Shareholders' Equity | NOTE 5 – SHAREHOLDERS’ EQUITY Common shares issued for cash During the three months ended December 31, 2018, the Company received $10,000 from the sale of 142,857 shares of its common stock. In connection with the sale, the Company issued a warrant to the shareholder to purchase 284,714 shares of the Company’s common stock. The warrant expires five years from the date of grant and has an exercise price of $0.15 per share. Common shares issued for Services During the three months ended December 31, 2018, the Company issued 120,000 shares of its common stock valued at $9,600 for services provided by consultants. The shares were valued at the trading price of the common stock at the date of issuance. 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. The Company’s policy is to recognize compensation cost for awards with only service conditions and a graded vesting schedule on a straight-line basis over the requisite service period for the entire award. Additionally, the Company’s policy is to issue new shares of common stock to satisfy stock option exercises. The Company applied fair value accounting for all share based payments awards. The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model. During the three months ended December 31, 2018, the Company granted an option to an employee to purchase 62,500 shares of its common stock with a fair value of $3,206. The option has an exercise price of $0.06 per share and expires five years from the date of grant. The shares vested on December 31, 2018. The Company valued the option using a Black-Scholes option pricing model. The assumptions used for the option granted during the three months ended December 31, 2018 are as follows: Exercise price $ 0.06 Expected dividends - Expected volatility 126.8 % Risk free interest rate 2.85 % Expected life of options 2.5 During the three months ended December 31, 2018, the Company recorded $85,951 of stock compensation for the fair value of the vested options, and as of December 31, 2018, unvested compensation of $614,914 remained that will be amortized over the remaining vesting period. The table below summarizes the Company’s stock option activities for the three months ended December 31, 2018: Number of Option Shares Exercise Price Range Per Share Weighted Average Exercise Price Fair Value at Date of Grant Balance, September 30, 2018 17,946,667 $ 0.10 - 2.00 $ 0.28 $ 3,244,755 Granted 62,500 0.06 0.06 3,206 Cancelled (421,429 ) 0.19 0.19 - Exercised - - - - Expired - - - - Balance, December 31, 2018 17,587,738 $ 0.06 – 2.00 $ 0.28 $ 3,247,961 Vested and exercisable, December 31, 2018 12,418,095 $ 0.06 – 2.00 $ 0.34 $ 2,153,024 Unvested, December 31, 2018 5,591,072 $ 0.14 – 0.19 $ 0.15 $ 1,094,937 There was no aggregate intrinsic value for option shares outstanding at December 31, 2018. As of December 31, 2018, there were 11,990,833 shares of stock options remaining available for issuance under the 2010 Plan. The following table summarizes information concerning outstanding and exercisable options as of December 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 $ 0.06 - 0.39 14,075,238 3.79 $ 0.15 8,905,595 3.53 $ 0.15 0.40 - 0.99 2,112,500 0.31 0.40 2,112,500 0.31 0.40 1.00 - 1.99 750,000 2.00 1.00 750,000 2.00 1.00 2.00 650,000 2.00 2.00 650,000 2.00 2.00 $ 0.06 - 2.00 17,587,738 3.23 $ 0.28 12,418,095 2.81 $ 0.34 Stock Warrants During the three months ended December 31, 2018, the Company issued a warrant to purchase 284,714 shares with an exercise price of $0.15 per share as part of the sale of equity units. The warrant expires five years from the date of grant. The table below summarizes the Company’s warrants activities for the three months ended December 31, 2018: Number of Warrant Shares Exercise Price Range Per Share Weighted Average Exercise Price Fair Value at Date of Issuance Balance, September 30, 2018 67,907,728 $ 0.12 - 0.67 $ 0.17 $ 3,434,560 Granted 284,714 0.15 0.15 17,803 Cancelled - - - - Exercised - - - - Expired - - - - Balance, December 31, 2018 68,192,442 $ 0.12 - 0.67 $ 0.17 $ 3,452,363 Vested and exercisable, December 31, 2018 68,192,442 $ 0.12 - 0.67 $ 0.17 $ 3,452,363 Unvested, December 31, 2018 - $ - $ - $ - There was no aggregate intrinsic value for warrant shares outstanding at December 31, 2018. The following table summarizes information concerning outstanding and exercisable warrants as of December 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 59,279,384 2.61 $ 0.15 59,279,384 2.61 $ 0.15 0.21 – 0.49 8,574,570 1.36 0.28 8,574,570 1.36 0.28 0.50 – 0.67 338,488 0.30 0.68 338,488 0.30 0.68 $ 0.12 – 0.67 68,192,442 2.46 $ 0.17 68,192,442 2.46 $ 0.17 |