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12. Stock Options
 6 Months Ended
Jun. 30, 2015
Notes  
12. Stock Options

12.  Stock Options

 

In April 2014, the Company established a stock option plan to authorize the granting of stock options to officers and employees. Upon exercise of the options shares are issued from the available authorized shares of the Company.

 

On April 30, 2014, 2,250,000 options were issued to management, 750,000 options vested immediately and the remaining 1,500,000 vested at a rate of 750,000 each year on the anniversary for 2 additional years. Each option allows the holder to purchase one share of the Company’s stock at $0.10 prior to expiration. Utilizing the Black Scholes option pricing model, an expected life of three years, a risk free rate of 0.87%, and expected volatility of 161.30% compensation cost of $173,844 is associated with the options. Of this, $115,896 was recorded as a general and administrative expense in 2014 and $21,731 was recorded in the first half of 2015. At June 30, 2015 unrecognized compensation cost related to these options was $36,218, which is expected to be recognized over the next year. All options expire on April 30, three years after their vest date.

 

On December 31, 2014, 500,000 options which vested immediately and expire after two years were issued to R Patrick Highsmith in connection with his hiring as the Company’s President and CEO. Each option allows the holder to purchase one share of the Company’s stock at $0.11 prior to expiration. Utilizing the Black Scholes option pricing model, an expected life of two years, a risk free rate of 0.49%, and expected volatility of 158.10%, a compensation cost of $36,250 is associated with these options and was recorded as a general and administrative expense in 2014.

 

On December 12, 2014, 1,500,000 options were issued to management, 750,000 options vested immediately and the remaining 750,000 vested after one year. The options expire after 5 years. Each option allows the holder to purchase one share of the Company’s stock at $0.15 prior to expiration. Utilizing the Black Scholes option pricing model, an expected life of five years, a risk free rate of 1.65%, and expected volatility of 150.60%, a compensation cost of $99,558 is associated with these options. Of this $49,780 was recorded as a general and administrative expense in 2014. The remaining compensation cost of $49,780 is being recognized in 2015, including $24,890, which was recognized as of June 30, 2015. All options expire on December 12, 2019. On December 12, 2014 an additional 250,000 options were issued to past President and CEO R. Patrick Highsmith with a vesting date of December 2015. As part of the resignation and release agreement those options are no longer valid.

 

 

 

 

Number of Options

 

Exercise Prices

Balance January 1, 2014

 

0

 

0

Issued

 

4,500,000

 

$0.10-0.15

Outstanding December 31, 2014

 

4,500,000

 

$0.10-0.15

Forfeited

 

  (250,000)

 

 

Outstanding June 30, 2015

 

4,250,000

 

$0.10-0.15

Exercisable at June 30, 2015

 

2,937,500

 

$0.10-0.15

 

Outstanding options had no intrinsic value at June 30, 2014.