The Company’s common stock activity for the nine months ended September 30, 2017 is as follows:

Common Stock

Shares Issued for Services – During the period ended September 30, 2017, the Company issued 7,703,768 common shares to employees and vendors for services rendered with a fair value of $1,545,623 and are expensed based on fair market value of the stock price at the date of grant. Included in these issuances were 4,250,000 shares of common stock with a fair value of $740,000 granted to officers of the Company for services rendered.

Shares Issued to Settle Accounts Payable - During the period ended September 30, 2017, the Company amended an agreement with a vendor and issued 400,000 shares of common stock as full and final payment to the vendor on accounts payable owed of $30,000. The fair value of the shares issued was $56,000 which resulted in a loss on extinguishment of debt totaling $26,000 was recorded as part of the transaction.

Shares Issued from Stock Subscription – The Company issued stock subscription to investors. For the nine months ended September 30, 2017, the Company issued 6,525,000 common shares for a net proceed of $470,000, of which, $20,000 was received in fiscal 2016 and included as part of Subscription Receivable in the accompanying Statement of Stockholders’ Deficit as of December 31, 2016.

Shares Issued from Conversion of Preferred Stock – During the period ended September 30, 2017, 283,500 shares of Series A Preferred Stock plus the redemption premium and interest were redeemed through the issuance of 2,368,824 shares of common stock (see Note 7).

Shares Issued from Conversion of Note Payable - During the period ended September 30, 2017, the Company issued 1,026,195 shares of common stock with a fair value of $181,845 upon conversion of a note payable (see Note 4).

Shares Issued as Part of Convertible Note Payable - During the period ended September 30, 2017, the Company issued 50,000 shares of common stock with a fair market value of $12,500 as part of an issuance of the convertible note (see Note 6).

Stock Options

Effective October 16, 2014, the Company adopted the 2014 Stock Option Plan (the “Plan”) under the administration of the board of directors to retain the services of valued key employees and consultants of the Company.

At its discretion, the Company grants share option awards to certain employees and non-employees, as defined by ASC 718, Compensation—Stock Compensation, under the 204 Stock Option Plan (the “Plan”) and accounts for its share-based compensation in accordance with ASC 718.

A summary of option activity for the nine months ended September 30, 2017 is presented below.

For the nine months ended September 30, 2017, the Company approved and granted 5,100,000 non-qualified stock options to employees and 2,000,000 to a Director with an aggregate fair value of approximately $683,000 Each exercisable into one share of our common stock and vest 100% in three years from the grant date.

For the nine months ended September 30, 2017, the Company approved and granted 4,400,000 non-qualified stock options to consultants with an aggregate fair value of $969,481. Each exercisable into one share of our common stock. A total of 4,000,000 options vest based on consultant achieving quantifiable milestones while the remaining 400,000, options vest over 3 years. As of September 30, 2017, the Company determined that the probability of the consultants achieving these milestones was probable. As a result, the Company recorded compensation expense of $57,087 to account the estimated 880,924 options that vest.

The Company also recognized $221,335 in share-based compensation expense for the nine months ended September 30, 2017 based upon the vesting of these options. As of September 30, 2017, total unrecognized stock-based compensation expense was approximately $961,000, which is expected to be recognized as an operating expense through August 2020.

The fair value of each share option award on the date of grant is estimated using the Black-Scholes method based on the following weighted-average assumptions:

The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of measurement corresponding with the expected term of the share option award; the expected term represents the weighted-average period of time that share option awards granted are expected to be outstanding giving consideration to vesting schedules and historical participant exercise behavior; the expected volatility is based upon historical volatility of the Company’s common stock; and the expected dividend yield is based upon the Company’s current dividend rate and future expectations

Warrants

The Company has the following warrants outstanding as of September 30, 2017 all of which are exercisable:

For the nine months ended September 30, 2017, the Company granted the following warrants: