NOTE 7 - COMMON STOCK OPTIONS

12 Months Ended

Dec. 31, 2013

Disclosure Text Block Supplement [Abstract]

Shareholders' Equity and Share-based Payments [Text Block]

NOTE 7 - 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.  The options are exercisable for up to five years and have vesting provisions as follows: (i) options for 500,000 shares vested immediately on the date of grant, (ii) options for 500,000 shares vested in September 2012, the date certified by the Company as the date its hospital disinfection program completed its beta-testing, and (iii) the remaining options for 500,000 shares will vest on the date certified by the Company as the date that its disinfection process has been commercialized and a minimum of 50 units or devices have been sold to third parties.  During the year ended December 31, 2012, options for 500,000 shares valued at $48,699 vested, and were recognized.  As of December 31, 2013, options for 500,000 shares had not yet vested.

In July 2010, the Company granted options for the purchase of up to 3,500,000 shares of common stock (of which 250,000 were cancelled in 2011) to certain board members and employees of the Company as additional compensation for work performed.  These options are exercisable for five years at $0.20 per share.  During the year ended December 31, 2012, these 3,250,000 options vested and the Company recognized $659,822 of expense.

In September 2010, the Company granted options for the purchase of up to 250,000 shares of common stock to an outside consultant in connection with extending his consulting agreement with the Company through September 2011.  These options are exercisable for five years at $0.275 per share.  During the year ended December 31, 2012, these options vested and the Company recognized $65,067 of expense.

In February 2012, the Board of Directors approved the 2012 Equity Incentive Award Plan (the “2012 Plan”) and authorized up to 10,000,000 shares of common stock to be available for awards under the 2012 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 closing price of the Company’s common stock reported on the over-the-counter Bulletin Board on the date of grant. In addition, certain officers, consultants and employees of the Company were awarded options in the aggregate for the purchase of 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 year ended December 31, 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 distribution channel related services to be performed.  Options totaling 550,000 and 100,000 shares have vested as of December 31, 2013 and 2012, respectively, 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 $0.17 per share, and are exercisable for up to five years.  The grant date fair value of these options was $153,997.  The Company recognized $69,300 and $15,399 of expense during the years ended December 31, 2013 and 2012, respectively.  The Company will recognize the remaining expense when the achievement of the required milestones becomes probable.

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 (vested immediately on the grant date) and to be performed in the future, which do not vest until completion of certain milestones. The options have an exercise price of $0.17 per share, and are exercisable for up to five years. The grant date fair value of these options was $149,460.  The Company recognized $49,322 and $100,138 of expense during the years ended December 31, 2013 and 2012, respectively.  As of December 31, 2013, all of the milestones were achieved and all of the shares were 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.  

In August 2013, the Company granted options for the purchase of 250,000 shares of common stock to a consultant.  These options are exercisable at $0.10 per share for five years from the date of grant with 50,000 options vesting immediately and the other 200,000 options vesting upon the achievement of certain milestones.  The value of these options granted was $22,075 of which the Company recognized $4,415 during the year ended December 31, 2013.  

In August 2013, the Company granted options for the purchase of 100,000 shares of common stock to an employee for services performed.  The options vested upon grant, have an exercise price of $0.10 per share, and are exercisable for up to five years.  The value of the options was $8,829 which the Company recognized as expense during the year ended December 31, 2013.

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 expected 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 $131,866 and $1,946,725 was recorded for the years ended December 31, 2013 and 2012, respectively.  As of December 31, 2013, the Company had various unvested outstanding options with related unrecognized expense of $135,657.  The Company will recognize this expense as the options vest over their remaining useful lives which range from 8 to 56 months.

The Company estimated the fair value of the stock options at the date of the grant, based on the following weighted average assumptions:

Risk-free interest rate	.75		%	to	1.66		%
Expected life					5 years
Expected volatility		138.3	%	to		148.9	%
Dividend yield						0.00	%

A summary of the status of the Company’s outstanding options as of December 31, 2013 and changes during the year then ended is presented below:

	Shares			Weighted Average Exercise Price
Outstanding, January 1, 2013		17,300,000		$	0.17
Granted		350,000			0.10
Expired/Canceled		(2,500,000	)		0.05
Outstanding, December 31, 2013		15,150,000			0.19
Exercisable		14,000,000		$	0.19