Annual report pursuant to Section 13 and 15(d)

Stock Options

v3.7.0.1
Stock Options
12 Months Ended
Dec. 31, 2016
Stock Options [Abstract]  
STOCK OPTIONS
7. STOCK OPTIONS

 

On March 6, 2014, the Company’s Board of Directors (the “Board”) approved the 2014 Equity Incentive stock plan pursuant to which the Company may grant incentive and non-statutory options to employees, nonemployee members of the Board, consultants and other independent advisors who provide services to the Corporation. The maximum shares of common stock which may be issued over the term of the plan shall not exceed 2,500,000 shares. Awards under this plan are made by the Board or a committee of the Board. Options under the plan are to be issued at the market price of the stock on the day of the grant except to those issued to holders of 10% or more of the Company’s common stock which is required to be issued at a price not less than 110% of the fair market value on the day of the grant. Each option is exercisable at such time or times, during such period and for such numbers of shares shall be determined by the Plan Administrator. However, no option shall have a term in excess of 5 years from the date of grant.

 

On March 6, 2014, the Company issued 650,000 options to its CEO, Darren Lampert, issued 400,000 options to its CFO, Irwin Lampert, issued 400,000 options to its President, Michael Salaman and issued 200,000 options to its COO, Jason Dawson exercisable at prices between $.60 and $.66 per share. On May 12, 2014, the Company issued 50,000 options to its director, Jody Kane and on May 14, 2014, the Company issued 50,000 options to its director, Steve Aiello, exercisable at prices between $.60 and $.66 per share. On July 7, 2014, the Company issued 100,000 options to 8 of its employees, exercisable at prices between $.60 and $.66 per share. On April 15, 2015 the Company issued 10,000 options to sales consultant, Duane Nunez and on October 8, 2015 it issued 25,000 options to sales consultant Troy Sower. The options vest 1/3 immediately, 1/3 one year after date of issuance and 1/3 two years after date of issuance. The options vest over a three year period. Compensation expense recorded for the year ended December 31, 2016 was $86,333.


Each stock option award is estimated as of the date of grant using a Black-Scholes Merton option valuation model that uses the assumptions noted in the table below. To address the lack of historical volatility data for the Company, expected volatility is based on the volatilities of peer companies. The risk-free rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

 

As of December 31, 2016, there were 1,872,000 options issued and outstanding under the plan.

 

  Expected volatility     141.26 %
  Expected dividends     -0-  
  Expected term     3 years  
  Risk-free rate     2.0 %

 

A summary of option activity as of December 31, 2016:

 

  Options   Shares     Weighted-Average Exercise Price     Weighted-Average Remaining Contractual Term
                   
  Outstanding at January 1, 2016     1,885,000     $     .62     3 years
  Granted     -0-       -0-      
  Exercised     -0-       -0-      
  Forfeited or expired     (13,000 )     -0-      
  Outstanding at December 31, 2016     1,872,000       .62     3 years

 

A summary of the status of the Company’s nonvested shares as of December 31, 2016 and changes during the period then ended is presented below:

 

            Weighted-Average  
            Grant Date  
  Nonvested shares   Shares     Fair Value  
               
  Nonvested at January 1, 2015     1,233,333       0.14  
  Granted     35,000       0.14  
  Vested     (628,334 )     0.14  
  Forfeited     -0-       -0-  
                   
  Nonvested at January 1, 2016     639,999       0.14  
  Granted     -0-       -0-  
  Vested     (626,999 )     0.14  
  Forfeited     (13,000 )     -0-  
                   
  Nonvested at December 31, 2016     -0-       0.14