NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BUSINESS AND ORGANIZATION
General
All references in these consolidated financial statements to “we,” “us,” “our,” and the “Company” are to Vu1 Corporation, Sendio, s.r.o., our Czech subsidiary, and Telisar Corporation, our inactive subsidiary unless otherwise noted or indicated by its context.
We are focused on developing, manufacturing and selling a line of mercury free, energy efficient light bulbs based on our proprietary light-emitting technology. For the past several years, we have primarily focused on research and development efforts for our technology products and the related manufacturing processes.
In September 2007, we formed Sendio, s.r.o. (“Sendio”) in the Czech Republic as a wholly-owned subsidiary for the purpose of operating a research and development and pilot manufacturing facility. On February 13, 2012, Sendio filed a petition of insolvency with the Regional Court in Olomouc, Czech Republic. In March, 2012 the court determined that Sendio was insolvent, and control of the legal entity passed to a court appointed trustee. The trustee will oversee the orderly sale of the assets and use any proceeds to satisfy the liabilities of Sendio. These liabilities have been recorded as a current liability on our balance sheet as of March 31, 2013 under the caption “Liabilities of Sendio.”
We have one inactive subsidiary, Telisar Corporation, a California corporation and 66.67% majority-owned subsidiary.
NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated unaudited financial statements included in this Form 10-Q have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q. Accordingly, these financial statements do not include all of the disclosures required by U.S. generally accepted accounting principles for complete financial statements. These consolidated unaudited interim financial statements should be read in conjunction with the audited financial statements for the fiscal year ended December 31, 2012 in our Annual Report on Form 10-K. The financial information furnished herein reflects all adjustments consisting of normal, recurring adjustments which, in the opinion of management, are necessary for a fair presentation of our financial position, the results of operations and cash flows for the periods presented. Operating results for the quarterly period ended March 31, 2013 are not necessarily indicative of results for future quarters or periods in the fiscal year ending December 31, 2013.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and all of its wholly-owned and controlled subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
For purposes of the statements of cash flows, we consider all investments purchased with original maturities of three months or less to be cash equivalents. At March 31, 2013 we had no cash in excess of federally insured limits in effect as of those dates, respectively. At December 31, 2012 we had $78,188 of cash in excess of federal insurance limits.
Equipment
Equipment is comprised of equipment used in the manufacturing process and related testing and development of our lighting products and is stated at cost. We provide for depreciation using the straight-line method over the estimated useful lives of three to five years. Expenditures for maintenance and repairs are charged to operations as incurred while renewals and betterments are capitalized. Gains or losses on the sale of equipment are reflected in the statements of operations.
Income Taxes
We recognize the amount of income taxes payable or refundable for the current year and recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement amounts of certain assets and liabilities and their respective tax bases. Deferred tax assets and deferred tax liabilities are measured using enacted tax rates expected to apply to taxable income in the years those temporary differences are expected to be recovered or settled. A valuation allowance is required when it is more likely than not that we will not be able to realize all or a portion of our deferred tax assets. The fiscal years 2008 to 2012 remain open to examination to U.S. Federal authorities and other jurisdictions in the U.S. where we operate.
We recognize the impact of an uncertain tax position in the consolidated financial statements of a tax position, if that position is more likely than not of being sustained upon examination, based on the technical merits of the position. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company has elected to classify interest and penalties related to unrecognized tax benefits, if and when required, as part of income tax expense in the consolidated statements of operations.
Loan Costs
Loan costs are amortized to interest expense using the straight line method, which approximates the effective interest method, over the life of the related loan.
Long-Lived Assets
Long-lived assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. Recoverability of assets to be held and used is measured by comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount that the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.
Fair Value of Financial Instruments
Financial instruments consist of convertible debentures. The fair value of our convertible debentures is $4,042,397 at March 31, 2013 based on the present value of the future cash flows of the instrument. We used level 3 inputs to measure fair value of this instrument.
Fair Value Measurements
ASC 820
“Fair Value Measurements”
defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. This hierarchy prioritizes the inputs into three broad levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. Significant fair value measurements resulted from the application of ASC 815 to our convertible promissory note and ASC 718-10 for our share-based payment arrangements. We used level 3 inputs to measure fair value of these instruments.
