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 former 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.
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, 2013 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 June 30, 2014 are not necessarily indicative of results for future quarters or periods in the fiscal year ending December 31, 2014.
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 June 30, 2014 and December 31, 2013 we had no cash in excess of federal insurance limits.
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.
Equipment
Equipment is comprised of equipment used in the testing and development of the manufacturing process for 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.
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.
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 2010 to 2013 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.
Fair Value of Financial Instruments
Financial instruments consist of loans payable and convertible debentures. The fair value of our loans payable are carried at historical cost; their respective estimated fair values approximate their carrying values due to the short term nature of these items. We use level 3 inputs under the fair value hierarchy to estimate the fair value of these instruments. It is not practical to determine the fair value of our convertible debentures due to the unique terms and embedded financial instruments.
Derivative financial instruments, as defined in ASC 815 “
Accounting for Derivative Financial Instruments and Hedging Activities”
consist of financial instruments or other contracts that contain a notional amount and one or more underlying (e.g., interest rate, security price or other variable), require no initial net investment and permit net settlement. Derivative financial instruments may be free-standing or embedded in other financial instruments. We generally do not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks.
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 warrant financing arrangements and ASC 718-10 for our share-based payment arrangements.
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 and six months ended June 30, 2014 and 2013, 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 June 30,
|
|
|
Six Months Ended June 30,
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
|
|
|
5,377,228
|
|
|
|
4,187,052
|
|
|
|
5,377,228
|
|
|
|
4,187,052
|
|
Convertible debt
|
|
|
1,368,805
|
|
|
|
1,152,223
|
|
|
|
1,368,805
|
|
|
|
1,152,223
|
|
Stock options
|
|
|
484,936
|
|
|
|
626,870
|
|
|
|
484,936
|
|
|
|
626,870
|
|
Unvested stock
|
|
|
-
|
|
|
|
39,231
|
|
|
|
-
|
|
|
|
39,231
|
|
Total potentially dilutive securities
|
|
|
7,230,969
|
|
|
|
6,005,376
|
|
|
|
7,230,969
|
|
|
|
6,005,376
|
|
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 six months ended June 30, 2014 we had no revenues, incurred a net loss of $1.65 million, and had negative cash flows from operations of $0.62 million. In addition, we had an accumulated deficit of $90.08 million at June 30, 2014. In addition, we are in default on approximately $1.45 million of our convertible debt and notes payable plus related accrued interest. 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 2014 to fund our planned operations and research and development activities, through one or more debt or equity financings. Subsequent to June 30, 2014, we raised gross proceeds of $135,000 in a private placement of our common stock and warrants to accredited investors. See Note 8.
NOTE 4 - COMMITMENTS AND CONTINGENCIES
On June 11, 2014, four holders of our Convertible Debentures totaling $705,900 in principal plus accrued interest of $198,696 as of June 30, 2014 filed a motion seeking summary judgment with the Supreme Court of the State of New York. The case was heard on July 31, 2014 and the court granted their request and issued a judgment in their favor for the full amount of principal and interest, plus certain expenses. We are working with their attorney to attempt to find a settlement agreeable to both parties.
Judgment Payable
On April 10, 2014 we received notice from one of the holders of our Convertible Debentures regarding a judgment they obtained on March 6, 2014 in the amount of $132,876, including principal of $117,500, accrued interest of $14,619 and costs of $605 as of that date. The judgment bore interest at a 9% rate until paid in full and is secured by the assets of the Company. On May 12, 2014 the judgment was paid in full.
Lease Agreement
On January 28, 2014 we entered into a lease agreement for approximately 4,600 square feet of office and light industrial space located in Berkeley, California in the United States. We utilize the facility for our research and development activities and as our corporate headquarters.
The lease term is for two years effective from February 1, 2014 and terminates on January 31, 2016. Our lease obligations are $30,000, $60,000 and $5,000 for the years ended December 31, 2014, 2015 and 2016, respectively.
The Company is also responsible for certain insurance, utilities, maintenance and other costs as described in the lease.
Liabilities of Sendio
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 June 30, 2014 and December 31, 2013 under the caption “Liabilities of Sendio.”
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 matured on June 22, 2013, two years after the date of their issuance and did 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 were 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 June 30, 2014 and determined no accrual was necessary.
Effective June 22, 2013, we entered into a letter agreement with holders of $2,553,000 in principal amount of the Debentures. The maturity date of these Debentures was extended to June 23, 2014 and the conversion price was reduced from $11.00 to $2.50 per share. In addition, these Debentures will bear interest at an annual rate of 10% per annum, payable in equal installments on the six month and one year anniversary of the letter agreement. On June 23, 2014 we did not make the required payment of principal payment to the holders of these amended Debentures. As a result, an additional principal amount of $200,000 plus accrued interest is in default as of that date.
