• Filing Date: 2018-04-17
  • Form Type: 10-K
  • Description: Annual report
v3.8.0.1
9. STOCK OPTION PLANS
12 Months Ended
Dec. 31, 2017
Notes to Financial Statements  
STOCK OPTION PLANS

During Fiscal 2005, the Company established, and the stockholders approved, an Employee Benefit and Consulting Services Compensation Plan (the “2005 Plan”) for the granting of up to 2,000,000 non-statutory and incentive stock options and stock awards to directors, officers, consultants and key employees of the Company. On June 9, 2005, the Board of Directors amended the Plan to increase the number of stock options and awards to be granted under the Plan to 4,000,000. During Fiscal 2009, the Company established a plan of long-term stock-based compensation incentives for selected Eligible Participants of the Company covering 4,000,000 shares. This plan was adopted by the Board of Directors and approved by stockholders in October 2009 and shall be known as the 2009 Employee Benefit and Consulting Services Compensation Plan (the “2009 Plan”). In September 2013, the Company’s stockholders approved an increase in the number of shares covered by the 2009 Plan to 10,000,000. In February 2015, the Board approved, subject to stockholder approval within one year, an increase in the number of shares under the 2009 Plan to 20,000,000 shares; however, stockholder approval was not obtained within the requisite one year and the anticipated increase in the 2009 Plan was canceled. In the first quarter of 2016, the Board approved and stockholders ratified a 2016 Employee Benefit and Consulting Services Compensation Plan covering 10,000,000 shares (the “2016 Plan”) and approving moving all options which exceeded the 2009 Plan limits to the 2016 Plan. The 2005, 2009 and 2016 plans are collectively referred to as the “Plans.”

 

All stock options under the Plans are granted at or above the fair market value of the common stock at the grant date. Employee and non-employee stock options vest over varying periods and generally expire either 5 or 10 years from the grant date. The fair value of options at the date of grant was estimated using the Black-Scholes option pricing model. For option grants, the Company will take into consideration payments subject to the provisions of ASC 718 “Stock Compensation”, previously Revised SFAS No. 123 “Share-Based Payment” (“SFAS 123 (R)”). The fair values of these restricted stock awards are equal to the market value of the Company’s stock on the date of grant, after taking into certain discounts. The expected volatility is based upon historical volatility of our stock and other contributing factors. The expected term is based upon observation of actual time elapsed between date of grant and exercise of options for all employees. Previously, such assumptions were determined based on historical data. The weighted average assumptions made in calculating the fair values of options granted during the years ended December 31, 2017 and 2016 are as follows:

 

   Years Ended December 31, 
   2017   2016 
Expected volatility   146.8%    135.6% 
Expected dividend yield   0    0 
Risk-free interest rate   1.89%    1.25% 
Expected term (in years)   5.00    5.00 

 

           Weighted     
       Weighted   Average     
       Average   Remaining   Aggregate 
       Exercise   Contractual   Intrinsic 
   Share   Price   Term   Value 
Outstanding, January 1, 2017   18,315,001   $0.41    5.18    5,625 
Granted   250,000   $0.05    4.00     
Exercised               
Cancelled / Expired   (1,050,000)            
                     
Outstanding, December 31, 2017   17,515,001   $0.39    4.43     
                     
Options exercisable, December 31, 2017   17,037,918   $0.39    4.40     

 

The weighted-average grant-date fair value of options granted during the years ended December 31, 2017 and 2016 was $0.05 and $0.08, respectively. The aggregate intrinsic value of options outstanding and options exercisable at December 31, 2016 is calculated as the difference between the exercise price of the underlying options and the market price of the Company’s common stock for the shares that had exercise prices, that were lower than the $0.02 closing price of the Company’s common stock on December 31, 2017.

 

As of December 31, 2017, the fair value of unamortized compensation cost related to unvested stock option awards was $24,955.

 

The option information provided above includes options granted outside of the Plans, which total 4,115,000 as of December 31, 2017.

 

The weighted average assumptions made in calculating the fair value of warrants granted during the years ended December 31, 2017 and 2016 are as follows:

 

   Years Ended 
   2017   2016 
Expected volatility   157.84%    0% 
Expected dividend yield        
Risk-free interest rate   1.87%    0% 
Expected term (in years)   4.10     

 

           Weighted     
       Weighted   Average     
       Average   Remaining   Aggregate 
       Exercise   Contractual   Intrinsic 
   Share   Price   Term   Value 
Outstanding, January 1, 2017   21,252,734   $0.48    1.40     
Granted   7,400,000   $0.06    3.02     
Exercised   (1,916,667)            
Cancelled/Expired   (14,754,400)            
Outstanding, December 31, 2017   11,981,667   $0.20    2.58     
                     
Warrants exercisable, December 31, 2017   11,981,667   $0.20    2.58