Non-Controlling Interest
Non-controlling interest represents the equity of the 33.3% non-controlling shareholders of Telisar Corporation. The subsidiary had no operations for all periods presented.
Revenue Recognition
Revenues are recognized when (a) persuasive evidence of an arrangement exists, (b) delivery has occurred and no significant obligations remain, (c) the fee is fixed or determinable and (d) collection is determined to be probable.
Research and Development Costs
For financial reporting purposes, all costs of research and development activities performed internally or on a contract basis are expensed as incurred. For the three months ended March 31, 2013 and 2012, research and development expenses were comprised primarily of technical consulting expenses, travel, materials and operational costs related to the development of the production line.
Share-Based Payments
We account for share-based compensation expense to reflect the fair value of share-based awards measured at the grant date. This expense is recognized over the requisite service period and is adjusted each period for anticipated forfeitures. We estimate the fair value of each share-based award on the date of grant using the Black-Scholes option valuation model. The Black-Scholes option valuation model incorporates assumptions as to stock price volatility, the expected life of options, a risk-free interest rate and dividend yield.
Loss Per Share
We calculate basic loss per share by dividing loss available to common stockholders by the weighted-average number of shares of common stock outstanding, excluding unvested stock. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the potential common shares, including unvested stock, had been issued and if the additional common shares were dilutive.
The following potentially dilutive shares of common stock are excluded from the computation of diluted net loss per share for all periods presented because the effect is anti-dilutive:
|
|
Three months ended
March 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
Warrants
|
|
|
3,706,302
|
|
|
|
1,257,884
|
|
Convertible debt
|
|
|
374,346
|
|
|
|
374,346
|
|
Stock options
|
|
|
601,604
|
|
|
|
591,181
|
|
Unvested stock
|
|
|
168,500
|
|
|
|
4,269
|
|
|
|
|
|
|
|
|
|
|
Total potentially dilutive securities
|
|
|
4,850,752
|
|
|
|
2,227,680
|
|
NOTE 3 - GOING CONCERN MATTERS
The accompanying financial statements have been prepared in conformity with generally accepted accounting principles which contemplate our continuation as a going concern. During the three months ended March 31, 2013 we had no revenues, incurred a net loss of $2.4 million, and had negative cash flows from operations of $0.4 million. In addition, we had an accumulated deficit of $85.8 million at March 31, 2013. These factors raise substantial doubt about our ability to continue as a going concern.
Recovery of our assets is dependent upon future events, the outcome of which is indeterminable. Our attainment of profitable operations is dependent upon our obtaining adequate debt or equity financing, developing products for commercial sale, and achieving a level of sales adequate to support our cost structure. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should we be unable to continue in existence.
Our efforts to raise additional funds will continue during fiscal 2013 to fund our planned operations and research and development activities, through one or more debt or equity financings. Subsequent to March 31, 2013, we raised gross proceeds of $61,000 in a private placement of our common stock and warrants to accredited investors. See Note 10.
NOTE 4 - COMMITMENTS AND CONTINGENCIES
On December 18, 2012 we entered into a 6 month lease for office space in New York, New York. Monthly rental payments are $2,035.
Total rent expense was $6,334 and $8,782 for the three months ended March 31, 2013 and 2012, respectively.
NOTE 5 – CONVERTIBLE DEBENTURES
On June 22, 2011, pursuant to a Securities Purchase Agreement, dated as of June 16, 2011, with several institutional investors, we completed a private placement of our original issue discount convertible debentures (referred to as the convertible debentures), receiving gross proceeds of $3,500,000. Each convertible debenture was issued at a price equal to 85% of its principal amount. The convertible debentures mature two years after the date of their issuance and do not bear regularly scheduled interest. Investors may convert their convertible debentures into shares of our common stock at any time and from time to time on or before the maturity date, at a conversion price of $11.00 per share.
The convertible debentures will mandatorily convert at our option into shares of our common stock at the conversion price, if the closing bid price for the common stock exceeds $30.00 per share for a period of 10 consecutive trading days, provided that such underlying shares have been fully registered for resale with the U.S. Securities and Exchange Commission (SEC).
