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Options and warrants

12 Months Ended

Dec. 31, 2016

On September 8, 2015, the Company adopted the 2015 Incentive Compensation Plan ("the 2015 Plan") which authorizes up to 5,000,000 shares of common stock issuance to certain employees and consultants as defined in the 2015 Plan and approved by the Company's Board of Directors.

The 2015 Plan authorizes up to 5,000,000 shares of common stock issuance to persons employed by the Company either as an employee, officer, director or independent consultant or other person employed by the Company, provided that no person can be granted shares under the 2015 Plan for services related to raising capital or promotional activities. There are no restrictions on resale upon the purchases of the stock from the employees or the consultants, unless contained in the written award approved by the Board of Directors, or otherwise as provided by law. During 2016 and 2015, the Company did not grant any common stock options or warrants to consultants, directors and employees under the 2015 Plan. As of December 31, 2016, 4,987,500 shares are available under the 2015 Plan for future grants, awards, options or share issuance.

The fair value of each option granted was estimated on the date of grant using the Black Scholes model that uses assumptions noted in the following table. Expected volatility is based on the Company's historical market price at consistent points in periods equal to the expected life of the options. The expected term of options granted is based on the Company's historical experience. The risk-free interest rate for the periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The Company estimates forfeitures; both at the date of grant as well as throughout the requisite service period, based on the Company's historical experience and future expectations.

The aggregate intrinsic value of options outstanding and exercisable at December 31, 2016, based on the Company's closing stock price of $0.24 was $440,000 and $400,000, respectively. Intrinsic value is the amount by which the fair value of the underlying stock exceeds the exercise price of the options.

On September 16, 2016, 50,000 options were granted to the Company’s Principal Financial Officer and Principal Accounting Officer for past services. These options were issued outside of the 2015 Plan, have an exercise price of $0.50, fully vested on the grant date, expire 5 years from the date of grant and have a grant date fair value of $0.42.

During the year ended December 31, 2016, 1,000,000 options were granted to the Company’s President, Secretary, Treasurer and Board Director for future services to be provided to the Company, through December 31, 2017, as defined in the Future Services Agreement dated February 19, 2016. These options were issued outside of the 2015 Plan and have an exercise price of $0.16 per share. The grant date fair value of these options was $0.03 per share. 500,000 of these options vested immediately and expire five years from date of grant. Additionally, 500,000 options vest on the first anniversary of the grant date and expire five years from that date.

The weighted average assumptions made in calculating the fair value of options granted during the year ended December 31, 2016 are as follows:

Expected volatility	92% – 174		%
Expected dividend yield		-
Risk-free interest rate	1.21% - 1.24		%
Expected term (in years)		5.0

The following table represents our stock option and warrant activity for the year ended December 31, 2016 (post reverse split):

	Shares		Weighted Average Exercise Prices		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Outstanding and Exercisable
Outstanding at December 31, 2015		4,600,000	$	0.22		4.46		-
Options and warrants granted		1,050,000	$	0.18		-		-
Options and warrants cancelled or expired		40,000	$	6.00		-		-
Outstanding at December 31, 2016		5,610,000	$	0.17		3.62		440,000
Exercisable at December 31, 2016		5,110,000	$	0.17		3.57		400,000

Net cash proceeds from the exercise of options and warrants were $0 for each of the years ended December 31, 2016 and 2015. Stock based compensation was $50,306 and $327,604 for the years ended December 31, 2016 and 2015, respectively. As of December 31, 2016 there was $2,236 of unrecognized stock based compensation, which will be recognized during 2017.