Shareholders' Deficit | NOTE 6 – SHAREHOLDERS’ DEFICIT Common shares issued for Services During the six months ended March 31, 2018, the Company issued 150,000 shares of its common stock valued at $26,700 for services provided by accounting and PSI consultants. The shares were valued at the trading price of the common stock at the date of issuance. Common shares issued in connection with Convertible Notes Payable During the six months ended March 31, 2018, the Company issued 486,849 shares of its common stock in connection with the issuance of convertible notes payable and also issued 550,000 shares upon the conversion of the notes payable (see Note 5). Stock Options On December 22, 2010, effective retroactively as of June 30, 2010, the Company’s Board of Directors approved the adoption of the “2010 Non-Qualified Stock Option Plan” (“2010 Option Plan”) by unanimous consent. The 2010 Option Plan was initiated to encourage and enable officers, directors, consultants, advisors and key employees of the Company to acquire and retain a proprietary interest in the Company by ownership of its common stock. A total of 7,500,000 of the authorized shares of the Company’s common stock may be subject to, or issued pursuant to, the terms of the plan. Effective January 1, 2018, the Board of Directors approved to increase the number of authorized shares of the Company’s common stock that may be subject to, or issued pursuant to, the terms of the plan from 7,500,000 to 30,000,000 (see Note 9). On January 1, 2018, the Company entered into employment agreements with three employees of SCI. Under the agreements, the Company issued options to purchase a combined total of 1,775,000 shares of its common stock with a fair value of $289,890. The options are exercisable over a term of five years, with an exercise price of $0.19. The Company valued the options using a Black-Scholes option pricing model. A combined total of 675,000 shares vested in equal amounts over a three-month period, starting on January 1, 2018, with the remainder vesting in equal amounts over the following one year and two months. During the three and six months ended March 31, 2018, the Company recorded $110,498 of stock compensation for the value of the options and as of March 31, 2018, unvested compensation of $179,392 remained that will be amortized over the remaining vesting period. Further, beginning on January 1, 2018, they will be granted additional stock options to purchase up to an aggregate total of 250,000 shares of the Company’s common stock each quarter. The options are exercisable over a five year period, are issuable on the last day of each quarter ending and vest immediately on the date of grant. All options accelerate and become fully vested upon the sale or change of control of the Company. During the six months ended March 31, 2018, the Company issued options to purchase 250,000 shares of its common stock to the employees with an exercise price of $0.13 per share. During the six months ended March 31, 2018, the Company valued the options using a Black-Scholes option pricing model and recorded $27,400 of stock compensation for the value of the options vested. The assumptions used for options granted during the six months ended March 31, 2018 are as follows: Exercise price $ 0.13 - 0.19 Expected dividends - Expected volatility 123.8% - 130.2 % Risk free interest rate 2.01% - 2.18 % Expected life of options 2.5 The table below summarizes the Company’s stock option activities for the three months ended March 31, 2018: Number of Option Shares Exercise Price Range Per Share Weighted Average Exercise Price Fair Value at Date of Grant Balance, September 30, 2017 6,822,500 $ 0.10 - 2.00 $ 0.51 $ 1,865,628 Granted 2,025,000 0.13 - 0.19 0.18 317,971 Cancelled - - - - Exercised - - - - Expired - - - - Balance, March 31, 2018 8,847,500 $ 0.10 – 2.00 $ 0.43 $ 2,183,599 Vested and exercisable, March 31, 2018 7,747,500 $ 0.10 – 2.00 $ 0.43 $ 2,003,527 Unvested, March 31, 2018 1,100,000 $ 0.19 $ 0.19 $ 180,072 The aggregate intrinsic value for option shares outstanding at March 31, 2018 was $13,438. The following table summarizes information concerning outstanding and exercisable options as of March 31, 2018: Options Outstanding Options Exercisable Range of Exercise Prices Number Outstanding Average Remaining Contractual Life (in years) Weighted Average Exercise Price Number Exercisable Average Remaining Contractual Life (in years) Weighted Average Exercise Price $ 0.10 - 0.39 5,325,000 3.72 $ 0.18 4,225,000 3.72 $ 0.18 0.40 - 0.99 2,122,500 1.05 0.40 2,122,500 1.05 0.40 1.00 - 1.99 750,000 2.75 1.00 750,000 2.75 1.00 2.00 650,000 2.75 2.00 650,000 2.75 2.00 $ 0.01 - 2.00 8,847,500 2.93 $ 0.43 7,747,500 2.93 $ 0.43 As of March 31, 2018, there were 21,152,500 shares of stock options remaining available for issuance under the 2010 Plan. Stock Warrants During the six months ended March, 31, 2018, the Company issued warrants to purchase 660,000 shares with an exercise price of $0.20 per share in connection with the issuance of a convertible note payable (see Note 5). The warrants expire five years from the date of grant. During the six months ended March, 31, 2018, warrants to purchase 1,407,619 shares of the Company’s common stock were exercised for $170,914. The table below summarizes the Company’s warrants activities for the three months ended March 31, 2018: Number of Warrant Shares Exercise Price Range Per Share Weighted Average Exercise Price Fair Value at Date of Issuance Balance, September 30, 2017 64,161,304 $ 0.12 - 1.00 $ 0.24 $ 2,151,219 Granted 660,000 0.20 0.20 132,000 Cancelled - - - - Exercised (1,407,619 ) 0.12 – 0.15 0.12 - Expired (4,317,602 ) 0.30 – 0.45 0.43 - Balance, March 31, 2018 59,096,084 $ 0.12 - 1.00 $ 0.22 $ 2,283,219 Vested and exercisable, March 31, 2018 59,096,084 $ 0.12 - 1.00 $ 0.22 $ 2,283,219 Unvested, March 31, 2018 - $ - $ - $ - The aggregate intrinsic value for warrant shares outstanding March 31, 2018 was $95,733. The following table summarizes information concerning outstanding and exercisable warrants as of March 31, 2018: Warrants Outstanding Warrants Exercisable Range of Exercise Prices Number Outstanding Average Remaining Contractual Life (in years) Weighted Average Exercise Price Number Exercisable Average Remaining Contractual Life (in years) Weighted Average Exercise Price $ 0.12 – 0.20 43,183,441 2.61 $ 0.15 43,183,441 2.61 $ 0.15 0.21 – 0.49 11,412,905 2.13 0.32 11,412,905 2.13 0.32 0.50 – 1.00 4,499,738 0.38 0.75 4,499,738 0.38 0.75 $ 0.12 – 1.00 59,096,084 2.35 $ 0.22 59,096,084 2.35 $ 0.22 |