We granted 50,000 options to an officer in January, 2016, which had a term of 5 years, but which only became vested if sales of $20 million and pre-tax income of 15% were achieved in 2018. If those targets were not met until 2019, then 50% of the options would vest and the remainder canceled. If those targets were not met until 2020, then 25% of the options would vest and the remainder canceled. On October 1, 2017, the option agreement was amended to provide a one-year delay for meeting the sales and earnings targets and a revised exercise price. Because of the revision in exercise price, this amendment was deemed a new option. Accordingly, the outstanding options were canceled and new options were issued under the terms of the October 1, 2017 amendment. On January 25, 2019, this option agreement was amended to provide for an additional performance metric, namely, if the product known as SpinDx™, including the marijuana breathalyzer which incorporates SpinDx™ technology, has been completed and submitted to regulatory authorities for review by or before December 31, 2019, all of the 50,000 options will vest in full, whether or not the sales and earnings requirements have been met. This amendment to the performance metrics of the existing option agreement was deemed a modification to the existing option. The Stock-based compensation expense recognized under ASC 718 for the six months ended June 30, 2019 and 2018 was $3,221 and $8,734 respectively. These amounts consist of stock-based compensation expenses from grants of employee stock options which are allocated to General and Administrative Expense when incurred.
Dr. Wilkomm should be able to see the incentive to get this thing done by the end of the year. He has about 4 1/2 months to see this to fruition. For the sake of the shareholders and everyone involved, let's pray that Lifeloc can take the necessary steps to get this submitted!