The convertible debentures are unsecured, general obligations of our company, and rank pari passu with our other unsecured and unsubordinated liabilities. The convertible debentures are not redeemable or subject to voluntary prepayment by us prior to maturity. The convertible debentures are identical for all of the investors except for principal amount.
The investors agreed not to convert their convertible debentures or exercise their warrants, and we will not be permitted to require a mandatory conversion, to the extent such conversion, exercise or issuance would result in beneficial ownership of more than 4.99% of our outstanding shares at such time.
Events of default under the convertible debentures include:
•
|
failure to pay principal or any liquidated damages on any convertible debenture when due;
|
|
|
•
|
failure to perform other covenants under the convertible debentures that is not cured five trading days after notice by holders;
|
|
|
•
|
default under the other financing documents, subject to any grace or cure period provided in the applicable agreement, document or instrument;
|
|
|
•
|
certain events of bankruptcy or insolvency of our company or any significant subsidiary. The lender has waived this event of default with respect to the insolvency of Sendio;
|
|
|
•
|
any default by our company or any subsidiary under any instrument in excess of $150,000 that results in such obligation becoming due and payable prior to maturity;
|
|
|
•
|
we become party to a change of control transaction, or dispose of greater than 50% of our assets; and
|
|
|
•
|
failure to deliver common stock certificates to a holder prior to the tenth trading day after a convertible debenture conversion date.
|
Upon an event of default, the outstanding principal amount of the convertible debentures, plus a default premium, shall become immediately due and payable to the holders of the convertible debentures.
The convertible debentures contain various covenants that limit our ability to:
•
|
incur additional indebtedness, other than permitted indebtedness as defined in the convertible debenture;
|
|
|
•
|
incur specified liens, other than permitted liens as defined in the convertible debenture;
|
|
|
•
|
amend our certificate of incorporation or by-laws in a material adverse manner to the holders; and
|
|
|
•
|
repay or repurchase more than a de minimus number of shares of our common stock.
|
As part of the financing, we also agreed not to undertake a reverse or forward stock split or reclassification of our common stock until the one-year anniversary of the closing date, except with the consent of a majority in interest of the holders or in connection with an up-listing of our common stock onto a trading market other than the OTC Bulletin Board.
We also issued to the investors five-year warrants to purchase up to 187,175 shares of our common stock at an exercise price of $13.00 per share. The warrants may be exercised on a cashless basis at any time after the earlier of (i) one year after the date of their issuance or (ii) the completion of the applicable holding period required by Rule 144 in the event the underlying shares have not been fully registered for resale with the SEC. The warrants are not callable. Neither the warrants nor the convertible debentures contain a provision for anti-dilution adjustments in the event of a subsequent equity financing at a price less than the respective warrant exercise price or convertible debenture conversion price.
Pursuant to a Registration Rights Agreement, dated as of June 16, 2011, with the investors, we agreed to file a shelf registration statement covering the resale of the shares of common stock issuable upon the conversion of the convertible debentures and exercise of the warrants within 30 days after the closing, use our best efforts to cause the shelf registration statement to be declared effective within 90 days after the closing (or 120 days in the event of a “full review” by the SEC), and keep the shelf registration statement effective until the underlying shares have been sold or may be sold without volume or manner of sale restrictions pursuant to Rule 144 under the Securities Act of 1933 and if we are unable to comply with this covenant, we will be required to pay liquidated damages to the investors in the amount of 1.5% of the investors’ purchase price per month during such non-compliance (capped at a maximum of 10% of the purchase price), with such liquidated damages payable in cash. We filed the registration statement on July 15, 2011 and it was declared effective on July 26, 2011. We evaluated any liability under the registration rights agreement at March 31, 2013 and determined no accrual was necessary
.
The carrying value at March 31, 2013 and December 31, 2012 of the convertible debentures is as follows:
|
|
March 31,
2013
|
|
|
December 31,
2012
|
|
Face amount
|
|
$
|
4,117,750
|
|
|
$
|
4,117,750
|
|
Original issue discount
|
|
|
(75,354
|
)
|
|
|
(155,443
|
)
|
|
|
|
4,042,396
|
|
|
|
3,962,307
|
|
Beneficial conversion feature and warrant allocation
|
|
|
(206,320
|
)
|
|
|
(415,811
|
)
|
Carrying value
|
|
$
|
3,836,076
|
|
|
$
|
3,546,496
|
|
The original issue discount of the convertible debentures is being amortized over their two-year life using the effective interest method.
