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Stock Options

6 Months Ended

Jun. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Note 13 – Stock Options

On July 30, 2014, the Company’s board of directors approved the Company’s 2014 Equity Incentive Plan (the “Plan”) and the reservation of 15,525,000 shares of common stock for issuance under the Plan. The Plan was approved by the Company’s shareholders and became effective on August 5, 2015.

On April 2, 2014, the Company granted 1,000,000 options with an exercise price of $0.25 per share to a company owned by Mr. Jack Ross, Chief Executive Officer of the Company.

On December 14, 2015, the Company granted 1,000,000 options each with an exercise price of $0.25 per share to two Board members of the Company.

On December 14, 2015, the Company granted 1,000,000 options each with an exercise price of $0.65 per share to two employees of the Company.

On February 18, 2016, the Company granted 300,000 options with an exercise price of $0.70 per share to an employee of the Company.

On April 18, 2016, the Company granted 500,000 options with an exercise price of $0.70 per share to an employee of the Company.

On July 4, 2016, the Company granted 500,000 options with an exercise price of $0.70 per share to an employee of the Company.

The following table summarizes the options outstanding, option exercisability and the related prices for the shares of the Company’s common stock issued to employees and consultants under the Plan at June 30, 2017:

				Options Outstanding												Options Exercisable
Exercise Prices ($)				Number Outstanding				Weighted Average Remaining Contractual Life (Years)				Weighted Average Exercise Price ($)				Number Exercisable				Weighted Average Exercise Price ($)
$	0.25 - $0.70				6,300,000				6.47			$	0.47				3,958,332			$	0.42

The stock option activity for the six months ended June 30, 2017 is as follows:

		Options Outstanding				Weighted Average Exercise Price
Outstanding at December 31, 2016			6,300,000			$	0.47
Granted			-				-
Exercised			-				-
Expired or canceled			-				-
Outstanding at June 30, 2017			6,300,000			$	0.47

Stock-based compensation expense related to vested options was $341,544 and $680,679 during the three and six months ended June 30, 2017, respectively, which is a component of general and administrative expense in the statement of income. The Company determined the value of share-based compensation for options vesting during the period using the Black-Scholes fair value option-pricing model with the following weighted average assumptions: estimated fair value of Company’s common stock of $0.40-0.74, risk-free interest rate of 0.90-2.23%, volatility of 135-160%, expected lives of 3-10 years, and dividend yield of 0%. Stock options outstanding as of June 30, 2017, as disclosed in the above table, have an intrinsic value of $660,000.

As of June 30, 2017, unrecognized compensation costs related to non–vested stock–based compensation arrangements were $858,030, and is expected to be recognized over a weighted average period of 1 year.