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NOTE 4. EQUITY
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Mar. 31, 2014
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| Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders' Equity Note Disclosure [Text Block] |
NOTE 4. EQUITY
Preferred Stock – 1,000,000 shares authorized, none issued or outstanding.
In the first quarter of 2014, the Company sold 1,516,697 shares to private investors as part of the private placement detailed in the 8-K filed on February 14, 2014. The shares were all purchased at a price of $0.30 per share and include warrants to purchase additional shares (one-for-one) at $0.75 per share any time before August 5, 2019. The purchasers included David Baker, who joined our Board of Directors after the end of the reporting period on May 8, 2014. The Company evaluated the warrants for derivative accounting consideration under ASC Topic
815-40, Derivatives and Hedging – Contracts in Entity’s own stock. We concluded that the warrants meet the criteria for classification in stockholders' equity. Therefore, derivative accounting is not applicable for the warrants.
75,000 shares related to stock compensation for employees and directors vested during the first quarter of 2014. Stock based compensation expense relating to these shares was $19,973 and $0 for the quarters ended March 31, 2014 and 2013, respectively.
As of March 31, 2014, we had $192,107 of total unrecognized compensation expense associated with restricted shares granted to employees. Of that amount, $30,107 (150,000 unvested shares) will be recognized over a five month period.
The remainder is subject to performance conditions and is not currently being amortized. As of March 31, 2014, there were 600,000 unvested shares subject to performance conditions. All of the aforementioned shares had a grant-date fair value, as determined by closing stock prices on August 5, 2013, of $0.27 per share.
As reported on Form 8-K filed January 31, 2014, on January 27, 2014, 800,000 shares were granted to David Baker in the first quarter of 2014 as consideration for his services as a consultant. The consulting agreement can be found in the 8-K filed on January 27, 2014. The shares granted to David Baker resulted in $380,000 of general and administrative expense in the first quarter of 2014.
Summary information regarding common stock warrants issued and outstanding as of March 31, 2014, is as follows:
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