| Options |
Note 10. Options
During the twelve months ended December 31,
2019 and December 31, 2018, approximately $2,251,300 and $808,300, respectively, in compensation expense was recognized on the
following:
| 1. |
In 2018 Options to purchase an aggregate of 104 shares of Blue Star’s common stock issued to Carlos Faria at an exercise price of $10,000 per share, which were outstanding immediately prior to the closing of the Merger, were converted into ten-year immediately exercisable options to purchase an aggregate of 3,120,000 shares of common stock at an exercise price of $0.333 under the Company’s 2018 Equity Incentive Plan (“2018 Plan”). These options were forfeited during the 12 months ending December 31, 2019 |
| 2. |
Options to purchase 3,120,000 shares of common stock at an exercise price of $2.00 with a 10 year life, which vest one-year from the date of grant, were issued to Christopher Constable under the 2018 Plan during the twelve months ending December 31, 2018. |
| 3. |
Options to purchase 430,000 shares of common stock at an exercise price of $2.00 with a 10 year life, which vest 25% each year from the date of grant, were issued to various long term employees under the 2018 Plan during the twelve months ending December 31, 2019. |
| 4. |
Options to purchase 250,000 shares of common stock at an exercise price of $2.00 with a 10 year life, which vest 20% each year from the date of grant, were issued to Zoty Ponce under the 2018 Plan during the twelve months ending December 31, 2019. |
| 5. |
Options to purchase 25,000 shares of common stock at an exercise price of $2.00 with a 10 year life, which vest 25% each year from the date of grant, were issued to various contractors during the twelve months ending December 31, 2019 |
The following table summarizes the assumptions
used to estimate the fair value of the stock options granted during 2019 and 2018:
| |
|
2019 |
|
|
|
2018 |
|
| Expected Volatility |
|
|
39%-48 |
% |
|
|
|
37%-39 |
% |
| Risk Free Interest Rate |
|
|
2.62%-2.71 |
% |
|
|
|
2.84 |
% |
| Expected life of options |
|
|
6.25 – 10.0 |
|
|
|
|
5 – 5.5 |
|
Under the Black-Scholes option pricing model,
the fair value of the 705,000 options granted during the twelve months ended December 31, 2019 is estimated at $613,586 on the
date of grant. The unrecognized portion of the expense remaining outstanding is $467,232. During the twelve months ended December
31, 2019, an aggregate of 15,000 shares subject to options were forfeited, none of which shares were vested and resulted in a reversal
of the expense of $2,263.
The following Table represents option activity
for the period ending December 31, 2019 and 2018:
| |
|
Number of Options |
|
|
Weighted Average Exercise Price |
|
|
Weighted Average Remaining Contractual Life in Years |
|
|
Aggregate Intrinsic Value |
|
| Outstanding - December 31, 2017 |
|
|
0 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
| Granted |
|
|
6,240,000 |
|
|
$ |
1.17 |
|
|
|
|
|
|
|
|
|
| Vested |
|
|
3,120,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Outstanding - December 31, 2018 |
|
|
6,240,000 |
|
|
$ |
1.17 |
|
|
|
9.86 |
|
|
|
|
|
| Exercisable - December 31, 2018 |
|
|
3,120,000 |
|
|
$ |
0.33 |
|
|
|
9.86 |
|
|
$ |
5,210,400 |
|
| Granted |
|
|
705,000 |
|
|
$ |
2.00 |
|
|
|
|
|
|
|
|
|
| Forfeited |
|
|
(3,135,000 |
) |
|
$ |
0.00 |
|
|
|
|
|
|
|
|
|
| Vested |
|
|
3,120,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Outstanding - December 31, 2019 |
|
|
3,810,000 |
|
|
$ |
2.00 |
|
|
|
8.86 |
|
|
|
|
|
| Exercisable - December 31, 2019 |
|
|
3,120,000 |
|
|
$ |
2.00 |
|
|
|
8.86 |
|
|
$ |
- |
|
|