7. Stock Option Plans and Agreements

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

Stock Option Plans and Agreements

The Company has approved stock options plans and agreements covering up to an aggregate of 12,717,000 shares of common stock. Such options may be designated at the time of grant as either incentive stock options or nonqualified stock options. Stock based compensation consists of charges for stock option awards to employees, directors and consultants.

On April 15, 2020, the Company’s board of directors approved the 2020 stock option plan, which grants options to purchase up to an aggregate of 1,500,000 common shares. As of September 30, 2020, 610,000 options to purchase shares remain unissued under the 2020 plan. Options issued to date are nonqualified since the Company has decided not to seek stockholder approval of the 2020 Plan.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. 1,555,000 options were granted for the nine months ended September 30, 2020 with a weighted average fair value of $ .07 per option. 2,973,500 options were granted for the nine months ended September 30, 2019. The following assumptions were used during the nine months ended September 30, 2020.

Risk-free interest rate	0.18%-1.40%
Expected dividend yield	0%
Expected stock price volatility	100%
Expected life of options	2.25-3.01 years

The Company recorded expense for options issued to employees and independent service providers of $34,341 and $53,318 for the three and nine months ended September 30, 2020, respectively ($5,536 and $11,332 in 2019). The Company recorded expense for options issued for loan financing consideration of $52,900 for the three and nine months ended September 30, 2020, respectively ($0 and $14,250 in 2019).

At September 30, 2020, there was no unrecognized compensation cost related to non-vested options and 125,000 options vested during the nine months ended September 30, 2020.

A summary of all stock option activity for the nine months ended September 30, 2020 follows:

	Number of Options Outstanding			Weighted Average Exercise Price		Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at December 31, 2019		10,910,500		$	.05
Granted		1,555,000			.07
Forfeited		(25,000	)		.05
Expired		(335,000	)		.15
Outstanding at September 30, 2020		12,105,500		$	.05	3.5 years	$	713,300
At September 30, 2020 -
Vested or expected to vest		12,105,500		$	.05	3.5 years	$	713,300
Exercisable		11,585,500		$	.05	3.5 years	$	689,300