Note 16 – Common Stock Options

Stock Incentive Plan

On February 12, 2020, the Company’s stockholders approved our 2019 Stock Incentive Plan (the “2019 Plan”), which had been adopted by the Company’s Board of Directors (the “Board”) as of December 10, 2019. The 2019 Plan provides for the issuance of up to 10,000,000 shares of common stock to the Company and its subsidiaries’ employees, officers, directors, consultants and advisors, stock options (non-statutory and incentive), restricted stock awards, stock appreciation rights (“SARs”), restricted stock units (“RSUs”) and other performance stock awards. Options granted under the 2019 Plan may either be intended to qualify as incentive stock options under the Internal Revenue Code of 1986, or may be non-qualified options, and are exercisable over periods not exceeding ten years from date of grant. Unless sooner terminated in accordance with its terms, the Stock Plan will terminate on December 10, 2029.

Common Stock Options Issued for Services

On July 1, 2020, the Company awarded options to purchase 125,000 shares of the Company’s Common Stock at an exercise price equal to $0.38 per share to a consultant. The options were issued outside of the Company’s 2019 Plan and are exercisable over a ten year period. The options will vest quarterly over six months. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 303% and a call option value of $0.3798, was $47,476. The options are being expensed over the vesting period, resulting in $23,738 of stock-based compensation expense during the nine months ended September 30, 2020. As of September 30, 2020, a total of $23,738 of unamortized expenses are expected to be expensed over the vesting period.

On July 1, 2020, the Company awarded options to purchase 1,000,000 shares of the Company’s Common Stock at an exercise price equal to $0.38 per share to a consultant. The options were issued outside of the Company’s 2019 Plan and are exercisable over a ten year period. The options will vest quarterly over three years. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 303% and a call option value of $0.38, was $379,958. The options are being expensed over the vesting period, resulting in $31,663 of stock-based compensation expense during the nine months ended September 30, 2020. As of September 30, 2020, a total of $348,295 of unamortized expenses are expected to be expensed over the vesting period.

On July 1, 2020, the Company awarded options to purchase 125,000 shares of the Company’s Common Stock at an exercise price equal to $0.38 per share to a consultant for Advisory Board services. The options were issued outside of the Company’s 2019 Plan and are exercisable over a ten year period. The options will vest quarterly over one year. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 303% and a call option value of $0.3799, was $47,482. The options are being expensed over the vesting period, resulting in $11,871 of stock-based compensation expense during the nine months ended September 30, 2020. As of September 30, 2020, a total of $35,611 of unamortized expenses are expected to be expensed over the vesting period.

On June 3, 2020, the Company awarded options to purchase 5,500,000 shares of the Company’s Common Stock at an exercise price equal to $0.55 per share to Isiah L. Thomas III, the Company’s Chief Executive Officer and Vice Chairman. The options were issued outside of the Company’s 2019 Plan and are exercisable over a ten year period. The options vest as to 1,500,000 shares immediately, as to 1,000,000 shares 120 days following the issuance of the option (the “Second Vesting Date”), and as to the remaining 3,000,000 shares vesting quarterly over the three years following the Second Vesting Date. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 301% and a call option value of $0.5499, was $3,024,689. The options are being expensed over the vesting period, resulting in $1,040,366 of stock-based compensation expense during the nine months ended September 30, 2020. As of September 30, 2020, a total of $1,984,323 of unamortized expenses are expected to be expensed over the vesting period.

On May 31, 2020, the Company awarded options to purchase 350,000 shares of the Company’s Common Stock at an exercise price equal to $0.56 per share to the Company’s Chairman of the Board, Dr. Ken Perego. The options vest as to 116,667 shares immediately, with the remaining 233,333 shares vesting quarterly over the following two years, beginning October 1, 2020. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 302% and a call option value of $0.5599, was $195,959. The options are being expensed over the vesting period, resulting in $86,263 of stock-based compensation expense during the nine months ended September 30, 2020. As of September 30, 2020, a total of $109,696 of unamortized expenses are expected to be expensed over the vesting period.

On May 31, 2020, the Company awarded options to purchase 350,000 shares of the Company’s Common Stock at an exercise price equal to $0.56 per share to Bruce Raben, a Director of the Company. The options vest as to 116,667 shares immediately, with the remaining 233,333 shares vesting quarterly over the following two years, beginning October 1, 2020. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 302% and a call option value of $0.5599, was $195,959. The options are being expensed over the vesting period, resulting in $86,263 of stock-based compensation expense during the nine months ended September 30, 2020. As of September 30, 2020, a total of $109,696 of unamortized expenses are expected to be expensed over the vesting period.

On May 31, 2020, the Company awarded options to purchase an aggregate 2,000,000 shares of the Company’s Common Stock at an exercise price equal to $0.56 per share to eight consultants and employees. The options vest as to 666,667 shares immediately, with the remaining 1,333,333 shares vesting quarterly over the following three years, beginning October 1, 2020. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 302% and a call option value of $0.5599, was $1,119,873. The options are being expensed over the vesting period, resulting in $454,181 of stock-based compensation expense during the nine months ended September 30, 2020. As of September 30, 2020, a total of $665,692 of unamortized expenses are expected to be expensed over the vesting period.