CONTINGENCIES
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Commitments and Contingencies Disclosure [Text Block] | |
Commitments and Contingencies Disclosure [Text Block] |
NOTE
5 COMMITMENTS AND
CONTINGENCIES
The
Company is subject to certain claims and lawsuits arising in
the normal course of business. In the opinion of management,
uninsured losses, if any, resulting from the ultimate
resolution of these matters will not have a material effect
on the Company’s consolidated financial position or
results of operations.
Litigation
Rakas vs.
Medizone International, Inc. - A former consultant
brought this action against the Company claiming the Company
had failed to pay consulting fees under a consulting
agreement. In September 2001, the parties agreed
to settle the matter for $25,000. The Company,
however, did not have the funds to pay the settlement and the
plaintiff moved the court to enter a default judgment in the
amount of $143,000 in January 2002. On May 8,
2002, the court vacated the default judgment and requested
that the Company post a bond of $25,000 to cover the
settlement previously entered into by the
parties. The Company has been unable to post the
required bond amount as of the date of this
report. Therefore, the Company has recorded a
liability (included in accounts payable) for the original
default judgment of $143,000, plus fees totaling $21,308, as
of June 30, 2013 and December 31, 2012. The
Company intends to contest the judgment if and when it is
able to in the future.
Other
Payables
As
of June 30, 2013 and December 31, 2012, the Company has
recorded other payables totaling $224,852 related to certain
past due payables for which the Company has not received
invoices or demands for over 10 years. Although
management of the Company does not believe that the amounts
will be paid, the amounts are being recorded as other
payables until such time as the Company is certain that no
liability exists and until the statute of limitations has
expired.
Operating
Leases
The
Company operates a certified laboratory located at
Innovation Park, Queen’s University in Kingston,
Ontario, Canada, which provides a primary research and
development platform. The lease term expired on
June 30, 2012, and is now month-to-month with a monthly
lease payment of $1,375 Canadian dollars (“CD”)
plus the applicable goods and services tax
(“GST”). A lease for a second laboratory
space for full scale room testing and a storage space also
expired on June 30, 2012, and are now month-to-month with a
monthly lease payment of $1,375 CD and $475 CD,
respectively, plus the applicable
GST.
The
Company entered into a new corporate office lease effective
January 1, 2012 through December 31, 2012 with monthly
payments of $2,100. The lease term was extended
for another year, through December 31, 2013, with monthly
lease payments increasing from $2,100 to
$2,200.
|
NOTE 7 STOCK TRANSACTIONS AND SIGNIFICANT CONTRACTS (Details) (USD $)
|
6 Months Ended | 12 Months Ended | 6 Months Ended | 12 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Dec. 31, 2012
|
Jun. 30, 2013
Restricted Stock Issued During May and June 2013 [Member]
|
Jun. 30, 2013
Restricted Stock Issued During April and May 2013 [Member]
|
Jun. 30, 2013
Restricted Stock Issued During January, February and March 2013 [Member]
|
Dec. 31, 2012
Restricted Stock Issued During January and February 2012 [Member]
|
Dec. 31, 2012
Stock Issued During January 2012 [Member]
|
Dec. 31, 2012
Stock Issued During June 2012 [Member]
|
Dec. 31, 2012
Restricted Stock Issued During June 2012 [Member]
|
Dec. 31, 2010
Stock Purchase Agreement [Member]
|
Dec. 31, 2010
Stock Purchase Agreement [Member]
Maximum [Member]
|
Jun. 30, 2013
Wood Wyant Canada [Member]
|
Jun. 30, 2013
ADA Innovations [Member]
|
Jun. 30, 2012
ADA Innovations [Member]
|
Jun. 30, 2013
ADA Innovations [Member]
|
Jun. 30, 2012
ADA Innovations [Member]
|
Jun. 30, 2013
Maximum [Member]
|
Dec. 31, 2012
Maximum [Member]
|
|
NOTE 7 STOCK TRANSACTIONS AND SIGNIFICANT CONTRACTS (Details) [Line Items] | |||||||||||||||||||
