Stock Option Plan and Stock-Based Compensation

3 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement [Abstract]

STOCK OPTION PLAN AND STOCK-BASED COMPENSATION

10. STOCK OPTION PLAN AND STOCK-BASED COMPENSATION

During the year ended December 31, 2010, the Company adopted a stock option plan entitled “The 2010 Stock Plan” (2010 Plan) under which the Company may grant options to purchase up to 5,000,000 shares of common stock. On September 7, 2013, the 2010 plan was amended to increase the number of shares of common stock issuable under the 2010 Plan to 7,500,000. As of March 31, 2021 and December 31, 2020, there were 250,000 and 250,000 options outstanding under the 2010 Plan, respectively.

During the year ended December 31, 2011, the Company adopted a non-qualified stock option plan entitled “2011 Non-Qualified Stock Plan” (2011 Plan) under which the Company may grant options to purchase 2,100,000 shares of common stock. In December 2012, the 2011 Plan was amended to increase the number of shares of common stock issuable under the 2011 Plan to 12,000,000 shares. During the period ended March 31, 2013, the 2011 Plan was amended to increase the number of shares of common stock issuable under the 2011 Plan to 17,500,000. As of March 31, 2021 and December 31, 2020, there were 8,871,000 and 8,871,000 options outstanding under the 2011 Plan.

Under the terms of the stock plans, the Board of Directors shall specify the exercise price and vesting period of each stock option on the grant date. Vesting of the options is typically three to four years and the options typically expire in five to ten years.

On August 22, 2016, the Company granted 6,000,000 options to purchase its common shares to its new CEO as a part of his employment agreement. The options consist of 3 separate tranches with different exercise prices and vest upon reaching certain milestones. All 6 million options have a five year life. The first 2,000,000 shares have an exercise price of $0.20 per share and vest upon the Company raising at least $1 million in financing. The second 2,000,000 shares carry an exercise price of $0.40 per share and vest upon the Company raising $5 million in financing. The third 2,000,000 shares carry an exercise price of $0.60 per share and vest upon the Company entering into a significant corporate alliance for substantial marketing and selling of the Company’s product portfolio. On March 1, 2018 the Board of Directors approved a reduction in the exercise price of 6,000,000 stock options issued to the Company’s CEO on August 22, 2016. The First tranche of 2,000,000 will be exercisable at $0.10 per share and the second and third tranches of 2,000,000 will be exercisable at $0.15 per share. The remainder of the terms remain unchanged.

In addition, the Company amended 1,500,000 stock options previously granted to the new CEO to extend the expiration date to August 22, 2026. These options were all previously vested.

No stock options were issued under either plan during the three months ended March 31, 2021 or 2020.

The Company did not record any stock-based compensation expense for either three month period ending March 31, 2021 or 2020 in connection with share-based payment awards. As of March 31, 2021 and December 31, 2020, there was $0 and $0, respectively of unrecognized compensation expense related to non-vested stock option awards.

The following table summarizes the Company’s stock option activity during the three months ended March 31, 2021 and 2020:

	Shares		Exercise Price per Share		Weighted Average Exercise Price per Share
Outstanding as of December 31, 2020		9,121,000	$	0.10 – 1.21	$	0.36
Granted		—		—		—
Exercised		—		—		—
Options forfeited/cancelled		—		—		—
Outstanding as of March 31, 2021		9,121,000	$	0.10 – 1.21	$	0.36

	Shares		Exercise Price per Share		Weighted Average Exercise Price per Share
Outstanding as of December 31, 2019		9,184,000	$	0.10 – 1.21	$	0.36
Granted		—		—		—
Exercised		—		—		—
Options forfeited/cancelled		—		—		—
Outstanding as of March 31, 2020		9,184,000	$	0.10 – 1.21	$	0.36

The following table summarizes information about stock options that are vested or expected to vest at March 31, 2021:

				Options Outstanding										Exercisable Options
Exercise Price		Number of Options		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value		Number of Options		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
$	0.10		3,500,000	$	0.10		2.54	$	—		3,500,000	$	0.10		2.54	$	—
	0.15		4,000,000		0.15		0.40		—		—		0.15		0.40		—
	0.18		934,000		0.18		2.23		—		934,000		0.18		2.23		—
	0.20		150,000		0.20		3.99		—		150,000		0.20		3.99		—
	0.37		58,000		0.37		1.43		—		58,000		0.37		1.43		—
	0.69		100,000		0.69		2.95		—		100,000		0.69		2.95		—
	1.21		379,000		1.21		2.75		—		379,000		1.21		2.75		—
$	0.10-1.21		9,121,000	$	0.20		1.62	$	—		5,121,000	$	0.20		1.62	$	—

The following table sets forth the status of the Company’s non-vested stock options as of March 31, 2021 and December 31, 2020:

	Number of Options		Weighted- Average Grant-Date Fair Value
Non-vested as of December 31, 2020		4,000,000	$	0.15
Granted		—		—
Forfeited		—		—
Vested		—		—
Non-vested as of March 31, 2021		4,000,000	$	0.15

The weighted-average remaining contractual life for options exercisable at March 31, 2021 is 1.62 years. At March 31, 2021 the Company has 8,871,000 and 7,250,000 options available for grant under the 2011 Plan and 2010 Plan, respectively.

The aggregate intrinsic value for fully vested, exercisable options was $0 at both March 31, 2021 and December 31, 2020, respectively. The aggregate intrinsic value of options exercised during the three months ended March 31, 2021 and 2020 was $0 for both periods as no options were exercised. The actual tax benefit realized from stock option exercises during the three months ended March 31, 2021 and 2020 were $0 for both periods as no options were exercised in either period.