On June 20, 2014, we entered into a letter agreement with a Debenture holder of the original principal sum of $2,353,000. Pursuant to the letter agreement, the Company and the holder agreed to extend the maturity date of the Debenture to June 22, 2015 and reduce the conversion price under the Debenture to $2.00 per share from the current $2.50 per share. Additionally, we issued 125,160 shares of our common stock to the holder in payment of accrued, unpaid interest of $117,650 under the Debenture for the period from December 23, 2013 to June 22, 2014, which shares were valued at the closing price of $0.94 per share on the date of the agreement.
On June 22, 2013, we did not make the required payment on the remaining principal amount of the Debentures of described above, which constituted an event of default under the terms of the remaining original Debentures. The Company is also liable for all other amounts, costs, expenses and liquidated damages due in respect of those Debentures. Additionally, the remaining original Debentures will bear default interest at a rate of 18% per annum. As a result of the Debentures being past due, the investors may at any time exercise their remedies under the terms of the Debentures. On June 11, 2014, four holders of our Convertible Debentures totaling $705,900 in principal plus accrued interest of $198,696 as of June 30, 2014 filed a motion seeking summary judgment with the Supreme Court of the State of New York as discussed in Note 4.
The carrying value at June 30, 2014 and December 31, 2013 of the convertible debentures is as follows:
|
|
June 30,
2014
|
|
|
December 31,
2013
|
|
|
|
|
|
|
|
|
Debentures Due June 22, 2013, in default at June 30, 2014, interest at 18%
|
|
$
|
1,435,325
|
|
|
$
|
1,352,975
|
|
Debentures Due June 23, 2015, interest at 10%
|
|
|
2,353,000
|
|
|
|
2,553,000
|
|
Carrying value
|
|
$
|
3,788,325
|
|
|
$
|
3,905,975
|
|
Interest expense related to the convertible debentures is as follows:
|
|
Three Months Ended June 30,
|
|
|
Six Months Ended June 30,
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of original issue discount
|
|
$
|
-
|
|
|
$
|
75,354
|
|
|
$
|
-
|
|
|
$
|
155,443
|
|
Amortization of beneficial conversion feature and warrant allocation
|
|
|
-
|
|
|
|
206,320
|
|
|
|
-
|
|
|
|
415,811
|
|
Amortization of loan costs
|
|
|
-
|
|
|
|
54,308
|
|
|
|
-
|
|
|
|
104,392
|
|
Penalty interest
|
|
|
|
|
|
|
144,121
|
|
|
|
|
|
|
|
144,121
|
|
Stated interest payable in cash
|
|
|
107,574
|
|
|
|
11,282
|
|
|
|
231,449
|
|
|
|
11,282
|
|
|
|
$
|
107,574
|
|
|
$
|
491,385
|
|
|
$
|
231,449
|
|
|
$
|
831,049
|
|
NOTE 6 – LOANS PAYABLE
Loans 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 future inventory and proceeds from the sale of that inventory as described in the deed of assignment. The loan was payable on June 23, 2013, six months from the date of the agreement. We recognized $54,300 and $23,514 of interest expense and $0 and $14,108 for loan cost amortization within interest expense for the six months ended June 30, 2014 and 2013, respectively.
On June 23, 2013 we did not repay the loan and it is in default. As a result of the default, the interest rate on the loan is 109.5% per annum from the date of default.
Total principal payments for future years for the Convertible Debentures described in Note 5 and the Loans Payable are as follows as of June 30, 2014:
|
|
June 30,
2014
|
|
|
|
|
|
|
2014
|
|
|
3,888,325
|
|
|
|
$
|
3,888,325
|
|
On May 9, 2014 we issued an unsecured Convertible Promissory Note for cash to an accredited investor in the amount of $132,876. The note bears interest at an annual rate of 7% per year, payable on the six month and one year anniversary of the note. The interest is payable at the option of the Company in either cash or shares of common stock at the market price on the interest payment dates as defined in the note. The note is convertible at any time at the option of the holder at a rate of $0.50 per share into 265,751 shares of our common stock. We evaluated the Note and determined it had a beneficial conversion feature due to the conversion price being lower than the market price of our common stock of $0.86 per share on the date of issuance. Accordingly, we recognized a discount related to the beneficial conversion feature associated with the Note in the amount of $95,671.
On June 30, 2014 the holder of the note converted the principal amount by its terms into 265,751 shares of common stock. In addition, the Company issued 1,440 shares of common stock related to the accrued interest of $1,325 based on the market price on the date of conversion of $0.92 per share.
We recognized interest expense, comprised of $1,325 related to the stated interest rate of the note and $95,671 related to the beneficial conversion feature for the three and six months ended June 30, 2014.
The proceeds from the Convertible Promissory Note discussed above were used to pay the judgment payable in full as discussed in Note 4.
NOTE 7 – 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
2014 Unit Offerings
During the six months ended June 30, 2014 we received gross proceeds of $605,000 from accredited investors at a price of $1.00 per unit and issued 605,000 shares of common stock and two-year warrants to purchase 605,000 shares of common stock at an exercise price of $1.25 per share.