Stock Issued During Period, Shares, Restricted Stock Award, Gross (in Shares) | 6,653,000 | 5,863,636 | 3,794,444 | 12,233,332 | 1,205,556 | ||||||||||||||
Number of Investors | 11 | 6 | 12 | 30 | 2 | ||||||||||||||
Proceeds from Issuance or Sale of Equity | $ 860,250 | $ 988,435 | $ 322,500 | $ 170,750 | $ 367,000 | $ 665,300 | $ 149,010 | $ 65,625 | $ 108,500 | ||||||||||
Shares Issued, Price Per Share (in Dollars per share) | $ 0.055 | $ 0.045 | $ 0.03 | $ 0.10 | $ 0.165 | $ 0.131 | $ 0.055 | $ 0.165 | |||||||||||
Stock Issued During Period, Shares, New Issues (in Shares) | 21,891,412 | 16,729,278 | 903,089 | 500,000 | |||||||||||||||
Stock Repurchase Program, Period in Force | 2 years | ||||||||||||||||||
Common Stock, Share Subscribed but Unissued, Subscriptions Receivable | 10,000,000 | ||||||||||||||||||
Equity Method Investment, Ownership Percentage | 4.90% | ||||||||||||||||||
Stock purchase agreement, price description | 75% of the lowest closing bid price during the five consecutive trading-day period (the "Draw Down Pricing Period") preceding the date a draw down notice (the "Draw Down Notice") was delivered by the Company to Mammoth (the "Draw Down Date") in a manner provided by the Stock Purchase Agreement | ||||||||||||||||||
Supply Commitment, Description | The Company delivered an initial order for five systems to Wood Wyant for proceeds totaling $375,000.The Company has six more systems in production. | ||||||||||||||||||
Sales Revenue, Goods, Gross | 375,000 | ||||||||||||||||||
Research and Development Expense, Software (Excluding Acquired in Process Cost) | $ 0 | $ 115,000 | $ 0 | $ 157,000 |
NOTE 3 BASIC AND DILUTED NET LOSS PER COMMON SHARE (Details) - Schedule of Earnings Per Share (USD $)
|
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Schedule of Earnings Per Share [Abstract] | ||||
Numerator: Net loss (in Dollars) | $ (224,907) | $ (557,287) | $ (612,205) | $ (1,969,348) |
Denominator: Weighted average number of common shares outstanding | 305,341,194 | 279,937,782 | 300,432,370 | 278,791,946 |
Basic and diluted net loss per common share (in Dollars per share) | $ 0.00 | $ 0.00 | $ 0.00 | $ (0.01) |
NOTE 8 ACCOUNTS PAYABLE - RELATED PARTIES (Details) (USD $)
|
Jun. 30, 2013
|
Dec. 31, 2012
|
|||
---|---|---|---|---|---|
Related Party Transactions Disclosure [Text Block] | |||||
Accounts Payable, Related Parties, Current | $ 234,534 | $ 234,572 | [1] | ||
|
NOTE 1 BASIS OF PRESENTATION
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Disclosure Text Block [Abstract] | |
Business Description and Basis of Presentation [Text Block] |
NOTE
1 BASIS OF PRESENTATION
The
financial information included herein is unaudited and has
been prepared consistent with United States generally
accepted accounting principles (“US GAAP”) for
interim financial information and with the instructions to
Form 10-Q and Article 8 of Regulation S-X. Accordingly, these
consolidated financial statements do not include all
information and notes required by US GAAP for complete
financial statements. These notes should be read in
conjunction with the audited consolidated financial
statements and notes thereto included in the Company’s
annual report on Form 10-K for the year ended December 31,
2012. In the opinion of management, these financial
statements contain all adjustments (consisting solely of
normal recurring adjustments) which are, in the opinion of
management, necessary to provide a fair presentation for the
interim periods. The results of operations for the three and
six-month periods ended June 30, 2013 are not necessarily
indicative of the results to be expected for the full
year.
|
NOTE 3 BASIC AND DILUTED NET LOSS PER COMMON SHARE
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Text Block] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Text Block] |
NOTE
3 BASIC AND
DILUTED NET LOSS PER COMMON SHARE
The
computations of basic and diluted net loss per common share
are based on the weighted average number of common shares
outstanding during the periods as follows:
Common
stock equivalents, consisting of options, have not been
included in the calculation as their effect is antidilutive
for the periods presented.
