Quarterly report pursuant to Section 13 or 15(d)

STOCK OPTIONS AND WARRANTS

v3.8.0.1
STOCK OPTIONS AND WARRANTS
9 Months Ended
Sep. 30, 2017
Notes to Financial Statements  
Note 13 - STOCK OPTIONS AND WARRANTS

Options

 

Option valuation models require the input of highly subjective assumptions. The fair value of stock-based payment awards was estimated using the Black-Scholes option model with a volatility figure derived from using the Company's historical stock prices. The Company accounts for the expected life of options based on the contractual life of options for non-employees. For employees, the Company accounts for the expected life of options in accordance with the "simplified" method, which is used for "plain-vanilla" options, as defined in the accounting standards codification.

 

The risk-free interest rate was determined from the implied yields of U.S. Treasury zero-coupon bonds with a remaining life consistent with the expected term of the options.

 

The following assumptions were used in determining the fair value of employee and vesting options during the nine months ended September 30, 2017:

 

 

    September 30, 2017  
Risk-free interest rate     1.86 %
Dividend yield     0 %
Stock price volatility     171.77 %
Expected life   5.00 years  
Weighted average grant date fair value   $ 0.1519  

 

On May 25, 2017, the Company awarded options to purchase 35,000 shares of common stock to key consultant of the Company. These options vest immediately and have a term of 5 years. The options have an exercise price of $0.016 per share. The options had an aggregate grant date fair value of $5,318.

 

The following table summarizes the stock option activity for the nine months ended September 30, 2017:

 

    Shares    

Weighted-Average

Exercise Price

   

Weighted-Average

Remaining

Contractual Term

   

Aggregate

Intrinsic Value

 
Outstanding at December 31, 2016     47,850,000     $ 0.04       8.9     $ 326,700  
Grants     35,000       0.016       5.0          
Exercised     -                          
Expired     -               -       -  
Outstanding at September 30, 2017     47,885,000     $ 0.04       7.8     $ 2,349,878  
Exercisable at September 30, 2017     35,510,000     $ 0.05       7.5     $ 1,524,466  

 

The aggregate intrinsic value in the preceding tables represents the total pretax intrinsic value, based on options with an exercise price less than the Company's stock price of $0.0868 as of September 30, 2017, which would have been received by the option holders had those option holders exercised their options as of that date.

 

The following table presents information related to stock options at September 30, 2017:

 

Options Outstanding     Options Exercisable  
            Weighted Average     Exercisable  
Exercise     Number of     Remaining Life     Number of  
Price     Options     In Years     Options  
                     
$ 0.01-0.025       33,035,000       8.7       20,660,000  
  0.0251-0.05       3,500,000       2.8       3,500,000  
  0.051       11,350,000       6.6       11,350,000  
          47,885,000       7.8       35,510,000  

 

The stock-based compensation expense related to option grants was $83,853 and $240,924 during the three and nine months ended September 30, 2017, respectively; and $78,535 and $104,713 for the three and nine months ended September 30, 2016.

 

As of September 30, 2017, stock-based compensation related to options of $209,428 remains unamortized and is expected to be amortized over the weighted average remaining period of 9 months.

 

Warrants:

 

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

 

Warrants Outstanding     Warrants Exercisable  
Exercise Prices     Number Outstanding    

Weighted

Average

Remaining

Contractual

Life (Years)

   

Weighted

Average

Exercise

Price

   

Number

Exercisable

   

Weighted

Average

Remaining

Contractual

Life (Years)

 
                                 
$ 0.25       1,275,000       1.77     $ 0.25       1,275,000       1.77  
  1.00       1,155,000       0.50       1.00       1,155,000       0.50  
$ 0.58       2,430,000       1.16     $ 0.61       2,430,000       1.16  

 

The following table summarizes the warrant activity for the nine months ended September 30, 2017:

 

   

Number of

Shares

   

Weighted

Average

Exercise

Price Per

Share

 
Outstanding at December 31, 2016     2,630,000     $ 0.58  
Issued     -       -  
Exercised     -       -  
Expired     (200,000 )     0.25  
Outstanding at September 30, 2017     2,430,000     $ 0.61