The net proceeds of $605,000 were allocated based on the relative fair values of the common stock and the warrants on the dates of issuance. The amount allocated to the fair value of the warrants was $160,983 and the balance of the proceeds of $444,017 was allocated to the common stock. The fair value of the warrants issued was computed using the Black Scholes Option Pricing model using the following assumptions – expected life – 2 years, risk free interest rate – 0.31% to 0.47%, volatility – 79.0% to 97.4%, and an expected dividend rate of 0%.
Issuances of common stock
On June 30, 2014 we issued 267,191 shares to an accredited investor upon the conversion of a Convertible Promissory Note as discussed in Note 6.
On June 22, 2014 we issued 125,160 shares of the Company's common stock to the holder in payment of accrued, unpaid interest under the Debenture for the period from December 23, 2013 to June 22, 2014.
During the six months ended June 30, 2014 we issued 605,000 shares of common stock in our unit offerings described above.
Stock and Stock Options issued and exercised pursuant to the 2007 Stock Incentive Plan
On August 26, 2013
the board of directors increased the number of shares authorized for issuance under the 2007 Stock Incentive Plan (the “Plan”) by 1,500,000 shares to a total of 2,500,000 shares. The increase in shares is subject to shareholder approval of the amendment to the Plan.
Stock issuances
There were no issuances of stock from the Plan for the six months ended June 30, 2014.
We recognized a total of $207,587 and $362,315 of compensation expense related to restricted stock issuances as general and administrative and research and development expenses for the six months ended June 30, 2014 and 2013, respectively.
At June 30, 2014 there is no unrecognized compensation expense related to stock issued from the Plan
.
Stock Option issuances
On February 11, 2014 we issued a five-year option to purchase 13,158 shares of common stock from the Plan at an exercise price of $1.14 per share to a consultant for services. The fair value of the option granted of $9,558 was calculated using the Black-Scholes option valuation model with the following assumptions – expected life – 5 years, risk free interest rate – 1.54%, volatility – 79.0%, and an expected dividend rate of 0%.
On May 13, 2014 we issued options to purchase 29,412 shares of common stock at an exercise price of $0.85 per share based on the closing market price of our common stock as of that date to a consultant for services. The fair value of the option granted of $16,489 was calculated using the Black-Scholes option valuation model with the following assumptions – expected life – 5 years, risk free interest rate – 1.62%, volatility – 82.8%, and an expected dividend rate of 0%.
We recognized compensation expense of $37,966 and $334,632 related to the vested portion of stock options based on their estimated grant date fair value as research and development expense or general and administrative expense based on the specific recipient of the award for the six months ended June 30, 2014 and 2013, respectively.
At June 30, 2014, we have unrecognized compensation expense related to stock options of $14,905, of which we anticipate $13,024 will be recognized through December 31, 2014 and $1,881 will be recognized in 2015.
During the six months ended June 30, 2014, options to purchase 152,722 shares of common stock at a weighted average exercise price of $10.42 per share expired unexercised.
Warrants
During the six months ended June 30, 2014 we issued two-year warrants to purchase 605,000 shares of common stock at an exercise price of $1.25 per share in our unit offering described above.
A summary of our outstanding warrants at June 30, 2014 is as follows:
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|
|
|
|
|
Weighted-Average
|
|
|
|
|
Exercise
|
|
|
Warrants
|
|
|
Remaining Contractual
|
|
|
Number
|
|
Price
|
|
|
Outstanding
|
|
|
Life (Years)
|
|
|
Exercisable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1.25
|
|
|
|
1,255,000
|
|
|
|
1.8
|
|
|
|
1,255,000
|
|
$
|
1.50
|
|
|
|
2,909,360
|
|
|
|
1.4
|
|
|
|
2,909,360
|
|
$
|
2.00
|
|
|
|
580,667
|
|
|
|
2.2
|
|
|
|
580,667
|
|
$
|
9.00
|
|
|
|
262,750
|
|
|
|
1.9
|
|
|
|
262,750
|
|
$
|
11.00
|
|
|
|
156,071
|
|
|
|
1.6
|
|
|
|
156,071
|
|
$
|
13.00
|
|
|
|
213,380
|
|
|
|
2.2
|
|
|
|
213,380
|
|
|
|
|
|
|
5,377,228
|
|
|
|
1.6
|
|
|
|
5,377,228
|
|
NOTE 8 – SUBSEQUENT EVENTS
From July 1 to July 10, 2014 we received gross proceeds of $75,000 from accredited investors at a price of $1.00 per unit and issued 75,000 shares of common stock and two-year warrants to purchase 75,000 shares of common stock at an exercise price of $1.25 per share.
From August 4 through August 8, 2014, we received gross proceeds of $60,000 from accredited investors at a price of $0.50 per unit and issued 120,000 shares of common stock and two-year warrants to purchase 120,000 shares of common stock at an exercise price of $0.75 per share.
In July, 2014 the board of directors approved the issuance of up to 149,999 three-year options to purchase common stock to four of our engineering consultants. The options will vest immediately, and will be issued at the market price on the date of completion of certain objectives.