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STOCK OPTION PLANS AND AGREEMENTS

12 Months Ended

Dec. 31, 2018

Share-based Payment Arrangement [Abstract]

The Company grants stock options to its key employees and independent service providers as it deems appropriate. Options expire from five to ten years after the grant date.

Option Agreements - The Company's Board approved stock option agreements with consultants and a member of the Board of which options for an aggregate of 1,438,000 common shares are outstanding at December 31, 2018 with an average exercise price of $.20 per share. At December 31, 2018, options for 500,000 shares are vested and options for 938,000 shares vest based on board authorization. Options for 938,000 shares were forfeited unvested in January 2019.

Loan Fees - On December 1, 2014, as payment of a portion of an origination fee under the LOC Agreement, the Company issued options to purchase 600,000 shares of its common stock at an exercise price of $.05, all of which were immediately vested. On September 30, 2016, as payment for an extension of the maturity date under the LOC Agreement, the Company issued options to purchase 800,000 shares of its common stock at an exercise price of $.04, all of which were immediately vested.

On July 18, 2017, the Company entered into an unsecured line of credit financing agreement with an officer and member of its Board. In consideration for providing the financing of up to $100,000, the lender was granted an option to purchase 400,000 shares of common stock at $.04 per share which was valued at $9,960. The option expires on July 17, 2022.

On September 21, 2017, the Company entered into an unsecured line of credit financing agreement with a related party. In consideration for providing the financing of up to $75,000, the lender was granted an option to purchase 400,000 shares of common stock at $.04 per share which was valued at $4,080. The option expires on January 2, 2023.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model based on the following assumptions. Volatility is based on the Company’s historical volatility. The expected life of the options was determined using the simplified method for plain vanilla options as stated in FASB ASC 718 to improve the accuracy of this assumption while simplifying record keeping requirements until more detailed information about the Company’s exercise behavior is available. The risk-free rate for the life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

The following assumptions were used for the years ended December 31, 2018 and 2017.

	2018	2017
Risk free interest rate	2.86% to 2.95%	1.50% to 2.00%
Expected dividend yield	0%	0%
Expected stock price volatility	100%	100%
Expected life of options	2.75 years	2.61 to 3.00 years

The following is a summary of stock option activity, including qualified and non-qualified options for the years ended December 31, 2018 and 2017:

Number of Options Outstanding

Weighted Average Exercise Price

Remaining Contractual Term

Aggregate Intrinsic Value

Outstanding at December 31, 2016

8,583,000

.12

Granted

1,080,000

.04

Expired

(169,500

)

.41

Forfeited

(1,462,500

)

.15

Outstanding at December 31, 2017

8,031,000

.10

Granted

300,000

.02

Expired

(411,000

)

.26

Outstanding at December 31, 2018

7,920,000

.09

3.3 years

Vested or expected to vest and exercisable at December 31, 2018

6,982,000

.07

3.7 years

At December 31, 2018, there was approximately $7,300 of total unrecognized compensation cost related to outstanding non-vested options, which excludes non-vested options for which the option expense cannot be presently quantified. This cost is expected to be recognized over a weighted average period of approximately one year. The total fair value of shares vested during the year ended December 31, 2018 was approximately $1,000.

The weighted average fair value of options granted was $.01 and $.03 per share for the years ended December 31, 2018 and 2017, respectively. The exercise price for all options granted equaled or exceeded the market value of the Company’s common stock on the date of grant.