Interest expense related to the convertible debentures is as follows:
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2013
|
|
|
2012
|
|
Amortization of original issue discount
|
|
$
|
80,089
|
|
|
$
|
74,652
|
|
Amortization of beneficial conversion feature and warrant allocation
|
|
|
209,491
|
|
|
|
162,166
|
|
Amortization of loan costs
|
|
|
54,308
|
|
|
|
54,911
|
|
|
|
$
|
343,888
|
|
|
$
|
291,729
|
|
NOTE 6 – CONVERTIBLE BRIDGE LOANS
In October and November 2011, we received $475,000 in gross proceeds from six existing stockholders in an interim convertible bridge loan financing involving the issuance of 12% convertible promissory notes and warrants to purchase common stock. Included in the proceeds was $50,000 received from Mark W. Weber, a member of our board of directors. Under the notes, the loans are due upon the earlier of (a) the closing of financing pursuant to which shares of common stock or other equity securities are issued by us for aggregate consideration of not less than $5,000,000, through the (i) conversion of the note, including accrued interest, or (ii) at the lender’s option, repayment of the note, or (b) in any event, two years after the issuance of the note. The number of shares of common stock issuable upon conversion of the note will be based on a conversion price equal to a 15% discount to the price obtained in any round of equity financing. In the event we fail to repay the promissory notes on or before November 30, 2011, the note’s interest rate will be increased to 15% per annum. We did not repay the promissory notes prior to that date, and the interest rate was increased to 15% per annum. Total interest expense related to the loans for the three months ended March 31, 2013 and 2012 was $7,027 and $15,586, respectively.
In addition to interest on the promissory note, each note holder is entitled to receive a warrant to purchase the number of shares of common stock determined by dividing 115% of the principal amount of the note by the price at which our common stock is sold in any round of equity financing not less than $5,000,000, times 100%. The warrants will be exercisable at any time, commencing 90 days after the closing of the round of financing, and from time to time for a period of three years after the issuance date, at an exercise price of $11.00 per share (subject to appropriate adjustment in the event of any subsequent stock split or similar transaction).
During the three months ended March 31, 2013, three of the convertible bridge loans totaling $368,162 (including accrued interest and loan fees of $68,162) were converted into 368,162 shares of our restricted common stock, three year warrants to purchase 368,162 shares of our common stock at an exercise price of $1.50 per share and three year warrants to purchase 98,571 shares of our common stock at an exercise price of $11.00 per share. The fair value of the common stock was $662,690 based on the market prices of our common stock on the date of conversion of $1.80 per share. The fair value of the three year warrants to purchase 368,162 shares of our common stock at an exercise price of $1.50 per share was $633,121 and fair value of the three year warrants to purchase 98,571 shares of our common stock at an exercise price of $11.00 per share was $158,094. We recognized a loss on debt conversion for the three months ended March 31, 2013 in the amount of $1,085,744.
The fair value of the warrants issued upon the conversion was computed using the Black Scholes Option Pricing model using the following assumptions – expected life – 3 years, risk free interest rate – 0.82%, volatility – 227.1%, and an expected dividend rate of 0%.
NOTE 7 – LOAN PAYABLE
On December 20, 2012, we received gross proceeds of $100,000 pursuant to the terms of a Loan Agreement dated December 20, 2012. The loan is secured by a Deed of Assignment for certain inventory and all proceeds from the sale of the inventory. The loan is payable on June 23, 2013, six months from the date of the agreement. We prepaid interest of $25,000 for the term of the loan and $15,000 for loan costs, which are being amortized over the life of the note. We recognized $12,162 and $0 of interest expense and $7,297 and $0 for loan cost amortization within interest expense for the three months ended March 31, 2013 and 2012, respectively.
Total principal payments for future years for the Convertible Debentures described in Note 5 and the Loan Payable are as follows as of March 31, 2013:
|
|
March 31,
2013
|
|
2013
|
|
|
4,217,750
|
|
|
|
$
|
4,217,750
|
|
NOTE 8 – STOCKHOLDERS’ EQUITY
Preferred Stock
Our Amended and Restated Articles of Incorporation allow us to issue up to 10,000,000 shares of preferred stock without further stockholder approval and upon such terms and conditions, and having such rights, preferences, privileges, and restrictions as the Board of Directors may determine. No preferred shares are currently issued and outstanding.
