Employee Stock Options

6 Months Ended

Jun. 30, 2015

Employee Stock Options [Abstract]

EMPLOYEE STOCK OPTIONS

7. EMPLOYEE STOCK OPTIONS

During the six months ended June 30, 2015, 29,500,000 options were granted to employees and a director for service provided. Of these, 10,000,000 options were immediately vested and were granted with an exercise price of $0.15 and the expiration date is May 18, 2018. Another 10,000,000 options vest over two years or upon the up listing of the Company’s stock and were granted with an exercise price of $0.15 and the expiration date is June 1, 2018. Another option for 1,500,000 shares vesting over three years was granted with an exercise price of $0.27 and the expiration date is May 4, 2019. A director received two options. The first was for 3,000,000 shares vesting over two years and was granted with an exercise price of $0.25 and the expiration date is June 1, 2018. The second was for 5,000,000 shares with vesting tied to performance and was granted with an exercise price of $0.25 and the expiration date is June 1, 2018. Based on management’s estimate, only 1,000,000 options will eventually vest while the remaining 4,000,000 would be forfeited.

The Company uses the Black-Scholes option pricing model to estimate the fair value of stock-based awards on the date of grant.

The following table summarizes the assumptions used to estimate the fair value of stock options granted during the six months ended June 30, 2015:

	2015
Expected dividend yield		0	%
Expected volatility		128	%
Risk-free interest rate		0.40 - 0.99	%
Expected life of options		1.50 – 3.42 years

Under the Black-Scholes option price model, fair value of the warrants granted is estimated at $5,142,284. During the six months ended June 30, 2015, $2,252,552 compensation expense was recognized and the remaining $2,889,732 will be recognized over the next three years.

The following table represents stock option activity as of and for the period ended June 30, 2015:

	Number of Options		Weighted Average Exercise Price		Contractual Life in Years		Intrinsic Value
Outstanding – December 31, 2014		-	$	0.00
Exercisable – December 31, 2014		-	$	0.00
Granted		29,500,000	$	0.18
Exercised or Vested		-	$	0.00
Forfeited or Expired		-	$	0.00
Outstanding – June 30, 2015		29,500,000	$	0.18		2.96
Exercisable – June 30, 2015		10,000,000	$	0.15		2.88	$	1,150,000