Note 9 - Stock Option and Stock Plans

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

9

. Stock Option and Stock Plans

On

September 26, 2018,

the Company’s Board of Directors adopted the Amarillo Biosciences, Inc.,

2018

Employee Stock Option Plan (the

“2018

-ESOP”) providing for the grant of Qualified Incentive Stock Options to Company employees. The maximum number of shares of Common Stock which

may

be issued under the

2018

-ESOP is

six million

(

6,000,000

) common stock shares which will be reserved for issuance subject to options. The option price is

$0.38

per share and the options are exercisable during a period of

ten

(

10

) years from the date of grant, where the options vest

20%

annually over

five

(

5

) years, commencing

one

(

1

) year from date of grant. If an option grantee owns or controls over

ten

percent (

10%

) of the outstanding stock, then pursuant to Section

424

(d) of the Code, the option price becomes

110%

of fair market value,

$0.418;

the term of exercise be

five

(

5

) years from

ten

(

10

); and the vesting period decreases from

five

(

5

) years to

four

(

4

) years.

On

September 26, 2018,

the Company’s Board of Directors adopted the Amarillo Biosciences, Inc.,

2018

Officers, Directors, Employees, and Consultants Nonqualified Stock Option Plan (the

“2018

-NQSOP”) providing for the grant of Nonqualified Incentive Stock Options to Company employees. The maximum number of shares of Common Stock which

may

be issued under the

2018

-NQSOP is

twenty million

(

20,000,000

) common stock shares which will be reserved for issuance subject to options. The option price for the Nonqualified Options is

$0.38

exercisable for a period of

ten

(

10

) years with a vesting period of

five

(

5

) years at

20%

per year commencing

one

(

1

) year from date of grant. There are

no

changes in terms or conditions for shareholders who own or control over

ten

percent (

10%

) of the outstanding stock.

Equity Compensation Plan Information:

Stock Plans 1	Issue Date Range			Total Shares Authorized		Shares Issued		Shares Remaining
2008 Stock Incentive Plan	5/23/08	–	10/11/11		600,000		463,420		136,580
Amarillo Biosciences, Inc., 2018 Employee Stock Option Plan	9/26/18	–	9/26/28		6,000,000		950,000		5,050,000
Amarillo Biosciences, Inc., 2018 Officers, Directors, Employees, and Consultants Nonqualified Stock Option Plan	9/26/18	–	9/26/28		20,000,000		3,995,000		16,005,000

1

The Board of Directors has approved all stock, stock option and stock warrant issuances.

Whether qualified or nonqualified, when options are exercised the ABI Common Stock shares will be issued pursuant to Rule

144A

meaning that the shares cannot be traded or otherwise exchanged for a minimum period of

six

months from issue date.

A summary of option activity for the years ended

December 31, 2018

and

2017

are presented below.

Date	Number of Options Qualified	Number of Options Nonqualified	Weighted Average Exercise Price	Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Balance December 31, 2017	-	-	-	-	-
Granted September 26, 2018*	*950,000	3,995,000	$0.38	5
Exercised	-	-	-	-	-
Expired	-	-	-	-	-
Balance December 31, 2018*	*950,000	3,995,000	$0.38	5

* There is

one

stock owner over

10%

currently holding

500,000

qualified options. The exercise price for this option-holder would be

$0.418

with an exercise period of

5

years and a vesting period of

4

years at

25%

per year.

The Company used the Black-Scholes option pricing model to value the option awards with the following assumptions applied: (

1

) Volatility –

276%;

(

2

) Term –

5

years was chosen although the full option term is

10

years to be more commensurate with the

5

-year vesting portion of the plan; (

3

) Discount –

2.96%.

As of

December 31, 2018,

there is

$1,775,222

in unrecognized option expense that will be recognized over the next

4.75

years.