Note 4 – STOCK OPTIONS

The fair value of each stock option granted is estimated on the date of the grant using the Black-Scholes option pricing model. The Black-Scholes option pricing model has assumptions for risk free interest rates, dividends, stock volatility and expected life of an option grant. The risk free interest rate is based upon market yields for United States Treasury debt securities at a maturity near the term remaining on the option. Dividend rates are based on the Company’s dividend history. The stock volatility factor is based on the historical volatility of the Company’s stock price. The expected life of an option grant is based on management’s estimate as no options have been exercised in the Plan to date. The Company calculated a forfeiture rate for employees and directors based on historical information. A forfeiture rate of 0% is used for options granted to consultants. The fair value of each option grant to employees, directors and consultants is calculated by the Black-Scholes method and is recognized as compensation expense on a straight-line basis over the vesting period of each stock option award. The risk-free interest rate for the period within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.

		2018
Dividends		0%
Volatility factor		156%
Expected life		10 years
Annual forfeiture rate		0%

The following is a summary of the Company’s stock option activity for the nine months ended at September 30, 2018:

	Number of Shares		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term In Years		Aggregate Intrinsic Value
Outstanding at December 31, 2017		449,480,441	$	0.0026	8.28
Granted		1,455,000,000	$	0.0008	9.84
Exercised		—		—
Cancelled and forfeited		—		—
Outstanding at September 30, 2018		1,904,480,441	$	0.0012		9.29	$	—
Exercisable at September 30, 2018		1,176,980,441	$	0.0015		9.29	$	—

Stock options totalling 1,455,000,000 were granted during the nine months ended September 30, 2018. The Plan recorded $467,000 of compensation expense for employees and director stock options in 2018. At September 30, 2018, there was $394,731 of unrecognized compensation costs related to non-vested share-based compensation arrangements under the Plan that is expected to be recognized over a weighted average period of approximately two year. There were no options exercised during the nine months ended September 30, 2018.