8. Stock Options

12 Months Ended

Dec. 31, 2016

Notes

8. Stock Options

8.               Stock Options

The Company has established a Stock Option Incentive Plan (“SIP”) to authorize the granting of stock options up to 10 percent of the total number of issued and outstanding shares of common stock to employees, directors and consultants. Upon exercise of options, shares are issued from the available authorized shares of the Company.

Option awards are generally granted with an exercise price equal to the fair market value of the Company’s stock at the date of grant. 

In July 2016, the Company granted 2,525,000 stock options to directors, officers, employees and consultants of the Company and its affiliates to purchase common shares of the Company. The options are exercisable on or before July 20, 2021 at a price of $0.10 per share.  After this grant, the Company has 4,765,000 outstanding stock options that represent 8.7% of the issued and outstanding shares of common stock.

On February 6, 2015, the Board approved a grant of one million options to directors, executive officers and other non-employees’ consultants to purchase common shares of the Company. The granted options were valued and recorded using the Black Scholes model. The Black Scholes calculation on the 1,000,000 options that were issued was a fair value of $0.06 per option ($60,000 in total). The SIP was approved by shareholder vote during the January 20, 2015 annual shareholder meeting.

The fair value of the options was determined to be $175,199 and $60,000 in 2016 and 2015, respectively, which was recognized as compensation expense upon the grant date because the options were fully vested.  The fair value of each option award was estimated using the Black Scholes model on the date of the grant using the following assumptions:

	2016	2015
Stock price	$ 0.07	$ 0.06
Exercise price	$ 0.10	$ 0.06
Expected volatility	238.9%	230.1%
Expected dividends	-	-
Expected terms (in years)	5.0	5.0
Risk-free rate	1.15%	1.31%

The following is a summary of the Company’s options issued under the Stock Option Incentive Plan:

	Shares	Weighted Average Exercise Price
Outstanding and exercisable at December 31, 2014	2,990,000	$0.20
Granted	1,000,000	0.06
Outstanding and exercisable at December 31, 2015	3,990,000	0.17
Expired	(2,000,000)	(0.27)
Granted	2,525,000	0.10
Outstanding and exercisable at December 31, 2016	4,515,000	$ 0.08

The average remaining contractual term of the options outstanding and exercisable at December 31, 2016 was 3.50 years.  As of December 31, 2016, options outstanding and exercisable had no aggregate intrinsic value.