Common Stock
2012 Unit Offering Amendment
During 2012, we issued a total of 474,632 shares of our restricted common stock and three-year warrants to purchase 474,632 shares of our common stock at an exercise price of $2.00 per share pursuant to a private placement to accredited investors at a price of $3.50 per unit. Each unit was comprised of one share of common stock and one warrant. On January 25, 2013 we amended the terms of the private placement, reducing the purchase price of the unit to $1.00 and reducing the exercise price of the warrant to $1.50 per share. As a result of the amendment, the Company issued an additional 1,186,567 shares of common stock to those investors and increased the number of shares reserved for issuance upon the exercise of the warrants by 1,186,567. The issuance of the shares under the amendment was considered non-compensatory, therefore, there was no effect on the results of operations. The effect of the issuance was a reallocation of the original gross proceeds among additional paid-in capital accounts attributable to the shares and warrants, based on the relative fair values of the instruments delivered in total, including those issued under the amended terms. As a result of this reduction in price and change in the number of issued shares, the allocation of the net proceeds of $1,425,768 would have resulted in $587,989 being allocated to the warrants and the balance of the proceeds of $837,779 would have been allocated to the common stock.
2013 Unit Offering
On January 25, 2013 we completed a private placement to accredited investors of 105,000 restricted shares of our common stock, at a purchase price of $1.00 per share, for gross proceeds of $105,000. As part of the private placement, the investors were issued three-year warrants to purchase 105,000 shares of our common stock, at an exercise price of $1.50 per share.
The net proceeds were allocated based on the relative fair values of the common stock and the warrants on the dates of issuance. The allocated fair value of the warrants was $52,363 and the balance of the proceeds of $52,637 was allocated to the common stock.
The fair value of the warrants issued in our unit private placement was calculated using the Black-Scholes option valuation model with the following assumptions – expected life – 3 years, risk free interest rate – 0.42%, volatility – 346.4%, and an expected dividend rate of 0%.
Issuances of common stock
During the three months ended March 31, 2013 we issued 105,000 shares of common stock in our unit offering described above and 368,162 shares of common stock upon the conversion of three of the convertible bridge loans as described in Note 6.
From January 1 to March 31, 2013 we issued 20,479 shares of common stock with a fair value of $37,500 to SAM Advisors, LLC. The issuances were based on the closing market prices as of the date of issuance pursuant to our agreement to convert their $12,500 monthly consulting fee to stock at the closing market price on the last business day of each month. SAM Advisors, Inc. is an entity controlled by William B. Smith, our chairman and chief executive officer.
From January 1 to March 31, 2013 we issued 6,143 shares of common stock with a fair value of $11,250 to Charles Hunt, a member of our board of directors. The issuances were based in the closing market prices as of the date of issuance pursuant to our agreement to convert $3,750 of his monthly consulting fee to stock at the closing market price on the last business day of each month.
Stock and Stock Options issued and exercised pursuant to the 2007 Stock Incentive Plan
Stock issuances
On February 20, 2013 we issued 80,000 shares of restricted stock from the 2007 Stock Incentive Plan to two board members and an officer for services. The shares had a fair value of $128,800 based on the closing market price of our common stock on that date of $1.61 per share.
We recognized a total of $264,342 and $26,107 of compensation expense as general and administrative expenses for the three months ended March 31, 2013 and 2012, respectively.
At March 31, 2013 there are 168,500 shares of unvested restricted stock representing $102,822 of unrecognized compensation expense which we anticipate
will be recognized through December 31, 2013.
Stock Option issuances
On February 20, 2013 we issued ten-year, fully vested options to purchase 42,600 shares of common stock from the 2007 Stock Incentive Plan at an exercise price of $1.61 per share to two board members and an officer for services. The fair value of the options granted of $68,741 was calculated using the Black-Scholes option valuation model with the following assumptions – expected life – 10 years, risk free interest rate – 2.02%, volatility – 246.2%, and an expected dividend rate of 0%.
