Quarterly report pursuant to Section 13 or 15(d)

STOCK-BASED COMPENSATION

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STOCK-BASED COMPENSATION
9 Months Ended
Jun. 30, 2019
Share-based Payment Arrangement [Abstract]  
STOCK-BASED COMPENSATION

NOTE 8 – STOCK-BASED COMPENSATION

 

On January 1, 2017, 33.5 million stock options, with an exercise price of $0.0278 per share, were granted to 6 employees and 2 directors of the Company. The CEO was not included in the award. The stock options vested 50% on January 1, 2017, and 50% on January 1, 2018. The stock options are exercisable for seven years from the original grant date of January 1, 2017, until January 1, 2024.

 

On May 1, 2018, 500,000 stock options, with an exercise price of $0.065 per share were granted to an employee. The stock options vested on the issue date. The stock options are exercisable for approximately 7.5 years from the date of grant of May 1, 2018 to December 31, 2025.

 

On June 1, 2018, 67.5 million stock options, with an exercise price of $0.075 per share were granted to employees, directors and contractors. 18.5 million of the stock options vested on June 1, 2018, 24 million vested on June 1, 2019 and 25 million will vest on June 1, 2020 provided the holder continues to serve as an employee or a director on the vesting date. The stock options are exercisable for approximately 7.5 years from the grant date of June 1, 2018, to December 31, 2025. 49 million of these stock options were awarded from the Company’s 2018 Omnibus Incentive Plan and 18.5 million stock options were inducement awards.

 

On January 2, 2019 the Company issued 1 million stock options to a former employee and contractor. 50% of the stock options vested on the issue date and the remainder will vest in July 2019. The stock options were valued at approximately $35,000 to be recognized over the service period of seven months. The stock options are exercisable until December 31, 2025. 

 

The fair value of the stock-options granted during 2018 and 2019 were determined using the Black Scholes valuation model with the following key assumptions:

 

Date of Grant May 1, 2018 June 1, 2018 January 2, 2019
Number of Stock Options Granted 500,000 67,500,000 1,000,000
Stock Price $ 0.065 $ 0.075 $ 0.045
Exercise Price $ 0.065 $ 0.075 $ 0.045
Expected Life of Options 4.25 years 4.25 years 3.75 years
Risk Free Rate 2.74 % 2.675 % 2.51 %
Volatility 145.21 % 145.21 % 126.37 %

 

The following table summarizes the Company’s stock option activity during the nine months ended June 30, 2019:

 

Number
of Options
Weighted
Average
Exercise Price
Weighted Average
Remaining
Contractual Term
(In years)
Outstanding at September 30, 2018 103,500,000 $ 0.0605
Granted 1,000,000 0.0450
Exercised
Cancelled
Outstanding at June 30, 2019 104,500,000 $ 0.0604 5.82
Vested and expected to vest 104,500,000 $ 0.0604 5.82
Exercisable at June 30, 2019 79,000,000 $ 0.0559 5.82

 

There was approximately $0.4 million of intrinsic value for the options outstanding as of June 30, 2019. As of June 30, 2019, there was approximately $1.5 million of unrecognized stock-based compensation expense to be recognized over a period of 1 year.

 

Stock-based compensation cost is measured at the grant date, using the estimated fair value of the award, and is recognized over the required vesting period. The Company recognized $415,111 and $1,371,150 in stock based compensation during the three months ended June 30, 2019 and June 30, 2018, respectively. A portion of these costs, $229,255 and $585,858, were capitalized to unproved properties for the three months ended June 30, 2019 and June 30, 2018, respectively, with the remainder recorded as general and administrative expenses for each respective period. The Company recognized $1,217,214 and $1,464,534 in stock based compensation for nine months ended June 30, 2019 and 2018, respectively. A portion of these costs, $659,196 and $613,733, were capitalized to unproved properties for the nine months ended June 30, 2019 and 2018, respectively.