The Company accounts for employee stock options and non-employee stock warrants under ASC 718 and ASC 505, whereby option costs are recorded based on the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable, utilizing the Black Sholes pricing model. Unless otherwise provided for, the Company covers option exercises by issuing new shares.

Beginning on December 12, 2012, Michael A. Lanphere, a related party and non-employee, loaned the Company money for a variety of purposes, some for working capital and some to allow the Company to pay outstanding obligations. Each of these loans was made pursuant to the terms of a Loan Agreement with Promissory Note and Stock Fee (the “Agreements”). Under the terms of the Agreements, Mr. Lanphere was not only entitled to repayment of the principal amount loaned to us, with interest, but also what was termed in the Agreements as a “Stock Fee” that the parties are interpreting as a stock warrant, which permits Mr. Lanphere to acquire shares of our common stock in exchange for an exercise price that was estimated based on the date of the loan agreement. The number of shares to be issued to Mr. Lanphere as a Stock Fee under each Agreement was an estimate and varied based on the loan amount and the price of our common stock on the day of the loan and was calculated by this formula: sixty percent (60%) or eighty percent (80%) of the loan amount divided by the Company’s stock price on the day of the loan, but at a price per share no higher than two and one-half cents ($0.025). Each Stock Fee is fully vested immediately and expires five (5) years from the date of the loan. Although the Stock Fee could be taken by Mr. Lanphere as a stock grant or a stock warrant, due to the fully vested nature of the Stock Fee, Mr. Lanphere is deemed to beneficially own those shares on the date of each Agreement. The number of warrants outstanding to Mr. Lanphere at March 31, 2019 and December 31, 2018 are 21,400,745 and 10,818,583, respectively.

The total outstanding balance of all non-employee stock warrants in TransBiotec, Inc. is 34,585,165 and 24,003,003 at March 31, 2019 and December 31 2018, respectively. There were 10,582,162 non-employee detached free-standing stock warrants granted during the three month period ended March 31, 2019 and 2,882,392 non-employee detached free-standing stock warrants granted during the three month period ended March 31, 2018. The fair value of these additional non-employee stock warrants granted during the three month period ended March 31, 2019 and during the year ended December 31, 2018 were determined using the Black-Sholes option pricing model based on the following assumptions:

The following table summarizes the changes in the Company’s outstanding warrants during the three months ended March 31, 2019 and 2018 and as of March 31, 2019 and December 31, 2018:

As of March 31, 2019 and December 31, 2018, there were three outstanding stock options to officers, directors, and consultants to purchase 1,775,000 shares of TransBiotec, Inc. common stock. The first outstanding stock option is dated October 1, 2014 and has an option price on that day of $0.0062, with an option exercise price of $0.25. The second outstanding option is dated October 27, 2014 at an option price on that day of $0.0066 with an option exercise price of $0.007, and the third outstanding option is dated August 15, 2016 at an option price on that day of $0.0045 with an option exercise price of $0.0045. These stock options vested upon grant. There were no stock options granted during the three months ended March 31, 2019 and 2018.

The following table summarizes the changes in the Company’s outstanding stock options during the three month period ended March 31, 2019 and 2018, and as of March 31, 2019 and December 31, 2018:

Executive Stock Options

The Company had 250,000 outstanding executive stock options exercisable at $0.007 per share as of March 31, 2019 and December 31, 2018.

Stock Subscriptions Payable

The Company had stock subscriptions payable due to a related party of $1,674 convertible into 337,894 of its common shares at March 31, 2019. The Company had stock subscriptions payable due to a related party of $1,271 convertible into 243,273 of its common shares at December 31, 2018. The Company recorded a related party gain of $8,113 and $7,776 related to the outstanding stock subscriptions payable during the three month period ended March 31, 2019 and 2018, respectively.