STOCK OPTION PLAN AND STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK OPTION PLAN AND STOCK-BASED COMPENSATION

9. 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 September 30, 2018, and December 31, 2017, 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 September 30, 2018, and December 31, 2017, there were 13,344,000 and 9,344,000 options outstanding under the 2011 Plan, respectively

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 February 12, 2018, Loraine Upham was appointed as Chief Operating Officer. Ms. Upham received a stock option to purchase 4,000,000 shares of common stock under the Company’s Amended and Restated 2011 Stock Incentive Plan, vesting over three (3) years, one third on the first anniversary of the effective date and the balance in equal quarterly installments. The exercise price of the initial tranche of options (1,333,334 shares) shall be $0.06 per share, the second tranche (1,333,333 shares) shall be $0.10 per share and the final tranche (1,333,333 shares) shall be $0.20 per share. The term of the options is five years.

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.

No stock options were issued under either plan during the nine months ended September 30, 2017.

The fair value of stock options granted and revaluation of non-employee consultant options for the nine months ended September 30, 2018 was calculated with the following assumptions:

	2018
Risk-free interest rate		2.3	%
Expected dividend yield		0	%
Volatility factor		217.6	%
Expected life of option		5 years

For the three and nine months ended September 30, 2018, the Company recorded stock-based compensation expense of $43,290 and $141,686, respectively, in connection with share-based payment awards. For the three and nine months ended September 30, 2017, the Company recorded stock- based compensation expense of $12,439 and $37,317, respectively, in connection with share-based payment awards. As of September 30, 2018, there was $263,370 of unrecognized compensation expense related to non-vested stock option awards.

The following table summarizes the Company’s stock option activity during the nine months ended September 30, 2018:

	Shares		Exercise Price per Share		Weighted Average Exercise Price per Share
Outstanding as of December 31, 2017		9,594,000	$	0.10 – 1.21	$	0.36
Granted		4,000,000		0.06 – 0.20		0.12
Exercised		—		—		—
Options forfeited/cancelled		—		—		—
Outstanding as of September 30, 2018		13,594,000	$	0.06 – 1.21	$	0.29

Boston Therapeutics, Inc. 

Notes to Unaudited Condensed Consolidated Financial Statements 

For the Three and Nine Months Ended September 30, 2018 and 2017

The following table summarizes information about stock options that are vested or expected to vest at September 30 2018:

				Vested or Expected to Vest										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
$	0.06		1,333,334	$	0.06		4.38	$	—		—	$	0.06		4.38	$	—
	0.10		2,933,333		0.10		6.00		—		1,600,000		0.10		6.00		—
	0.18		934,000		0.18		4.75		—		934,000		0.18		4.75		—
	0.20		3,483,333		0.20		3.62		—		2,150,000		0.20		3.62		—
	0.37		58,000		0.37		3.93		—		58,000		0.37		3.93		—
	0.40		2,000,000		0.40		2.92		—		—		0.40		2.92		—
	0.42		63,000		0.42		2.25		—		63,000		0.42		2.25		—
	0.50		310,000		0.50		1.08		—		310,000		0.50		1.08		—
	0.60		2,000,000		0.60		2.92		—		—		0.60		2.92		—
	0.69		100,000		0.69		5.50		—		100,000		0.69		5.50		—
	1.21		379,000		1.21		5.25		—		379,000		1.21		5.25		—
$	0.06-1.21		13,594,000	$	0.29		4.04	$	—		5,594,000	$	0.27		4.72	$	—

The following table sets forth the status of the Company’s non-vested stock options as of September 30, 2018 and December 31, 2017:

	Number of Options		Weighted- Average Grant-Date Fair Value
Non-vested as of December 31, 2017		4,000,000	$	0.50
Granted		4,000,000		0.12
Forfeited		—		—
Vested		—		—
Non-vested as of September 30, 2018		8,000,000	$	0.31

Boston Therapeutics, Inc. 

Notes to Unaudited Condensed Consolidated Financial Statements 

For the Three and Nine Months Ended September 30, 2018 and 2017

The weighted-average remaining contractual life for options exercisable at September 30, 2018 is 4.72 years. At September 30, 2018 the Company has 4,156,000 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 September 30, 2018. The aggregate intrinsic value of all options granted at September 30, 2018 was $0.