Quarterly report pursuant to Section 13 or 15(d)

NOTE 8 - EQUITY

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NOTE 8 - EQUITY
9 Months Ended
Sep. 30, 2015
Disclosure Text Block Supplement [Abstract]  
Shareholders' Equity and Share-based Payments [Text Block]
NOTE 8 – EQUITY

Equity

On March 10, 2015, March 23, 2015 and March 24, 2015, the Company entered into subscription agreements (the “Subscription Agreements”) with certain investors (the “Investors”) providing for the issuance and sale by the Company (the “Offering”) of an aggregate of 363,490 shares (the “Shares”) of Common Stock and warrants (the “Investor Warrants”) to purchase an aggregate of 181,745 shares of Common Stock (the “Warrant Shares”). Each Warrant to purchase one share of Common Stock was sold at a price of $0.01 and has an exercise price of $5.30 per share. The gross proceeds raised was $1,543,015 less expenses relating to the offering of $730,992, resulting in net proceeds to the Company of $812,023.

On March 29, 2015, Mr. Meller returned his one share of Series B Preferred Stock (the “Series B Preferred”) to the Company and with the approval of the majority of the Company’s stockholders and the Board of Directors the Series B Preferred Stock was canceled in its entirety.

On April 29, 2015 the Board approved entering into a consulting agreement with Christopher IR for investor relation services.  In addition to cash payments for services, the Company issued 15,000 shares of Common Stock at $2.42 per share or $36,300.

On July 6, 2015 the Company in relation to the acquisition of certain assets of PTI had issued 64,484 shares of Common Stock at $4.032 per share for a value of $260,000. The stock price was based on the average close price of SSNT stock for the five trading days immediately preceding the closing date.

Options

In February 2014, the Company granted 50,000 incentive stock options with an exercise price of $4.50 per option to certain non-executive employees under the 2004 Stock Incentive Plan. Approximately 25,000 of the options vest immediately with the remaining 50% vesting ratably over a three-year period. The Company estimated the fair value of each option using the Black Scholes option-pricing model with the following weighted-average assumptions: expected dividend yield of 0.0%, risk-free interest rate of 0.71%, volatility at 353.95% and an expected life of 5 years. The Company estimates the forfeiture rate based on historical data. Based on an analysis of historical information, the Company has applied a forfeiture rate of 15%. As a result, the Company estimated the value of these options at $115,488.

In May 2014, the Company granted 20,000 incentive stock options with an exercise price of $4.50 per option to a non – executive employee under the 2004 Stock Incentive Plan. The Company recognizes compensation cost on awards on a straight-line basis over the vesting period, approximately five years. The Company estimated the fair value of each option using the Black Scholes option-pricing model with the following weighted-average assumptions: expected dividend yield of 0.0%, risk-free interest rate of 1.68%, volatility at 328.76% and an expected life of 5 years. The Company estimates the forfeiture rate based on historical data. Based on an analysis of historical information, the Company has applied a forfeiture rate of 15%. As a result, the Company estimated the value of these options at $77,981. 

In July 2014, the Company granted 10,000 incentive stock options with an exercise price of $4.50 per option to a certain non-executive employee under the 2004 Stock Incentive Plan. Options vest immediately. The Company estimated the fair value of each option using the Black Scholes option-pricing model with the following weighted-average assumptions: expected dividend yield of 0.0%, risk-free interest rate of 1.0%, volatility at 323.81% and an expected life of 5 years. As a result, the Company estimated the value of these options at $44,987.

In March 2015, the Company granted 10,000 incentive stock options with an exercise price of $4.00 per option to a certain non-executive employee under the 2004 Stock Incentive Plan. The Company recognizes compensation cost on awards on a straight-line basis over the vesting period, approximately five years. The Company estimated the fair value of each option using the Black Scholes option-pricing model with the following weighted-average assumptions: expected dividend yield of 0.0%, risk-free interest rate of 1.6%, volatility at 263.18% and an expected life of 5 years. As a result, the Company estimated the value of these options at $39,875.

The Company uses judgment in estimating the amount of stock-based awards that are expected to be forfeited. If actual forfeitures differ significantly from the original estimate, stock-based compensation expense and the results of operations could be impacted.

A summary of the status of the Company’s stock option plans for the fiscal years ended December 31, 2014 and the nine months ending September 30, 2015 and changes during the years are presented below: (in number of options):

   
Number
of Options
   
Average
Exercise Price
 
Average Remaining
Contractual Term
 
Aggregate
Intrinsic Value
 
                     
Outstanding options at January 1, 2014
   
89,116
   
$
4.80
 
3.4 years
 
$
-0-
 
Options granted
   
80,000
     
4.50
 
4.3 years
       
Options canceled/forfeited
   
(5,270
)
 
$
4.80
           
                           
Outstanding options at December 31, 2014
   
163,846
   
$
4.65
 
2.5 years
 
$
-0-
 
Options granted
   
10,000
   
$
4.00
 
4.7 years
       
Options canceled/forfeited
   
(11,437
)  
$
4.41 
           
                           
Outstanding options at September 30, 2015
   
162,409
   
$
4.62
 
2.9 years
 
$
-0-
 
                           
Vested Options:
                         
September 30, 2015;
   
123,076
   
$
4.70
 
2.6 years
 
$
-0-
 
December 31, 2014:
   
115,653
   
$
4.65
 
1.8 years
 
$
-0-
 

For the nine months ended September 30, 2015 the unamortized compensation expense for stock options was $95,000.  Unamortized compensation expense is expected to be recognized over a weighted-average period of three years. 

Warrants

On January 29, 2015 the Company granted 3,333 warrants with a fair value of approximately $19,969, which immediately vested, to Joseph Macaluso as part of his compensation for agreeing to join the Board of Directors. The estimated fair value of the warrant has been calculated based on a Black-Scholes pricing model using the following assumptions: a) fair market value of stock of $6.00; b) exercise price of $6.00; c) Dividend yield of 0%; d) Risk free interest rate of 1.42%; e) expected volatility of 284.28%; f) Expected life of 5 years. 

On March 9, 2015 the Company granted 18,175 warrants with a fair value of approximately $73,356, which immediately vested, to Alexander Capital, LP as partial compensation for acting as placement agent. The estimated fair value of the warrant has been calculated based on a Black-Scholes pricing model using the following assumptions: a) fair market value of stock of $4.05; b) exercise price of $5.088; c) Dividend yield of 0%; d) Risk free interest rate of 1.66%; e) expected volatility of 263.67%; f) Expected life of 5 years. 

On March 23, 2015 the Company granted 181,745 warrants with a fair value of approximately $638,630, which immediately vested, to those that purchased common stock as part of the offering. The estimated fair value of the warrant has been calculated based on a Black-Scholes pricing model using the following assumptions: a) fair market value of stock of $3.53; b) exercise price of $5.30; c) Dividend yield of 0%; d) Risk free interest rate of 1.41%; e) expected volatility of 258.39%; f) Expected life of 5 years.

The following table summarizes the warrants transactions:

   
Warrants
Outstanding
   
Weighted Average
Exercise Price
 
             
Balance, January 1, 2014
   
25,001
   
$
5.20
 
Granted
   
-
   
$
-
 
Exercised
   
8,333
   
$
3.60
 
Canceled
   
16,668
   
$
4.20
 
Outstanding and Exercisable December 31, 2014
   
-
   
$
-
 
                 
Granted
   
203,253
   
$
5.29
 
Exercised
   
-
   
$
-
 
Canceled
   
-
   
$
-
 
Outstanding and Exercisable September 30, 2015
   
203,253
   
$
5.29