XML 16 R26.htm IDEA: XBRL DOCUMENT

STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

19.

STOCK-BASED COMPENSATION

The Company adopted an Incentive Stock Plan on January 18, 2007. This plan is intended to provide incentives which will attract and retain highly competent persons at all levels as employees of the Company, as well as independent contractors providing consulting or advisory services to the Company, by providing them opportunities to acquire the Company's common stock or to receive monetary payments based on the value of such shares pursuant to Awards issued. While the plan terminates 10 years after the adoption date, issued options have their own schedule of termination. During 2013, the majority of the shareholders approved to increase the total available shares in the plan from 2.5 million to 3.5 million shares of common stock. During May 2014, the majority of the shareholders approved to increase the total available shares in the plan from 3.5 million to 4.25 million shares of common stock, during February 2015, the majority of the shareholders approved to increase the total available shares in the plan from 4.25 million to 4.6 million shares of common stock and during April 2015, the majority of the shareholders approved to increase the total available shares in the plan from 4.6 million to 5.1 million shares of common stock. Options to acquire shares of common stock may be granted at no less than fair market value on the date of grant. Upon exercise, shares of new common stock are issued by the Company.

The Company adopted the 2015 Stock Incentive Plan on April 30, 2015. This plan is intended to provide incentives which will attract and retain highly competent persons at all levels as employees of the Company, as well as independent contractors providing consulting or advisory services to the Company, by providing them opportunities to acquire the Company's common stock or to receive monetary payments based on the value of such shares pursuant to Awards issued. The 2015 Plan permits the grant of options and shares for up to 5,000,000 shares. In addition, there is a provision for an annual increase of 15% of the shares pertaining to the 2015 plan that are outstanding as of the last day of the prior year. As of December 31, 2019, approximately 400,000 shares are available.

Under the 2015 Stock Incentive Plan, the Company has issued options to purchase approximately 6.53 million shares at an average price of $3.58 with a fair value of $5.10 million. For the years ended December 31, 2019 and 2018, the Company issued options to purchase 1.20 million and 1.83 million shares. For the years ended December 31, 2019 and 2018, the Company recognized an expense of approximately $4.8 million and $4.3 million, respectively, of non-cash compensation expense (included in General and Administrative expense in the accompanying Consolidated Statement of Operations) determined by application of a Black Scholes option pricing model with the following inputs: exercise price, dividend yields, risk-free interest rate, and expected annual volatility. As of December 31, 2019, the Company had approximately $8,531,047 of unrecognized pre-tax non-cash compensation expense, which the Company expects to recognize, based on a weighted-average period of 3 years. The Company used straight-line amortization of compensation expense over the two to three-year requisite service or vesting period of the grant. There are options to purchase approximately 2.35 million shares that have vested as of December 31, 2019.

The Company uses the Black-Scholes option-pricing model to estimate the fair value of its stock option awards and warrant issuances. The calculation of the fair value of the awards using the Black - Scholes option-pricing model is affected by the Company's stock price on the date of grant as well as assumptions regarding the following:

	Year ended December 31,
	2019			2018
Expected volatility		58.62-121.32	%		91% -142	%
Expected term		4.02-5.00 Years			4.02 – 5.06 Years
Risk-free interest rate		1.58%-2.72%	%		2.56% - 2.86	%
Forfeiture Rate		0.00	%		0.00	%
Expected dividend yield		0.00	%		0.00	%

The expected volatility was determined with reference to the historical volatility of the Company's stock. The Company uses historical data to estimate option exercise and employee termination within the valuation model. The expected term of options granted represents the period of time that options granted are expected to be outstanding. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury rate in effect at the time of grant.

A summary of the status of the Company's outstanding stock options as of December 31, 2019 and 2018 and changes during the periods ending on that date is as follows:

									Weighted
				Weighted Average			Aggregate		Average
	Shares			Exercise		Fair	Intrinsic		Remaining
	(000's)			Price		Value	Value		Term (Yrs)
Options
At December 31, 2017		4,602			1.82		$	12,476		4.23
Granted		1,825			5.31
Exercised		(784	)		.57
Forfeiture and cancelled		(803	)		3.65
At December 31, 2018		4,840			3.04		$	5,338		5.05
Granted		2,874			3.61
Exercised		(912	)		.96
Forfeiture and cancelled		(274	)		3.57
At December 31, 2019		6,528			3.58			8,978		6.58

Exercisable at December 31, 2019		2,350			2.78					3.69

The following table summarizes information about employee stock options outstanding at December 31, 2019:

	Outstanding Options						Vested Options
	Number						Number
	Outstanding		Weighted		Weighted		Exercisable		Weighted		Weighted
Range of	at		Averaged		Averaged		at		Averaged		Averaged
Exercise	December 31,		Remaining		Exercise		December 31,		Exercise		Remaining
Price	2019 (000's)		Life		Price		2019 (000's)		Price		Life
$0.20 - $0.53		359		3.20	$	0.28		359	$	0.28		3.20
$0.65 - $1.80		342		1.35	$	1.05		342	$	1.05		1.35
$1.83 - $2.84		555		2.59	$	2.07		555	$	2.07		2.59
$3.20 - $6.20		5,273		7.57	$	4.50		1,094		4.50		5.13
Outstanding options		6,528		6.58	$	2.78		2,350	$	2.78		3.69