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NOTE 12 - COMMON STOCK PURCHASE WARRANTS AND OPTIONS
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Mar. 31, 2015
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| NOTE 12 - COMMON STOCK PURCHASE WARRANTS AND OPTIONS |
NOTE 12 – COMMON STOCK PURCHASE WARRANTS AND OPTIONS
Warrants
Following is a summary of activity for warrants to purchase common stock for the three months ending March 31, 2015.
On March 31, 2015, the Board of Directors approved the exchange of warrants to purchase 196,170 shares of the Company’s common stock for 127,366 shares of common stock. The Company developed a formula for the exchange which was based on the time value remaining and ascribed a value even though at the time of the approval, all of the warrants were “out of the money”. This formula was applied equitably across all warrant holders with a percentage conversion to calculate the number of shares to be exchanged for the warrants that were cancelled. The Company also applied a 40% floor to the exchange ratio. As of the date of this report, the Company had received agreements from six of the warrant holders who agreed to exchange 113,295 warrants for 82,966 shares. (See Note 11).The Company has verbal commitments from the remaining warrant holders and will execute the balance of the exchange within the following quarter. The Company revalued the warrants just prior to and after the modification and applied ASC 718 for the recognition of any incremental expense for which none existed.
Options
Following is a summary of stock option activity for the three months ending March 31, 2015.
On March 31, 2015, the Board of Directors approved the exchange of options to purchase 20,750 shares of the Company’s common stock for 14,750 shares of common stock. (See Note 11) The Company originally granted options as compensation for Officers and Directors in lieu of stock in all cases except one, the Board elected to exchange options on a 1 for 1 basis to comply with a covenant in the Duos merger agreement that no options will survive the merger. This was applied uniformly with two exceptions; one was related to a consultant that was terminated early from a contract and where only a portion of the options granted were converted into stock (40% as per similar treatment for the warrant exchange described above) and the other was the cancellation in entirety of an option grant for a former officer who did not vest in the option grant by remaining employed with the Company.
The Company revalued the warrants just prior to and after the modification and applied ASC 718 for the recognition of any incremental expense for which none existed.
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