Common Stock Options

3 Months Ended

Mar. 31, 2015

Notes to Financial Statements

Note 4. Common Stock Options

Approval of the 2013 Long-Term Incentive Plan

On June 20, 2013, the Board of Directors (the “Board”) adopted, subject to receiving shareholder approval, the 2013 Long-Term Incentive Plan (the “Incentive Plan”). The Incentive Plan provides for the issuance of stock options of up to 20,000,000 shares (subject to adjustment) of the Company’s common stock to officers, directors, key employees and consultants of the Company. Options granted to employees under the Incentive Plan, including directors and officers who are employees, may be incentive stock options or non-qualified stock options; options granted to others under the Incentive Plan are limited to non-qualified stock options. On November 15, 2013, shareholders owning a majority of the Company’s issued and outstanding shares approved the Incentive Plan.

The Incentive Plan is administered by the Board or a committee designated by the Board. Subject to the provisions of the Incentive Plan, the Board has the authority to determine the officers, employees and consultants to whom options will be granted, the number of shares covered by each option, vesting rights and the terms and conditions of each option that is granted to them; however, no person may be granted in any of the Company’s fiscal year, options to purchase more than 2,000,000 shares under the Incentive Plan, and the aggregate fair market value (determined at the time the option is granted) of the shares with respect to which incentive stock options are exercisable for the first time by an optionee during any calendar year cannot exceed $100,000. Options granted pursuant to the Incentive Plan are exercisable no later than ten years after the date of grant.

The exercise price per share of common stock for options granted under the Incentive Plan will be the fair market value of the Company’s common stock on the date of grant, using the closing price of the Company’s common stock on the last trading day prior to the date of grant, except for incentive stock options granted to a holder of ten percent or more of the Company’s common stock, for whom the exercise price per share will not be less than 110% of the fair market value. No option can be granted under the Incentive Plan after June 20, 2023.

As of March 31, 2015, there were 19,815,000 shares available for grant.

Stock Option Activity

The following table summarizes stock option activity for the period ended March 31, 2015:

					Weighted
					Average
			Weighted		Remaining		Aggregate
	Options		Average		Contractual		Intrinsic
	Outstanding		Exercise Price		Life (Years)		Value
Balance January 1, 2015		185,000	$	0.83		9.12	$	9,300
Options granted		-		_		-	$	0
Balance March 31, 2015		185,000	$	0.83		8.87	$	110,800
Exercisable at March 31, 2015		85,000	$	0.72		8.96	$	22,500

The fair value of stock options are estimated at the date of grant using the Black-Scholes option pricing model. There were no stock options granted during the three months ended March 31, 2015.

During the three months ended March 31, 2015, stock-based compensation expense of $10,944 was recognized as general and administrative expenses. During the three months ended March 31, 2014, stock-based compensation expense of $6,782 was recognized as general and administrative expenses. There were 85,000 stock options vested and 100,000 stock options unvested as of March 31, 2015. As of March 31, 2015, the Company had $32,016 of total unrecognized compensation cost related to unvested stock options, which is expected to be recognized by April 1, 2019.

The Company issues new shares when options are exercised.