Convertible Preferred Stock

 

 The Company issued 2,130,734 shares of Series A Preferred at $2.30 per share to accredited investors in a private placement transaction for gross proceeds of $4,900,677 during the six months ended June 30, 2014. Cumulative Series A Preferred dividends were $1,868,280 as of June 30, 2014. See Note 8 – Convertible Debt Obligations and Note 13 – Stockholders’ Equity – Common Stock transactions for details related to other exchanges/conversions into Series A Preferred.

 

Common Stock

 

 In January 2014, the Company issued 10,485 shares of common stock to settle certain accounts payable for $23,591 or an average of $2.25 per share of common stock.

 

 In February 2014, the Company issued 166,305 shares of common stock to settle cashless exercised options to purchase 566,946 shares of common stock at an exercise price of $1.59 per share and 31,421 shares of common stock to settle an exercised option for a purchase price of $49,959 or $1.59 per share of common stock.

 

 In March 2014, the Company issued 21,454 shares of common stock at $2.25 per share to settle its 2013 obligation (an aggregate of $48,272 representing the combination of employee contributions and Company matching contributions) to the Company’s 401(k) profit-sharing plan.

 

On April 9, 2014, the Company engaged a financial advisor for a six month term (subject to immediate termination by either party) for consideration comprised of a $15,000 cash fee ($7,500 expense for the three months ended June 30, 2014) and the issuance of 50,000 shares of common stock.

 

Accumulated Other Comprehensive Loss

 

 The Company recorded foreign currency translation adjustments of $82,831 and $(1,522,985) during the three and six months ended June 30, 2014 and $(413,309) and $(969,957) during the three and six months ended June 30, 2013, respectively, as accumulated other comprehensive loss.

 

 Warrants

 

 The Company issued five-year warrants for the purchase of 137,470 and 237,464 shares of Series A Preferred during the three and six months ended June 30, 2014 and five year warrants for the purchase of 12,304 and 88,421 shares of Series A Preferred during the three and six months ended June 30, 2013, to its subsidiary DPEC Capital, Inc., who acted as placement agent in connection with the sale of Series A Preferred. The warrants had an exercise price of $2.30 per share. DPEC Capital, Inc., in turn, awarded such warrants to its registered representatives and recorded $112,175 and $198,870, of stock-based compensation expense for three and six months ended June 30, 2014 and $10,354 and $81,523 for three and six months ended June 30, 2013, respectively, within general and administrative expense in the condensed consolidated statements of operations.

 

 A summary of warrants activity during six months ended June 30, 2014 is presented below: 

 

 

A summary of outstanding and exercisable warrants as of June 30, 2014 is presented below:

 

Warrants Outstanding									Warrants Exercisable
									Weighted
						Outstanding			Average			Exercisable
	Exercise		Exercisable			Number of			Remaining Life			Number of
	Price		Into			Warrants			In Years			Warrants
$	1.59		Common Stock			46,130			1.0			46,130
$	2.30		Preferred Stock			911,564			4.0			911,564
$	3.70		Common Stock			69,485			0.3			69,485
			Total			1,027,179			3.6			1,027,179

 

Stock Options

 

The Company has computed the fair value of options granted using the Black-Scholes option pricing model. There is currently no public trading market for the shares of AWLD common stock underlying the 2008 Plan. Accordingly, the fair value of the AWLD common stock was estimated by management based on observations of the cash sales prices of AWLD equity securities. Forfeitures are estimated at the time of valuation and reduce expense ratably over the vesting period. This estimate will be adjusted periodically based on the extent to which actual forfeitures differ, or are expected to differ, from the previous estimate, when it is material. The expected term of options granted to consultants represents the contractual term, whereas the expected term of options granted to employees and directors was estimated based upon the “simplified” method for “plain-vanilla” options. Given that the Company’s shares are not publicly traded, the Company developed an expected volatility figure based on a review of the historical volatilities, over a period of time, of similarly positioned public companies within its industry. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the options.

 

The Company used the following weighted average assumptions in applying the Black-Scholes option pricing model during the three and six months ended June 30, 2014 and 2013:

 

 

There were no stock options granted during the six months ended June 30, 2014. The weighted average estimated fair value of the stock options granted during the three and six months ended June 30, 2013 was $0.67 per share.

     

The Company recorded stock-based compensation expense related to stock option grants of $90,686 and $226,901 during the three and six months ended June 30, 2014, respectively, and $2,123,437 and $2,317,624, during the three and six months ended June 30, 2013, respectively, which is reflected as general and administrative expenses in the condensed consolidated statements of operations. As of June 30, 2014, there was $427,933 of unrecognized stock-based compensation expense related to stock option grants that will be amortized over a weighted average period of 1.0 years, of which $30,123 of unrecognized expense is subject to non-employee mark-to-market adjustments.

 

A summary of options activity during the six months ended June 30, 2014 is presented below:

 

					Weighted			Weighted
					Average			Average
			Number of		Exercise			Remaining Life		Intrinsic
			Options		Price			(in years)		Value
Outstanding, December 31, 2013			7,136,236		$	2.85
Granted			-			-
Exercised			(598,367)			1.59
Expired			(784,965)			2.67
Forfeited			(595,068)			2.79
Outstanding, June 30, 2014			5,157,836		$	3.04		2.9		$	252,104
Exercisable, June 30, 2014			4,630,041		$	2.94		3.0		$	252,104

 

The following table presents information related to stock options at June 30, 2014:

 

		Options Outstanding						Options Exercisable
		Weighted						Weighted			Weighted
Range of		Average			Outstanding			Average			Average			Exercisable
Exercise		Exercise			Number of			Exercise			Remaining Life			Number of
Price		Price			Options			Price			In Years			Options
$1.59 - $2.00		$	1.59			381,975		$	1.59			0.6			381,975
$2.01 - $2.50		$	2.48			2,630,000		$	2.48			4.0			2,630,000
$2.51 - $3.50		$	2.72			251,232		$	2.72			1.0			251,232
$3.51 - $4.50		$	3.85			1,859,000		$	3.85			2.1			1,331,205
$4.51 - $9.50		$	8.03			19,868		$	8.03			0.8			19,868
$9.51 - $41.78		$	33.94			15,761		$	33.94			0.8			15,761
$1.59 - $41.78		$	3.04			5,157,836		$	2.94			3.0			4,630,041