NOTE 6 COMMON STOCK OPTIONS

3 Months Ended

Mar. 31, 2015

Disclosure Text Block Supplement [Abstract]

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

NOTE 6     COMMON STOCK OPTIONS

In May 2012, the Company granted options for the purchase of 1,000,000 shares of common stock to a consultant for distribution channel related services to be performed.  Options totaling 550,000 shares have vested as of March 31, 2015 and the remaining options will vest on the date certified by the Company as the date that certain other milestones are achieved.  The options have an exercise price of $0.17 per share, and are exercisable for up to five years. The Company recognized no expense in connection with these options during the three months ended March 31, 2015. The Company will measure and begin recognizing the remaining expense, when the achievement of the required milestones becomes probable.

In August 2013, the Company granted options for the purchase of 250,000 shares of common stock to a consultant, of which 50,000 were immediately vested.  These options are exercisable at $0.10 per share for five years from the date of grant and are fully vested as of March 31, 2015.  The Company recognized expense of $17,660 during the three months ended March 31, 2015, as milestones were achieved for the remaining 200,000 options.

On February 26, 2014, the Company granted to a new director options for the purchase of 2,000,000 shares of common stock, with an exercise price of $0.1095 per share.  Of these options, 1,000,000 vested on February 26, 2015 and the remaining 1,000,000 options will vest upon the successful achievement of certain milestones.  Unvested options vest immediately in the event of a change in control of the Company.  The options are exercisable for five years. The Company recognized $16,017 of expense in connection with these options during the three months ended March 31, 2015. Also, the Company will measure and begin recognizing the remaining expense when the achievement of the required milestones becomes probable.

On February 26, 2014, the Company granted options to six consultants and service providers for the purchase of a total of 250,000 shares of common stock at an exercise price of $0.1095 per share.  Options for 200,000 shares vested immediately upon grant and options for the remaining 50,000 shares vested on January 9, 2015.  The options are exercisable for five years. The grant date fair value of these options was $24,023. The Company recognized expense of $800 in connection with these options during the three months ended March 31, 2015.

On April 30, 2014, the Company granted options for the purchase of a total of 1,350,000 shares of common stock for services rendered, as follows:  250,000 shares to each of four directors of the Company, 100,000 shares to each of two consultants, and 75,000 shares each to a consultant and an employee of the Company.  All options vested upon grant, have an exercise price of $0.163 per share, and are exercisable for up to five years.  The total value of these options at the date of grant was $193,234, which the Company recognized as expense during the three months ended June 30, 2014.

On May 6, 2014, the Company granted options to a consultant for the purchase of 100,000 shares of common stock at an exercise price of $0.19 per share.  Options for 50,000 shares vested immediately upon grant and options for the remaining 50,000 shares vested during the three months ended March 31, 2015 when certain milestones were achieved.  The options are exercisable for five years. The Company recognized expense of $8,342 in connection with these options during the three months ended March 31, 2015.

On August 15, 2014, the Company granted options to a consultant for the purchase of 75,000 shares of common stock at an exercise price of $0.13 per share.  The shares will vest when certain required milestones are achieved.  The options are exercisable for five years.  The Company will measure and begin recognizing expense when the achievement of the required milestones becomes probable.

On August 15, 2014, the Company granted options for services rendered to a director of the Company for the purchase of 1,000,000 shares of common stock at an exercise price of $0.13 per share.  These options vested immediately upon grant and the Company recognized expense of $114,069, which was the grant date fair value of these options.

On October 7, 2014, the Company granted to a new board member options for the purchase of 1,000,000 shares of common stock, with an exercise price of $0.16 per share.  These options will vest on October 7, 2015.  Unvested options vest immediately in the event of a change in control of the Company.  The options are exercisable for five years. The grant date fair value of the options was $140,178.  The Company recognized $35,044 of expense in connection with these options during the three months ended March 31, 2015 and will continue to recognize expense over the remaining vesting period. 

On December 4, 2014, the Company granted options to four consultants for the purchase of 140,000 shares of common stock at an exercise price of $0.11 per share.  The shares will vest when certain required milestones are achieved.  The options are exercisable for five years. Of the 140,000 options, 35,000 options vested during the three months ended March 31, 2015 and $3,365 was recognized as expense. The Company will measure and recognize additional expense on the remaining options when achievement of required milestones becomes probable.

The Company estimates the fair value of each stock option 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 $81,229 and $28,427 related to stock options was recorded for the three months ended March 31, 2015 and 2014, respectively.  Excluding options whose performance condition is not yet deemed probable, as of March 31, 2015, the Company had unvested outstanding options with related unrecognized expense of $70,089.  The Company will recognize this expense as these options vest over their remaining useful lives, which range from 47 to 55 months.

The Company estimated the fair value of the stock options described in the above paragraphs at the date of the grant or date of re-measurement, based on the following weighted average assumptions:

Risk-free interest rate		1.50% to 1.69	%
Expected life	5 years
Expected volatility		135.74% to 136.34	%
Dividend yield		0.00	%

A summary of the status of the Company’s outstanding options as of March 31, 2015 and changes during the three months then ended, is presented below:

	Shares			Weighted Average Exercise Price
Outstanding, beginning of the period		18,565,000		$	0.180
Granted		-			-
Expired/Canceled		(250,000	)		0.190
Exercised		-			-
Outstanding, end of the period		18,315,000			0.180
Exercisable		15,685,000			0.190