Quarterly report pursuant to Section 13 or 15(d)

STOCK-BASED COMPENSATION

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STOCK-BASED COMPENSATION
9 Months Ended
Sep. 30, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
STOCK-BASED COMPENSATION

NOTE 6  STOCK-BASED COMPENSATION

 

On June 29, 2016, the Board of Directors amended the 2015 Stock Option Plan authorizing the Company to grant awards to certain employees under the plan, which was approved by shareholders at the Annual Meeting held on September 6, 2016.  The total number of shares of Common Stock, with respect to which awards may be granted pursuant to the Plan, shall not exceed 4,000,000 shares.

 

As of September 30, 2018, there were outstanding 1,919,000 options awarded to certain executives, key employees and advisory board members under the Plan.

 

On October 21, 2015, the Board of Directors of the Company approved non-employee director compensation of $25,000 each annually, to be paid quarterly half in cash and half in common stock, beginning September 1, 2015.

 

The fair value of each award is estimated on the grant date using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in the nine months ended September 30, 2018 and September 30, 2017. Historical information was the primary basis for the selection of the expected volatility, expected dividend yield and the expected lives of the options.  The risk-free interest rate was selected based upon yields of the U.S. Treasury issues with a term equal to the expected life of the option being valued:

 

    September 30,  
    2018   2017  
               
Dividend yield     0.00%     0.00%  
Expected Volatility     62.8 - 65.2%     70.1 - 72.20%  
Weighted-average volatility          
Expected dividends          
Expected term (in years)     5 Years     5 Years  
Risk-free rate     2.80 - 2.90%     2.30 - 2.48%  

 

The following table summarizes the status of the Plan:

 

    Nine months Ended September 30,  
    2018   2017  
    Shares   Weighted
Average
Exercise
Price
  Shares   Weighted
Average
Exercise
Price
 
                   
Outstanding at January 1   1,038,000   $ 0.41     905,000   $ 0.37  
Granted   1,018,000   $ 1.23     568,000   $ 0.41  
Exercised   125,000   $ 0.41       $  
Forfeited   12,000   $ 0.87     310,000   $ 0.36  
Outstanding at September 30   1,919,000   $ 0.85     1,163,000   $ 0.40  
Options exercisable at September 30   666,969   $ 0.40     573,000   $ 0.38  
Stock-based compensation expense     $ 51,592       $ (13,979 )

 

Total stock-based compensation expense, net of estimated forfeitures for stock option awards totaled $51,592 and ($13,979) for the nine months ended September 30, 2018 and September 30, 2017, respectively. Cash received from option exercises for the nine months ended September 30, 2018 and 2017 was $51,250 and zero, respectively.

 

The weighted-average grant-date fair value of options granted during the nine months ended September 30, 2018 and September 30, 2017, was $0.68 and $0.22, respectively.  The total intrinsic value of options exercised during the nine months ended September 30, 2018 and September 30, 2017, was $30,664 and zero, respectively.

 

The following table presents information pertaining to options outstanding at September 30, 2018:

 

Range of Exercise Price   Number
Outstanding
  Weighted
Average
Remaining
Contractual
Life
  Weighted
Average
Exercise
Price
  Number
Exercisable
  Weighted
Average
Exercise
Price
 
                           
$0.36 - $1.33   1,919,000   5 years   $ 0.85   666,969   $ 0.40  

 

As of September 30, 2018, there was $712,745 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of 34 months. The total fair value of shares vested as of September 30, 2018 and September 30, 2017, was $139,569 and $116,305, respectively.