Employee Options

On December 13, 2012, the Company ratified, confirmed and approved the granting of 2012 stock options in aggregate of 9,000,000 to Jorge Andrade, Neil Muller and Lourdes Felix, officers and directors of the Company under the Company’s 2012 Stock Option Plan. The issued options are exercisable immediately at $0.015 per share for five years.

On September 13, 2013, the Company ratified, confirmed and approved the granting of 2013 stock options in aggregate of 6,000,000 to Kent Emry, newly appointed CEO of the Company under the Company’s 2013 Stock Option Plan. The issued options are exercisable 50% immediately and 50% December 13, 2013 at $0.015 per share for five years.

On October 16, 2013, the Company ratified, confirmed and approved the granting of 2013 stock options in aggregate of 3,000,000 to Brady Granier, newly appointed COO of the Company under the Company’s 2013 Stock Option Plan. The issued options are exercisable immediately at $0.015 per share for five years.

The following table summarizes the changes in employee options outstanding and the related prices for the shares of the Company’s common stock issued to employees of the Company under the 2012 Stock Option Plan:

The intrinsic value of the vested employee stock options as of December 31, 2013 was $945,000 based on the Company’s stock price of $0.12 per share at December 31, 2013.

Transactions involving stock options issued to employees are summarized as follows:

The intrinsic value of the exercised employee stock options was $693,000 based on the Company’s stock price of $0.092 per share at the exercise date.

As described above, On November 29, 2012, the Company granted an aggregate of 9,000,000 options to purchase the Company’s common stock at an exercise price of $0.015 per share for five years to officers and directors with immediate vesting. The fair value of options was determined using the Black Scholes Option Pricing Model with the following assumptions: dividend yield $-0-, volatility of 261.40% and risk free rate of 0.63%.

As described above, on September 13, 2013, the Company granted 6,000,000 options to purchase the Company’s common stock at an exercise price of $0.015 per share for five years to the CEO with 50% immediate vesting and 50% on December 13, 2013. The fair value of options was determined using the Black Scholes Option Pricing Model with the following assumptions: dividend yield $-0-, volatility of 240.38% and risk free rate of 1.39%.

As described above, on October 16, 2013, the Company granted 3,000,000 options to purchase the Company’s common stock at an exercise price of $0.015 per share for five years to the COO with immediate vesting on October 16, 2013. The fair value of options was determined using the Black Scholes Option Pricing Model with the following assumptions: dividend yield $-0-, volatility of 239.10% and risk free rate of 1.45%.

The Company recorded $307,281 and $107,588 as employee stock compensation expense for the years ended December 31, 2013 and 2012, respectively. 

Non-employee options

In October, 2013, the Company ratified, confirmed and approved the granting of 2013 stock options in aggregate of 250,000 to the Company’s advisory board representing five individuals under the Company’s 2012 Stock Option Plan. The issued options are exercisable 52% immediately and remainder at 10,000 per month (12 months) at $0.015 per share for five years.

On December 4, 2013, the Company ratified, confirmed and approved the granting of 2013 stock options in aggregate of 2,500,000 to consultant organizations of the Company under the Company’s 2013 Stock Option Plan. The issued options are exercisable immediately at $0.015 per share for five years.

The following table summarizes the changes in non-employee options outstanding and the related prices for the shares of the Company’s common stock issued to employees of the Company under the 2012 Stock Option Plan:

The intrinsic value of the vested non- employee stock options as of December 31, 2013 was $278,250 based on the Company’s stock price of $0.12 per share at December 31, 2013.

Transactions involving stock options issued to employees are summarized as follows:

In October 2013, the Company granted an aggregate of 250,000 options to purchase the Company’s common stock at an exercise price of $0.015 per share for five years to the Company’s advisory board with 52% immediately and remainder at 10,000 per month (12 months) for five years. The fair value of vesting options was determined using the Black Scholes Option Pricing Model with the following assumptions: dividend yield $-0-, volatility of 234.07% to 240.11% and risk free rate of 1.30% to 1.75%.

As described above, on December 4, 2013, the Company ratified, confirmed and approved the granting of 2012 stock options in aggregate of 2,500,000 to consultant organizations of the Company under the Company’s 2012 Stock Option Plan. The issued options are exercisable immediately at $0.015 per share for five years. The fair value of vesting options was determined using the Black Scholes Option Pricing Model with the following assumptions: dividend yield $-0-, volatility of 237.24% and risk free rate of 1.45%.

The Company recorded $232,357 and $-0- as non-employee stock compensation expense for the years ended December 31, 2013 and 2012, respectively. 

Warrants:

The following table summarizes the changes in warrants outstanding and the related prices for the shares of the Company’s common stock:

Transactions involving warrants are summarized as follows:

As described in Note 8, above, the Company issued detachable warrants granting the holder the right to acquire an aggregate of 2,430,000 shares of the Company’s common stock at an initial exercise price of $1.00 per share for five years. The warrant contains exercise price adjustments in the event the Company issues additional shares of its common stock or securities convertible into the Company’s common stock at a price per share less than the exercise price in effect or without consideration, then the exercise price upon each issuance shall be adjusted to the price equal to the consideration per share paid for such additional shares of the Company’s common stock.