2. STOCK BASED COMPENSATION

9 Months Ended

Sep. 30, 2021

Notes

2. STOCK BASED COMPENSATION

2.     STOCK BASED COMPENSATION

The following table summarizes the Company’s employee stock option activity for the nine months ended September 30, 2021:

Schedule of Employee Stock Option Activity
	Options	Weighted average exercise price	Weighted average remaining contractual life (yrs)	Aggregate Intrinsic value
Options outstanding, December 31, 2020	2,989,963	$0.012	7.19
Options exercisable, December 31, 2020	1,727,463	$0.010	5.93	$   155,595
Options exercised during the period	203,000	$0.003
Options expired during the period	31,334	$0.003
Options issued during the period	90,000	$0.240
Options outstanding September 30, 2021	2,845,629	$0.020	6.85
Options exercisable September 30, 2021	1,913,133	$0.012	6.12	$ 1,336,090

During the nine months ended September 30, 2021, 90,000 nonqualified employee stock options were granted with an exercise price of $0.01 per option for 45,000 options and $0.47 per option for 45,000 options. The options were valued using Black-Scholes option pricing model on the respective date of issuance and the fair value of the options was determined to be $21,147 and $21,124, respectively, of which $1,174 was recognized as stock-based compensation expense for the nine months ended September 30, 2021. 45,000 of the stock options will vest one-third on each annual anniversary of the grant date (August 23, 2021), and 45,000 of the stock options will vest one-third on each annual anniversary date beginning four years after the date of grant (August 23, 2021).

During the nine months ended September 30, 2021, certain employees of the Company exercised options to purchase 203,000 restricted shares of the Company’s common stock. Proceeds from the exercise of the Options were $609. The common shares were issued pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, without payment of any form of commissions or other remuneration.

Total stock-based compensation expense for the nine months ended September 30, 2021 was $5,571 of which $1,174 was related to options issued during the nine months ended September 30, 2021 and $4,397 was related to options issued in prior years. 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).