NOTE 7 – STOCK OPTIONS

 The following table summarizes stock option activity:

Effective July 8, 2016 the Company’s board of directors approved the Polar Power 2016 Omnibus Incentive Plan (the “2016 Plan”), authorizing the issuance of up to 1,754,385 shares of common stock as incentives to employees and consultants to the Company with awards limited to a maximum of 350,877 shares in a given calendar year.

In December 2017, the Company granted to members of its board of directors, options to purchase an aggregate of 30,000 shares of the Company’s common stock that expire ten years from the date of grant, and vesting 1 year from issuance date. The fair value of each option award was estimated on the date of grant using the Black-Scholes option pricing model based on the following assumptions: (i) volatility rate of 57.71%, (ii) discount rate of 2.42%, (iii) zero expected dividend yield, and (iv) expected life of 6 years, which is the average of the term of the options and their vesting periods. The total fair value of the option grants at their grant date was approximately $98,000.

During the year ended December 31, 2017, the Company expensed total stock-based compensation related to stock options of $8,240, and the remaining unamortized cost of the outstanding stock-based awards at December 31, 2017 was approximately $90,000. This cost will be amortized on a straight line basis over the remaining vesting period of approximately nine months. At December 31, 2017, the 30,000 outstanding stock options had no intrinsic value, and none of the options had yet vested.