|
NOTE 6 COMMON STOCK OPTIONS
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity and Share-based Payments [Text Block] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity and Share-based Payments [Text Block] |
NOTE
6 COMMON STOCK OPTIONS
On
August 26, 2009, the Company granted options for the
purchase of 1,500,000 shares of common stock to an outside
consultant for services rendered, with an exercise price of
$0.10 per share, exercisable for up to five years, but
including vesting provisions as follows: (i) 500,000 of the
options vested immediately on the date of grant, (ii)
500,000 options vested, in September 2012, the date
certified by the Company as the date the Company’s
hospital disinfection program completed its beta-testing,
and (iii) the remaining 500,000 options will vest on the
date certified by the Company as the date that the
Company’s process has been commercialized and a
minimum of 50 units or devices have been sold to third
parties by the Company. As of June 30, 2013,
500,000 of the 1,500,000 options granted to this consultant
had not yet vested.
In
July 2010, the Company granted options for the purchase of
3,500,000 shares of common stock (of which 250,000 were
cancelled in 2011) to certain board members and employees of
the Company for services rendered. These options
are exercisable for five years from the date of grant at
$0.20 per share, and vested when the Company achieved
commercial sales during the third quarter of
2012.
In
September 2010, the Company granted options for the purchase
of 250,000 shares of common stock to a consultant in
connection with extending his consulting agreement with the
Company through September 2011. These options are
exercisable at $0.275 per share for five years from the date
of grant and vested when the Company achieved commercial
sales during the third quarter of 2012.
In
February 2012, the Board of Directors approved the 2012
Equity Incentive Award Plan and authorized up to 10,000,000
shares of common stock to be available for awards under the
Plan. On February 21, 2012, each of four directors
of the Company was awarded stock options for the purchase of
1,000,000 shares of common stock, exercisable at a price of
$0.23 per share, which was the fair value of the common stock
based on the price of the Company’s common stock
reported on the OTC Bulletin Board on the date of
grant. In addition, certain officers, consultants
and employees of the Company were awarded options for the
purchase of an aggregate 1,050,000 shares of common stock at
an exercise price of $0.23 per share. The value of
these options granted, totaling $1,057,600, was recognized as
expense during the six months ended June 30, 2012 as each of
the options granted was fully vested on the date of
grant.
In
May 2012, the Company granted options for the purchase of
1,000,000 shares of common stock to an individual for
services. Options for 550,000 shares have vested
and the remaining options will vest on the date certified by
the Company as the date that the other milestones are
achieved. The options have an exercise price of
$0.15 per share, and are exercisable for up to five
years. The value of these options granted was
$153,997 in connection with which the Company recognized
$69,300 during the six months ended June 30,
2013. As of June 30, 2013, options for the
purchase of 550,000 of the 1,000,000 shares have
vested.
In
May 2012, the Company granted options for the purchase of
1,000,000 shares of common stock to an individual for medical
consulting support services already performed and to be
performed in the future. The options have an
exercise price of $0.17 per share, and are exercisable for up
to five years. The value of the options vested
upon grant was $149,460, of which the Company recognized
$25,408 during the six months ended June 30,
2013. The remaining options vest as certain
milestones are achieved. As of June 30, 2013,
options for the purchase of 840,000 of the 1,000,000 shares
have vested.
In
August 2012, the Company granted options for the purchase of
2,500,000 shares of common stock to three individuals in
connection with the purchase of restricted stock, exercisable
at a price of $0.05 per share. No expense was
recorded for these options as the value associated with these
options was recorded as part of the stock
transactions. These options held a six-month term
and have expired without being exercised.
The
Company estimated the fair value of the stock options
described in the above paragraphs at the date of the grant,
based on the following weighted average assumptions:
A
summary of the status of the Company’s outstanding
options as of June 30, 2013, and for the six-month period
then ended, is presented below:
The
Company estimates the fair value of each stock award by using
the Black-Scholes option-pricing model, which model requires
the use of exercise behavior data and the use of a number of
assumptions including volatility of the Company’s stock
price, the weighted average risk-free interest rate, and the
weighted average expected life of the options. Because the
Company does not pay dividends, the dividend rate variable in
the Black-Scholes option-pricing model is zero. Expense of
$94,707 and $1,157,738 related to stock options was recorded
for the six-month period ended June 30, 2013 and 2012,
respectively. As of June 30, 2013, the Company had
various unvested outstanding options with related
unrecognized expense of $141,911. The Company will
recognize this expense as these options vest over their
remaining lives, which range from 14 to 46 months.
|
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