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Stock Options

9 Months Ended

Sep. 30, 2018

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

STOCK OPTIONS

NOTE 10 – STOCK OPTIONS

Our stockholders approved our 2014 Equity Incentive Plan in June 2014 (the “2014 Plan”), our 2015 Equity Incentive Plan in December 2015 (the “2015 Plan”), our 2016 Equity Incentive Plan (“2016 Plan”) in October 2016, our 2017 Equity Incentive Plan in December 2016 (“2017 Plan”) and our 2018 Equity Incentive Plan in June 2018 (the “2018 Plan”), and together with the 2014 Plan, 2015 Plan, 2016 Plan, 2017 Plan, and 2018 Plan the “Plans”). The Plans are identical, except for number of shares reserved for issuance under each. As of September 30, 2018, the Company had granted an aggregate of 58,600,000 securities under the Plans, with 5,900,000 shares available for future issuances.

The Plans provide for the grant of incentive stock options to our employees and our parent and subsidiary corporations’ employees, and for the grant of non-statutory stock options, stock bonus awards, restricted stock awards, performance stock awards and other forms of stock compensation to our employees, including officers, consultants and directors. Our Plans also provide that the grant of performance stock awards may be paid out in cash as determined by the committee administering the Plans.

During the nine months ended September 30, 2018, the Company granted ten-year options outside of our Plans to purchase up to 13,250,000 shares of the Company’s common stock. The fair value of $2,136,883, was determined using the Black-Scholes option pricing model, assuming approximately 2.78% - 2.98% risk-free interest, 0% dividend yield, 112.67% -116.28% volatility, and expected life of ten years and will be charged to operations over the vesting terms of the options.

The summary terms of the issuances are as follows:

Exercise Price				Number of Options				Vesting Terms
$	0.20				12,000,000			Immediately
	0.36				250,000			Immediately
	0.40				1,000,000			Immediately

Stock options outstanding and exercisable on September 30, 2018 are as follows:

Exercise Price		Number of Options				Remaining Life In Years				Number of Options Exercisable
$0.01 – 0.25			13,056,786				9.49				13,056,786
0.26 - 0.50			1,939,631				8.51				1,939,631
0.51 – 0.75			1,820,112				7.93				1,820,112
0.76 - 1.00			9,926,072				7.96				9,912,072
1.01 - 2.00			629,164				7.86				629,164
			27,371,765								27,357,765

A summary of the stock option activity for the nine months ended September 30, 2018 is as follows:

		Shares				Weighted-Average Exercise Price				Weighted-Average Remaining Contractual Term				Aggregate Intrinsic Value
Outstanding at December 31, 2017			14,378,432			$	0.76				8.48			$	771,359
Grants			13,250,000				0.22
Exercised			(256,667	)			0.51
Forfeiture/Canceled			-
Outstanding at September 30, 2018			27,371,765				0.50				8.73			$	-
Exercisable at September 30, 2018			27,357,765			$	0.50				8.73			$	-

The aggregate intrinsic value of outstanding stock options was $25,363, based on options with an exercise price less than the Company’s stock price of $0.13 as of September 30, 2018, which would have been received by the option holders had those option holders exercised their options as of that date.

Due to a clerical error, MassRoots’ Annual Report on Form 10-K filed on April 17, 2018, as amended on April 30, 2018, stated that 2,454,761 options were canceled/expired for the twelve months ending December 31, 2017 and the options outstanding as of December 31, 2017 were 14,377,570. It should have stated that 2,863,715 options were canceled/expired for the twelve months ending December 31, 2017 and the options outstanding as of December 31, 2017 were 14,378,432. While we are correcting this error in this Quarterly Report on Form 10-Q and subsequent filings, we do not believe it has a material impact on our fiscal 2017 financial statements.

Option valuation models require the input of highly subjective assumptions. The fair value of stock-based payment awards was estimated using the Black-Scholes option pricing model with a volatility figure derived historical data. The Company accounts for the expected life of options based on the contractual life of options for non-employees.