Stock Options and Warrants

6 Months Ended

Jun. 30, 2018

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

Stock Options and Warrants

13.

Stock Options and Warrants

For the three and six months ended June 30, 2018 and June 30, 2017, respectively, the Company recorded non-cash stock-based compensation expense of $14,392 and $24,733, and $10,517 and $21,397, respectively, relating to employee stock options and warrants issued for consulting services.

Stock options and warrants issued to consultants and other non-employees as compensation for services provided to the Company are accounted for based on the fair value of the services provided or the estimated fair market value of the option or warrant, whichever is more reliably measurable in accordance with FASB ASC 505, Equity, and FASB ASC 718, Compensation – Stock Compensation. The related expense is recognized over the period the services are provided. Unrecognized expense remaining at June 30, 2018 and 2017 for the options is $180,427 and $34,596, respectively, and will be recognized through June 30, 2019.

On April 12, 2018 the Board of Directors approved the adoption of a 2018 Equity Compensation Plan.  The Company has reserved 10,000,000 shares of our common stock for grants under this plan.

The 2018 Plan provides for the granting of both incentive and non-qualified stock options to key personnel, including officers, directors, consultants and advisors to the Company, at the discretion of the Board of Directors. Each plan limits the exercise price of the options at no less than the quoted market price of the common stock on the date of grant. The option term is determined by the Board of the Directors, provided that no option may be exercisable more than 10 years after the date of its grant and, in the case of an incentive option granted to an eligible employee owning more than 10% of the Company’s common stock, no more than five years after the date of the grant. Generally, under both plans, options to employees vest over three years at 33.33% per annum unless the Board of Directors designates a different vesting schedule. 

On April 12, 2018, the Company granted employees and directors options to purchase 4,475,000 shares of the Company’s common stock, at exercise prices ranging from $0.0189 to $0.208 per share.  The options vest over a three-year period and expire April 12, 2028.   The fair value of the options totaled $69,989 using the Black-Scholes option pricing model with the following assumptions: i) risk free interest rate of 2.64%, ii) expected life of 5 years, iii) dividend yield of 0%, iv) expected volatility of 217%. On April 30, 2018 our Chairman and Former CEO voluntarily cancelled the grant on April 12, 2018 of options awarded him to purchase an aggregate of 1,400,000 shares of the common stock.

On May 18, 2018, the Company, upon recommendation and approval by the compensation committee of the board of directors, granted its new Chief Executive Officer, options to purchase 6,500,000 shares of the Company’s common stock, at an exercise price of $0.017 per share. The options vest over a three-year period and expire May 18, 2028. The fair value of the options totaled $101,437 using the Black-Scholes option pricing model with the following assumptions: i) risk free interest rate of 2.64%, ii) expected life of 5 years, iii) dividend yield of 0%, iv) expected volatility of 217%.

A summary of the Company’s stock option plans as of June 30, 2018, and changes during the six month period then ended is presented below:

	Six Months Ended June 30, 2018
	Number of Options			Weighted Average Exercise Price
Options outstanding at December 31, 2017		3,180,000		$	0.20
Options granted		10,975,000		$	0.02
Options exercised		—			—
Options forfeited		(1,408,334	)	$	0.02
Options expired		(291,666	)	$	0.25
Options at end of period		12,455,000		$	0.06
Options exercisable at June 30, 2018		2,860,000		$	0.19

Changes in the Company’s non-vested options for the six months ended June 30, 2018 are summarized as follows:

	Six Months Ended June 30, 2018
	Number of Options			Weighted Average Exercise Price
Nonvested options at December 31, 2017		270,840		$	0.15
Granted		10,975,000		$	0.02
Vested		(242,506	)	$	0.16
Forfeited		(1,408,334	)	$	0.22
Nonvested options at June 30, 2018		9,595,000		$	0.18

	Options Outstanding						Options Exercisable
Range of Exercise Price	Number Outstanding		Remaining Average Contractual Life (In Years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$0.017- $0.30		12,445,000		8.36	$	0.06		2,860,000	$	0.19
Totals		12,445,000		8.36	$	0.06		2,860,000	$	0.19

A summary of the Company’s warrant activity as of June 30, 2018 and changes during the six-month period then ended is presented below:

	Six months ended June 30, 2018
	Warrants			Weighted Average Exercise Price
Warrants outstanding at December 31, 2017		990,162		$	0.24
Granted		—			—
Expired		(168,750	)	$	0.35
Warrants outstanding at June 30, 2018		821,412		$	0.17

	Warrants Outstanding
Range of Exercise Price	Number Outstanding		Remaining Average Contractual Life (In Years)		Weighted Average Exercise Price
		821,412		1.80	$	0.17
Totals		821,412		1.80	$	0.17