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Equity Incentive Plan

3 Months Ended

Mar. 31, 2020

Share-based Payment Arrangement [Abstract]

Note 7 – Equity Incentive Plan

Under the Company’s 2017 Equity Incentive Plan, as may be modified and amended by the Company from time to time (the “2017 Equity Plan”), the Board of Directors (the “Board”) (or the compensation committee of the Board, if one is established) may award stock options, stock appreciation rights (“SARs”), restricted stock awards (“RSAs”), restricted stock unit awards (“RSUs”), shares granted as a bonus or in lieu of another award, and other stock-based performance awards. The 2017 Equity Plan allocates 50,000,000 shares of the Company’s common stock (“Plan Shares”) for issuance of equity awards under the 2017 Equity Plan. If any shares subject to an award are forfeited, expire, or otherwise terminate without issuance of such shares, the shares will, to the extent of such forfeiture, expiration, or termination, again be available for awards under the 2017 Equity Plan.

During the three months ended March 31, 2020, the Company issued shares of its common stock under the 2017 Equity Plan as follows:

	●	1,000,000 shares to an employee in settlement of certain RSUs that vested December 31, 2019;

	●	560,000 shares pursuant to a special incentive stock bonus approved by the Board for the period ended December 31, 2019; and

	●	6,750,000 shares in settlement of restricted stock units to a former employee after taking measures to mitigate the Company’s exposure to penalties and liability for the failure to properly withhold income taxes.as further discussed in Note 6 – Commitments and Contingencies, Litigation above.

As of March 31, 2020, awards related to 22,951,900 shares remain outstanding.

The total unrecognized compensation expense for unvested non-qualified stock options and RSUs at March 31, 2020, was $89,571, which will be recognized over approximately 9 months.

Non-Qualified Stock Options

A summary of the non-qualified stock options granted to employees and consultants under the 2017 Equity Plan during the three months ended March 31, 2020, are presented in the table below:

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value

Outstanding, December 31, 2019		10,135,000	$	0.096		7.7	$	-
Granted		6,616,900	$	0.070		10.0
Exercised		-
Forfeited		-
Expired		-
Outstanding, March 31, 2020		16,751,900	$	0.086		8.4	$	-
Exercisable, March 31, 2020		13,751,900	$	0.087		8.2	$	-
Outstanding vested and expected to vest, March 31, 2020		16,751,900	$	0.086		8.4	$	-

A summary of non-vested non-qualified stock options activity for employees and consultants under the 2017 Equity Plan for the three months ended March 31, 2020, are presented in the table below:

	Number of Options			Weighted Average Grant-Date Fair Value		Aggregate Intrinsic Value		Grant-Date Fair Value

Nonvested, December 31, 2019		2,000,000		$	0.075	$	-	$	149,534
Granted		6,616,900		$	0.059			$	387,199
Vested		(5,616,900	)	$	0.058			$	328,472
Forfeited		-
Expired		-
Nonvested, March 31, 2020		3,000,000		$	0.069	$	-	$	208,262

For the three months ended March 31, 2020 and 2019, the Company recorded $106,288 and $172,778 as compensation expense related to vested options issued to employees and consultants, net of forfeitures, respectively.

A summary of the non-qualified stock options granted to directors under the 2017 Equity Plan during the three months ended March 31, 2020, are presented in the table below:

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value ($000)

Outstanding, December 31, 2019		900,000	$	0.135		7.6	$	-
Granted		4,500,000	$	0.070		10.0
Exercised		-
Forfeited/Cancelled		-
Expired		-
Outstanding, March 31, 2020		5,400,000	$	0.081		9.4	$	-
Exerciseable, March 31, 2020		5,400,000	$	0.081		9.4	$	-

A summary of non-vested non-qualified stock options activity for directors under the 2017 Equity Plan for the three months ended March 31, 2020, are presented in the table below:

	Number of Options			Weighted Average Grant-Date Fair Value		Aggregate Intrinsic Value		Grant-Date Fair Value

Nonvested, December 31, 2019		-				$	-
Granted		4,500,000		$	0.059			$	263,250
Vested		(4,500,000	)	$	0.059			$	263,250
Forfeited		-
Expired		-
Nonvested, March 31, 2020		-				$	-

During the three months ended March 31, 2020 and 2019, the Company incurred $29,266 and $0, respectively, as compensation expense related to 500,000 and 0 vested options, respectively, issued to directors.

As further discussed in Note 9. Subsequent Events below, effective June 24, 2020, the Company issued 2 million non-qualified stock options under the 2017 Equity Plan to newly appointed directors. The options will vest 50% upon grant and 50% on April 1, 2021, if the Director remains on the Board up to that time. The options have a term of 5 years and have an exercise price equal to the closing price of the Company’s common stock on The OTC Markets on the day immediately preceding the grant date.

Restricted Stock Units

A summary of the RSUs awarded to employees, directors and consultants under the 2017 Equity Plan during the three months ended March 31, 2020, are presented in the table below:

	Number of Units			Weighted Average Grant-Date Fair Value		Aggregate Intrinsic Value

Outstanding, December 31, 2019		7,550,000		$	0.128	$	528,500
Granted		-
Vested and settled with share issuance		(6,750,000	)	$	0.121
Forfeited/canceled		-
Outstanding, March 31, 2020		800,000		$	0.184	$	25,200

For the three months ended March 31, 2020 and 2019, the Company recorded $18,872 and $92,755, respectively, as compensation expense related to vested RSUs issued to employees, directors and consultants. The total intrinsic value of RSUs vested and settled with share issuance was $70,000 for the three months ended March 31, 2020.

As further disclosed in Note 9 – Subsequent Events below, the remaining 800,000 RSUs vested effective April 30, 2020. However, the holder of the RSUs elected not to exercise them and accordingly they have lapsed, unexercised.