Quarterly report pursuant to Section 13 or 15(d)

4. STOCKHOLDERS' EQUITY

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4. STOCKHOLDERS' EQUITY
6 Months Ended
Jun. 30, 2015
Notes to Financial Statements  
NOTE 4 - STOCKHOLDERS' EQUITY

The Company is authorized to issue up to 5,000,000 shares of its $0.001 par value preferred stock and up to 200,000,000 shares of its $0.001 par value common stock.

 

Common Stock

 

During the three months ended March 31, 2015, the Company issued 40,500 shares of its common stock with a fair value of $12,105 in exchange for consulting services rendered during those periods in connection with two consulting agreements.

 

In May 2015, the Company’s Board of Directors approved up to 2,000,000 shares of the Company’s common stock to be available to the Company to satisfy vendor and consultant payments.  In June 2015, the Company issued 158,428 shares of its common stock to two vendors in exchange for sevices previously recorded. The fair value of these shares was $22,179.

 

In June 2015, the Company issued 10,500 shares of its common stock with a fair value of $1,575 in exchange for consulting services rendered during the three months ended June 30, 2015 in connection with one consulting agreement.

 

Common Stock Warrants

 

On March 12, 2015, pursuant to the Typenex agreement referenced in Note 3, the Company issued to Typenex a warrant to purchase 979,965 shares of the Company’s common stock.  Market price, as defined in the Typenex Note, is 70% multiplied by the average of the three lowest closing bid prices in the twenty trading days immediately preceding the issuance date.  The warrant is immediately exercisable at an exercise price of $0.30 per share and expires in March 2020.  Both the exercise of the warrant and the number of shares covered by the warrant are subject to adjustment under certain circumstances, including “full ratchet” anti-dilution protection upon the issuance of any common stock, securities convertible into common stock, or certain other issuances at a price below the then-existing exercise price, with certain exceptions.  The Company has classified the Typenex warrant as a liability instrument.  See Note 9 for further discussion.

 

The Company accounts for warrants as either equity instruments or liabilities instruments depending on the specific terms of the warrant agreement.  As of June 30, 2015, the Company had 13,404,634 warrants outstanding.  Of the 13,404,634 total warrants outstanding, the Company has classified 12,424,669 as equity instruments and 979,965 as liability instruments as of June 30, 2015.  All warrants outstanding are fully exercisable as of June 30, 2015.  

 

During the three months ended March 31, 2015, the Company received five separate notices to exercise an aggregate of 92,000 placement agent warrants with an exercise price of $0.30 per share.  Based upon the Company’s stock price on the date of exercise, as well as the cashless exercise formula, 43,992 shares were issued to the five holders during the quarter ended March 31, 2015, with the remaining 48,008 warrants forfeited.  There were no exercises of warrants during the three months ended June 30, 2015.

 

The following table summarizes the Company’s common stock warrant activity during the six months ended June 30, 2015:

 

    Warrants    

Weighted Average

Exercise Price

 
Outstanding as of December 31, 2014     12,516,669     $ 0.53  
      Granted     979,965       0.30  
      Exercised     (43,992)       0.30  
      Forfeited/cancelled     (48,008)       0.30  
Outstanding as of June 30, 2015     13,404,634     $ 0.51