STOCKHOLDERS’ EQUITY

12 Months Ended

Dec. 31, 2021

Equity [Abstract]

STOCKHOLDERS’ EQUITY

NOTE 10 – STOCKHOLDERS’ EQUITY

Stock Compensation

The Company offers incentive stock option equity awards to directors and key employees. Options vest in tranches and expire in five (5) years, subject to conditions of their grant. During the year ended December 31, 2021, and 2020, the Company recorded vested options expense of $341,515 and $80,603, respectively. The option expense not taken as of December 31, 2021, is $1,306,337, with a weighted average term of 2.25 years.

In 2021, 1,635,000 share incentive stock options were granted to two (2) independent members of the Board of Directors and six (6) key employees. Each independent Board member was granted 25,000 shares per quarter of service for 2020 and 2021 for a total of 200,000 shares each. The key employees were granted 1,435,000 share options as part of their employment agreements. During the year ended December 31, 2021, 923,210 shares were exercised. 250,000 of these options were exercised by one (1) former Board member who received his options at the time of the KonaTel Nevada merger in 2017 and who was not an independent director, and 250,000 of these options were exercised by an officer who also received his options at the time of the KonaTel Nevada merger; the remaining 423,120 options were exercised by a former key employee. During the year, 251,880 share options were forfeited. The forfeited options were 76,880 granted to a former key employee and 175,000 granted to former independent Board members. The Aggregate Intrinsic Value is based on the market value of the Company’s common stock of $1.75 on December 31, 2021.

Basic net income (loss) per share of common stock attributable to common stockholders is calculated by dividing net income (loss) attributable to common stockholders by the weighted-average shares of common stock outstanding for the period. Potentially dilutive shares, which are based on the weighted-average shares of common stock underlying outstanding stock-based awards using the treasury stock method or the if-converted method, as applicable, are included when calculating diluted net income (loss) per share of common stock attributable to common stockholders when their effect is dilutive.

The estimated grant date fair value of stock option grants was calculated using the Black-Scholes-Merton option-pricing model using the following assumptions:

Weighted average	231.59	%	280.02	%
Weighted average expected term (years)	2.25		2.2
Risk free interest rate	0.78	%	.90	%
Expected dividend yield	—		—

The following table represents stock option activity as of and for the year ended December 31, 2021:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Life		Aggregate Intrinsic Value
Options Outstanding: December 31, 2020		3,800,000		$	.21		3.60	$	812,350
Granted		1,635,000		$	.75		4.65
Exercised		(923,120	)	$	.21
Forfeited		(251,880	)
Options Outstanding: December 31, 2021		4,260,000		$	.37		2.25	$	5,862,938
Exercisable and Vested: December 31, 2021		1,981,926		$	.25		1.65	$	2,970,907

The following table represents stock option activity as of and for the year ended December 31, 2020:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Life		Aggregate Intrinsic Value
Options Outstanding: December 31, 2019		3,800,000		$	.20		3.00	$	—
Granted		400,000		$	.15		4.50
Exercised
Forfeited		(400,000	)
Options Outstanding: December 31, 2020		3,800,000		$	.21		3.60	$	812,350
Exercisable and Vested: December 31, 2020		3,600,000		$	.22		2.40	$	698,475

In 2020, 400,000 share options were granted to two (2) independent members of the Board of Directors. Each member was granted 25,000 shares per quarter of service for 2019 and 2020 for a total of 200,000 shares each. During the year 2020, 400,000 share options were forfeited. The forfeited options were 300,000 from a key employee and 100,000 from an independent Board member who had resigned and had not exercised his options prior to their expiration following resignation. The Aggregate Intrinsic Value is based on the market value of the Company’s common stock of $0.421 on December 31, 2020.

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