4.	STOCKHOLDERS’ EQUITY

In May 2006, our stockholders approved the 2005 Equity Incentive Plan (the “2005 Plan”) and reserved 2,000,000 shares of our common stock for issuance. Our stockholders approved the reservation of an additional 1,750,000 shares of common stock for issuance under the 2005 Plan, which increased the total shares available for grant under the 2005 Plan to 3,750,000 shares. The 2005 Plan expired in April 2015. In June 2015, our stockholders approved the 2015 Equity Incentive Plan (the “2015 Plan”) and reserved 1,000,000 shares of our common stock for issuance. At December 31, 2017, no shares remained available to grant under the 2015 Plan (the 2005 plan and the 2015 plan are collectively referred to as “The Plans”). Two types of options may be granted under the Plans: options intended to qualify as incentive stock options under Section 422 of the Internal Revenue Code (the “Code”) and other options not specifically authorized or qualified for favorable income tax treatment by the Code. All eligible employees may receive more than one type of option. Any director or consultant who is not an employee of the Company shall be eligible to receive only nonqualified stock options under the Plans.

The Plans provide that in the event of a takeover or merger of the Company in which 100% of the equity of the Company is purchased or a sale of all or substantially all of the Company’s assets, 75% of all unvested employee options will vest immediately and the remaining 25% will vest over the following twelve-month period. If an employee or holder of stock options is terminated as a result of or subsequent to the acquisition, 100% of that individual’s stock option will vest immediately upon employment termination.

We used the Black-Scholes model with the following assumptions to determine the total fair value of $35,000 for options to purchase 280,000 shares of our common stock issued during 2016. No options were granted in 2017 and at December 31, 2017 no options remained available to grant under the Plans.

		2016
Risk free interest rate		1.5%
Volatility		100%
Expected term		4.5 Years
Dividend yield		0%

Summary

Non-cash stock compensation cost for the year ended December 31, 2017 and 2016 totaled $0 and $35,000, respectively, and was recorded as a general and administrative expense in the Statement of Operations.

No options were exercised in the years ended December 31, 2017 and 2016.

At December 31, 2017, there was no remaining unamortized non-cash stock compensation costs.

A summary of option activity under our stock option plans for the years ended December 31, 2017 and 2016 is as follows:

	2017							2,016
	Number of Options		Weighted average exercise price		Number of Options		Weighted average exercise price		Weighted average remaining contractual term (years)
Options outstanding at the beginning of the year:		3,611,706	$	0.37		4,162,706	$	0.81
Granted		-				280,000	$	0.86
Exercised		-				-
Expired/Forfeited		(95,000)	$	1.49		(831,000)	$	2.47
Outstanding at end of year		3,516,706	$	0.34		3,611,706	$	0.37		4.72
Options exercisable at year-end		3,516,706	$	0.34		3,611,706	$	0.37		4.72
Options vested and expected to vest at year end		3,516,706	$	0.34		3,611,706	$	0.37		4.65

The Company had no unvested common stock share awards as of December 31, 2017, or December 31, 2016, and no common stock awards were made in 2017 or 2016.

It is the Company’s policy to issue options from stockholder approved incentive plans. However, if the options are issued as an inducement for an individual to join the Company, the Company may issue stock options outside of stockholder approved plans. The options granted to employees under stockholder approved incentive plans have a ten-year term and normally vest over a two to four-year period of service. All stock options are granted with an exercise price equal to the current market value on the date of grant and, accordingly, stock options have no intrinsic value on the date of grant. Based on the closing market price of the Company’s common stock at December 31, 2017 of $0.05, stock options exercisable or expected to vest at December 31, 2017, have no intrinsic value.

As described in our Current Report on Form 8-K filed with the Securities and Exchange Commission on February 1, 2018, on January 30, 2018, the Company entered into the First Amendment to Securities Purchase, Loan and Security Agreement (the “Amendment”) with BP Peptides, LLC (“Brookstone"). Brookstone currently owns approximately 34.1% of our outstanding common stock. Under the original Agreement (see Note 10), interest on the Secured Debt was payable quarterly. The Amendment defers the payment of interest until the Secured Debt’s maturity, October 15, 2020. In consideration for the deferral, the Company issued a Warrant to Brookstone to purchase up to 6,321,930 shares of the Company’s Common Stock with an exercise price of $.075 per share. The warrant expires October 15, 2025 and provides for quarterly vesting of shares in amounts approximately equal to the amount of quarterly interest payable that would have been payable under the Agreement, converted into shares at $.075. On the date of the Amendment, January 30, 2018, 984,301 shares became fully vested and exercisable.