4. STOCK BASED COMPENSATION

3 Months Ended

Mar. 31, 2018

Notes

4. STOCK BASED COMPENSATION

 

Schedule of Employee Stock Option Activity
	Options	Weighted average exercise price	Weighted average remaining contractual life (yrs)	Aggregate Intrinsic value
Options outstanding, December 31, 2017	2,110,834	$.006	8.18
Options exercisable, December 31, 2017	626,834	$0.003	6.03	$ 22,902
Options issued during the period	2,010,000	0.040
Options outstanding, March 31, 2018	4,120,834	$0.023	8.88
Options exercisable, March 31, 2018	2,822,167	$0.027	8.81	$ 26,678

During the three months ended March 31, 2018, 2,010,000 nonqualified employee stock options were granted with an exercise price of $.04.  The options were valued using Black-Scholes option pricing model on the respective date of issuance and the fair value of the shares was determined to be $76,895 of which $67,280 was recognized as stock-based compensation expense for the three months ended March 31, 2018. 1,750,000 of the stock options vested immediately and 260,000 will vest one-fifth on each annual anniversary date of the grant. The total 2,010,000 will expire ten years from the date of the grant.  

Total stock-based compensation expense for the three months ended March 31, 2018 was $68,937 of which $67,280 was related to options issued during the three months ended March 31, 2018 and $1,657 was related to options issued in prior years.

Stock-based compensation is measured at the grant date, based on the calculated fair value of the option, and is recognized as an expense on a straight-line basis over the requisite employee service period (generally the vesting period of the grant).  

The Black-Scholes option pricing model was used with the following weighted-average assumptions for options granted during the three months ended March 31, 2018:

	2018
Risk free interest rate	2.65%
Expected lives (in years)	5
Expected volatility	178%
Dividend yield	0%