On March 11, 2013 we issued five-year options to purchase 250,000 shares of common stock at an exercise price of $1.70 per share to William B. Smith, our Chairman and Chief Executive Officer. A total of 83,334 options vested immediately, with an additional 83,333 shares vesting on the six month and twelve month anniversary of the options. In addition, certain performance based criteria provide for the potential acceleration of the vesting schedule. The fair value of the options granted of $410,540 was calculated using the Black-Scholes option valuation model with the following assumptions – expected life – 5 years, risk free interest rate – 0.9%, volatility – 188.8%, and an expected dividend rate of 0%.
We recognized compensation expense of $230,065 and $79,147 related to the vested portion of stock options based on their estimated grant date fair value as marketing expense, research and development expense or general and administrative expense based on the specific recipient of the award for the three months ended March 31, 2013 and 2012, respectively.
At March 31, 2013, we have unrecognized compensation expense related to stock options of $262,584, of which we anticipate $230,073 will be recognized through December 31, 2013 and $32,511 will be recognized in 2014.
Warrants
As a result of the amendment of our 2012 Unit Offering as described above, the Company issued warrants to purchase an additional 1,186,567 shares of common stock at an exercise price of $1.50 per share to the investors in the offering.
During the three months ended March 31, 2013 we issued three year warrants to purchase 105,000 shares of common stock at an exercise price of $1.50 per share in our unit offering described above.
Also during the three months ended March 31, 2013 we issued 368,162 shares of our common stock, three year warrants to purchase 368,162 shares of our common stock at an exercise price of $1.50 per share and three year warrants to purchase 98,571 shares of our common stock at an exercise price of $11.00 per share to three investors upon the conversion of convertible bridge notes as described in Note 6.
During the three months ended March 31, 2013 warrants to purchase a total of 66,117 shares of common stock with a weighted average exercise price of $16.52 expired unexercised.
A summary of our outstanding warrants at March 31, 2013 is as follows:
|
|
|
|
|
|
Weighted-Average
|
|
|
|
|
Exercise
|
|
|
Warrants
|
|
|
Remaining Contractual
|
|
|
Number
|
|
Price
|
|
|
Outstanding
|
|
|
Life (Years)
|
|
|
Exercisable
|
|
$
|
1.50
|
|
|
|
2,909,360
|
|
|
|
2.4
|
|
|
|
2,909,360
|
|
$
|
7.60
|
|
|
|
3,750
|
|
|
|
0.1
|
|
|
|
3,750
|
|
$
|
9.00
|
|
|
|
262,750
|
|
|
|
2.9
|
|
|
|
262,750
|
|
$
|
11.00
|
|
|
|
156,071
|
|
|
|
2.6
|
|
|
|
156,071
|
|
$
|
13.00
|
|
|
|
213,380
|
|
|
|
3.2
|
|
|
|
213,380
|
|
$
|
15.00
|
|
|
|
160,991
|
|
|
|
0.3
|
|
|
|
160,991
|
|
|
|
|
|
|
3,706,302
|
|
|
|
2.5
|
|
|
|
3,706,302
|
|
NOTE 9 – RELATED PARTY TRANSACTIONS
From January 1 to March 31, 2013 we issued 20,479 shares of common stock with a fair value of $37,500 to SAM Advisors, LLC. The issuances were based on the closing market prices as of the date of issuance pursuant to our agreement to convert their $12,500 monthly consulting fee to stock at the closing market price on the last business day of each month. SAM Advisors, Inc. is an entity controlled by William B. Smith, our chairman and chief executive officer.
From January 1 to March 31, 2013 we issued 6,143 shares of common stock with a fair value of $11,250 to Charles Hunt, a member of our board of directors. The issuances were based in the closing market prices as of the date of issuance pursuant to our agreement to convert $3,750 of his monthly consulting fee to stock at the closing market price on the last business day of each month.
NOTE 10 – SUBSEQUENT EVENTS
Subsequent to March 31, 2013 we issued 40,667 shares of common stock and warrants to purchase 40,667 shares of common stock at an exercise price of $2.00 per share and received gross proceeds of $61,000 from two accredited investors. Included in this amount is $10,000 received from a member of our board of directors.