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Equity Incentive Plan

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

Note 8 – 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 nine months ended September 30, 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 7 – Commitments and Contingencies, Litigation above.

As of September 30, 2020, awards related to 21,711,000 shares remain outstanding.

The total unrecognized compensation expense for unvested non-qualified stock options at September 30, 2020, was $30,839, which will be recognized over approximately 6 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 nine months ended September 30, 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		(2,440,900	)	$	0.100		4.4
Outstanding, September 30, 2020		14,311,000		$	0.084		8.5	$	-
Exercisable, September 30, 2020		12,311,000		$	0.083		8.5	$	-
Outstanding vested and expected to vest, September 30, 2020		14,311,000		$	0.084		8.5	$	-

During the three and nine months ended September 30, 2020, 1,812,100 and 2,440,900 non-qualified stock options expired unexercised, respectively, following the departure of seven former employees.

A summary of non-vested non-qualified stock options activity for employees and consultants under the 2017 Equity Plan for the nine months ended September 30, 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		(6,616,900	)	$	0.059			$	387,199
Forfeited		-						$	-
Expired		-						$	-
Nonvested, September 30, 2020		2,000,000		$	0.075	$	-	$	149,534

For the nine months ended September 30, 2020 and 2019, the Company recorded $171,624 and $332,779 as compensation expense related to vested options issued to employees and consultants, net of forfeitures, respectively.

During the nine months ended September 30, 2020, the Company issued 6,616,900 stock options to employees and consultants valued at $269,340 in respect of the 2019 annual equity incentive award that had been accrued for in full in the Company’s financial statements at December 31, 2019.

A summary of the non-qualified stock options granted to directors under the 2017 Equity Plan during the nine months ended September 30, 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		6,500,000	$	0.057		8.5
Exercised		-		-
Forfeited/Cancelled		-		-
Expired		-		-
Outstanding, September 30, 2020		7,400,000	$	0.067		7.7	$	-
Exerciseable, September 30, 2020		6,400,000	$	0.070		8.0	$	-

A summary of non-vested non-qualified stock options activity for directors under the 2017 Equity Plan for the nine months ended September 30, 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		6,500,000			0.057		$	373,000
Vested		(5,500,000	)		0.063		$	344,000
Forfeited		-			-		$	-
Expired		-			-		$	-
Nonvested, September 30, 2020		1,000,000			0.029		$	29,000

During the nine months ended September 30, 2020 and 2019, the Company incurred $55,970 and $0, respectively, as compensation expense related to 1,500,000 and 0 vested options, respectively, issued to directors.

Effective January 2, 2020, the Company issued 4,000,000 fully vested stock options to directors valued at $234,126 in respect of a 2019 special equity award that had been accrued for in full in the Company’s financial statements at December 31, 2019.

Further on January 2, 2020, the Company issued an additional 500,000 fully vested, non-qualified stock options under the 2017 Equity Plan valued at $29,266 to directors. 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 of $.0.07.

Effective June 24, 2020, the Company issued 2,000,000 non-qualified stock options under the 2017 Equity Plan, valued at $39,600, to newly appointed directors. The options vested 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 of $.029.

Restricted Stock Units

A summary of the RSUs awarded to employees, directors and consultants under the 2017 Equity Plan during the nine months ended September 30, 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	$	-
Granted		-			-
Vested and settled with share issuance		(6,750,000	)	$	0.121
Forfeited/canceled		(800,000	)	$	0.184
Outstanding, September 30, 2020		-				$	-

For the nine months ended September 30, 2020 and 2019, the Company recorded $25,163 and $230,796, 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 $199,125 for the nine months ended September 30, 2020.

Effective April 30, 2020, 800,000 RSUs vested. However, the holder elected to cancel the RSUs.