STOCK OPTION PLANS AND AGREEMENTS

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

STOCK OPTION PLANS AND AGREEMENTS

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 500,000 common shares are outstanding at December 31, 2019 with an average exercise price of $.15 per share. At December 31, 2019, options for 500,000 shares are vested. Options for 938,000 shares were forfeited unvested in January 2019.

Loan Fees - On May 7, 2019, the Company entered into a note payable agreement for up to $500,000 with a related party. The note has an interest rate of 7.5% and is due on August 31, 2026. The Company borrowed $200,000 which remains outstanding as of December 31, 2019. As consideration for providing this financing, the Company granted a stock option to purchase a total of 2,500,000 common shares at an exercise price of $.02 and recorded interest expense of $14,250 using the Black-Scholes option pricing model to determine the estimated fair value of the option.

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, 2019 and 2018.

	2019			2018
Risk free interest rate		1.38% to 2.55%			2.86% to 2.95%
Expected dividend yield		0	%		0	%
Expected stock price volatility		100	%		100	%
Expected life of options		2.75 to 3.90 years			2.75 years

The following is a summary of stock option activity, including qualified and non-qualified options for the years ended December 31, 2019 and 2018:

	Number of Options Outstanding			Weighted Average Exercise Price		Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at December 31, 2017		8,031,000		$	0.10
Granted		300,000		$	0.02
Expired		(411,000	)	$	0.26
Outstanding at December 31, 2018		7,920,000		$	0.09
Granted		4,203,500		$	0.03
Expired		(275,000	)	$	0.07
Forfeited		(938,000	)	$	0.23
Outstanding at December 31, 2019		10,910,500		$	0.05	4.1 years	$	165,600
Vested or expected to vest and exercisable at December 31, 2019		10,910,500		$	0.05	4.1 years	$	165,600

At December 31, 2019, there was $0 of total unrecognized compensation cost related to outstanding non-vested options.

The weighted average fair value of options granted was $.03 and $.01 per share for the years ended December 31, 2019 and 2018, 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.