NOTE F - COMMON STOCK AND STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2019

Notes

NOTE F - COMMON STOCK AND STOCK-BASED COMPENSATION

NOTE F — COMMON STOCK AND STOCK-BASED COMPENSATION    COMMON STOCK    On May 17, 2019, certain employees, officers and directors and their family members exercised options to purchase 518,666 restricted shares of the Company’s common stock for cash proceeds of $116 and the reduction of deferred compensation payable to officers and directors of $1,440.    STOCK-BASED COMPENSATION    The Company does not have a written employee stock option plan. The Company has historically granted only employee stock options with an exercise price equal to the market price of the Company’s stock at the date of grant, a contractual term of ten years, and a vesting period of three years ratably on the first, second and third anniversaries of the date of grant (with limited exceptions).    All employee stock options granted during 2019 and 2018 were nonqualified stock options. Stock-based compensation is measured at the grant date, based on the calculated fair value of the option, and is recognized as an expense on a straight-line basis over the requisite employee service period (generally the vesting period of the grant).   

The following table summarizes the Company’s employee stock option activity for the years ended December 31, 2019 and 2018: 

Schedule of Employee Stock Option Activity
	Options	Weighted average exercise price	Weighted average remaining contractual life (yrs)	Aggregate intrinsic value
Options outstanding, December 31, 2017	2,110,834	$ 0.006	8.18
Options exercisable, December 31, 2017	626,834	$ 0.003	6.03	$ 22,902
Options granted during the year	2,013,000	0.040
Options exercised during the year	(1,750,000)	0.040
Options expired during the year	(3,000)	0.003
Options outstanding, December 31, 2018	2,370,834	$ 0.010	7.45
Options exercisable, December 31, 2018	1,126,167	$ 0.005	6.39	$ 34,623
Options granted during the year	483,000	0.003
Options exercised during the year	(518,666)	0.003
Options forfeited during the year	(16,333)	0.005
Options outstanding, December 31, 2019	2,318,835	$ 0.010	6.42
Options exercisable, December 31, 2019	1,628,165	$ 0.007	6.00	$ 37,682

The following table summarizes the Company’s non-vested employee stock option activity for years ended December 31, 2019 and 2018: 

	2019	2018
Non-vested options outstanding, beginning of year	1,244,667	1,484,000
Options granted during the year	483,000	2,013,000
Options vested during the year	(1,020,664)	(2,252,333)
Options forfeited during the year	(16,333)	-
Non-vested options outstanding, end of year	690,670	1,244,667

The fair values of the granted options are estimated at the date of grant using the Black-Scholes option pricing model. In addition to the exercise and grant date prices of the options, certain weighted average assumptions that were used to estimate the fair value of stock option grants in the respective periods are listed in the table below: 

	2019	2018
Risk free interest rate	1.55%–2.51 %	2.65%-2.77%
Expected lives (in years)	1-5	5
Expected volatility	36.47%-170%	163%-178%
Dividend yield	0%	0%

The following table shows total stock options compensation expense included in the Consolidated Statements of Operations and the effect on basic and diluted earnings per share for the years ended December 31: 

	2019	2018
Stock options compensation	$23,795	$75,134
Impact on income per share:
Basic and diluted	$-	$-

During the year 2019, 483,000 employee stock options were granted, of which 480,000 vested immediately, and 3,000 will vest one-third on each annual anniversary of the grant date resulting in $15,885 of stock options compensation. Stock options compensation of $7,910 recorded in the year 2019 was related to options that were granted in prior years. Additionally, 16,333 employee stock options were forfeited that were related to options granted in prior years. At December 31, 2019 there was $7,398 of unrecognized stock options compensation that is expected to be recognized as an expense over a weighted-average period of 3 years. 

Common Stock Purchase Warrants – A summary of common stock purchase warrant activity for the years ended December 31, 2019 and 2018 follows: