EQUITY

12 Months Ended

Dec. 31, 2014

Notes to Financial Statements

Note 13 - EQUITY

 The Company’s Articles of Incorporation, as amended, authorize the issuance of two classes of stock to be designated “Common Stock” and “Preferred Stock”. The Preferred Stock may be divided into such number of series and with the rights, preferences, privileges and restrictions as the Board of Directors may determine.

 Series B Convertible Redeemable Preferred Stock

 The Company had 239,400 shares of Series B Preferred outstanding as of December 31, 2014 and 2013. At December 31, 2014 and 2013, the Company had cumulative undeclared dividends of approximately $8,000 ($0.03 per share). There were no conversions of Series B Preferred into common stock during the year ended December 31, 2014 or 2013.

 Common Stock

 The following table summarizes outstanding common stock activity for the following periods:

	Common Stock
Shares outstanding at December 31, 2011		67,988,916
Shares issued pursuant to warrants exercised for cash		7,052,647
Shares issued pursuant to cashless warrants exercised		1,573,362
Shares issued pursuant to option exercises		24,924
Shares outstanding at December 31, 2012		76,639,849
Shares issued pursuant to warrants exercised for cash		6,132,779
Shares issued pursuant to cashless warrants exercised		4,458,493
Conversion of related-party notes payable into common stock		18,182
Shares issued as compensation in lieu of cash		264,000
Shares issued pursuant to option exercises		35,310
Shares outstanding at December 31, 2013		87,548,613
Shares issued pursuant to warrants exercised for cash		4,742,632
Shares issued pursuant to cashless warrants exercised		868,565
Conversion of related-party notes payable into common stock		154,607
Shares issued as compensation in lieu of cash		94,116
Shares issued pursuant to option exercises		98,617
Shares outstanding at December 31, 2014		93,507,150

 During the year ended December 31, 2014, the Company issued 98,617 shares of common stock pursuant to the exercise of 98,617 options for cash proceeds of approximately $67,000.  During the year ended December 31, 2014, the Company issued 4,742,632 shares of common stock pursuant to the exercise of 4,742,632 warrants for cash proceeds of approximately $2,848,000. During the year ended December 31, 2014, the Company issued 868,565 shares of common stock pursuant to the cashless exercise of 1,125,784 warrants. Also during the year ended December 31, 2014, the Company issued 154,607 shares of common stock pursuant to the conversion of $55,000 of Related-Party Convertible notes payable principal and $30,000 of accrued interest. The Company also issued 94,116 shares of its common stock to certain members of the Company’s Board of Directors as compensation for services to be rendered through December 31, 2015.  Such shares are forfeitable should the Board members’ service be terminated.

 Warrants

 As of December 31, 2014, warrants to purchase 977,778shares of common stock at prices ranging from $0.50 to $2.25 were outstanding. All warrants are exercisable as of December 31, 2014 and expire at various dates through December 2016, with the exception of an aggregate of 380,000 warrants, which become exercisable only upon the attainment of specified events.

 The following table summarizes warrant activity for the following periods:

	Warrants			Weighted- Average Exercise Price
Balance at December 31, 2011		28,453,760		$	0.52
Granted		305,000		$	0.92
Expired / Canceled		(12,000	)	$	0.50
Exercised		(9,958,275	)	$	0.50
Balance at December 31, 2012		18,788,485		$	0.56
Granted		1,232,632		$	1.01
Expired / Canceled		(688,749	)	$	1.49
Exercised		(12,733,952	)	$	0.52
Balance at December 31, 2013		6,598,416		$	0.63
Granted		302,778		$	2.02
Expired / Canceled		(55,000	)	$	1.10
Exercised		(5,868,416	)	$	0.58
Balance at December 31, 2014		977,778		$	1.22

 During the year ended December 31, 2014, the Company issued to certain consultants warrants to purchase an aggregate of 125,000 shares of the Company’s common stock. Such warrants have exercise prices ranging from $1.10 to $1.83 per share and have terms ranging from one to three years from the date of issuance. An aggregate of 380,000 of these warrants become exercisable only upon the attainment of specified events. No such events were obtained during the year ended December 31, 2014.

 During the year ended December 31, 2014, the Company issued to an existing shareholder and member of our Board of Directors warrants to purchase 177,778 shares of the Company’s common stock. Such warrants have an exercise price of $2.25 per share and a term of two years from the date of issuance.

 During the year ended December 31, 2014, there were 1,125,784 warrants exercised pursuant to cashless transactions and 55,000 warrants expired. During the year ended December 31, 2014, there were 4,742,632 warrants exercised for cash resulting in cash proceeds to the Company of approximately $2,848,000. The Company issued 865,565 shares of its common stock pursuant to cashless warrant exercises and 4,742,632 shares of its common stock pursuant to warrants exercised for cash.

 The following table summarizes information regarding the warrants outstanding as of December 31, 2014:

Exercise Price		Number Outstanding	Weighted—Average  Remaining Life (Years)	Weighted—Average  Exercise Price
$	0.50	250,000	2.0	$	0.50
$	0.80	150,000	3.0	$	0.80
$	0.98	100,000	1.0	$	0.98
$	1.10	100,000	1.4	$	1.10
$	1.14	30,000	0.0	$	1.14
$	1.72	70,000	0.7	$	1.72
$	1.83	100,000	1.0	$	1.83
$	2.25	177,778	0.2	$	2.25
		977,778