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STOCK BASED COMPENSATION

6 Months Ended

Jun. 30, 2021

Share-based Payment Arrangement [Abstract]

NOTE 11 – STOCK BASED COMPENSATION

During 2007, the Board of Directors of the Company adopted the 2007 Employee Stock Plan (“2007 Plan”) that was approved by the shareholders. Under the 2007 Plan, the Company is authorized to grant options to purchase up to 10,000,000 shares of common stock to directors, officers, employees and consultants who provide services to the Company. The 2007 Plan is intended to permit stock options granted to employees under the 2007 Plan to qualify as incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended (“Incentive Stock Options”). All options granted under the 2007 Plan, which are not intended to qualify as Incentive Stock Options are deemed to be non-qualified options (“Non-Statutory Stock Options”). Effective June 24, 2016, the 2007 Plan was terminated. As of June 30, 2021, options to purchase 4,040,000 shares of common stock have been issued and are outstanding.

During 2016, the Board of Directors of the Company adopted the 2016 Equity Incentive Plan (“2016 Plan”) that was approved by the shareholders at the 2016 annual meeting of shareholders on May 20, 2016. Under the 2016 Plan, the Company is authorized to grant awards of incentive and non-qualified stock options and restricted stock to purchase up to 3,000,000 shares of common stock to employees, directors and consultants. Effective May 16, 2019, the number of shares of the Company’s common stock available for issuance under the 2016 Plan was increased from 3,000,000 to 8,000,000 shares. As of June 30, 2021, options to purchase 4,175,623 shares of common stock have been issued and are outstanding and 3,283,750 shares of common stock remain available for grants under the 2016 Plan.

Both plans are administered by the Company’s Board of Directors or its compensation committee which determines the persons to whom awards will be granted, the number of awards to be granted, and the specific terms of each grant. Subject to the provisions regarding Ten Percent Shareholders, (as defined in the 2016 Plan), the exercise price per share of each option cannot be less than 100% of the fair market value of a share of common stock on the date of grant. Options granted under the 2016 Plan are generally exercisable for a period of 10 years from the date of grant and may vest on the grant date, another specified date or over a period of time.

The Company uses the Black-Scholes option pricing model to calculate the grant-date fair value of an award, with the following assumptions for 2021: no dividend yield in all years, expected volatility, based on the Company’s historical volatility, 70.4% to 71.8%, risk-free interest rate between 1.15% to 1.73% and expected option life of 10 years. Prior to May 2018, the expected life is based on the estimated average of the life of options using the “simplified” method, as prescribed in FASB ASC 718, due to insufficient historical exercise activity during recent years. Starting in May 2018, the expected life is based on the legal contractual life of options.

As of June 30, 2021, there was $779,323 of unrecognized compensation expense related to non-vested market-based share awards that is expected to be recognized through March 2023.

Share-based compensation was recognized as follows:

For the Six For the Six

Months Ending Months Ending

June 30, 2021 June 30, 2020

2007 Employee Stock Option Plan $ — $ —

2016 Equity Incentive Plan 528,249 354,958

Warrants 10,242 50,677

Total share-based compensation $ 538,491 $ 405,635

The following tables summarize all stock option and warrant activity of the Company during the six months ended June 30, 2021:

Non-Qualified Stock Options and Warrants
Outstanding and Exercisable

Number of Exercise Weighted Average

Shares Price Exercise Price

Outstanding, December 31, 2020 10,022,500 $0.51 - $1.69 $ 0.84

Granted 965,000 $1.27 - $1.60 $ 1.46

Forfeited (6,250 ) $0.83 $ 0.83

Exercised (1,150,627 ) $0.63 - $1.50 $ 0.84

Outstanding, June 30, 2021 9,830,623 $0.51 - $1.69 $ 0.90

Exercisable, June 30, 2021 9,002,292 $0.51 - $1.69 $ 0.86

The aggregate intrinsic value of options and warrants outstanding and exercisable as of June 30, 2021 was $122,380,234. The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and warrants and the closing stock price of $14.45 for the Company’s common stock on June 30, 2021. During the six month period ending June 30, 2021, 710,000 options were exercised for proceeds of $619,500, 200,000 warrants were exercised for proceeds of $127,250 and 240,627 options were exercised via cashless method.

Non-Qualified Stock Options and Warrants Outstanding

Number Outstanding Weighted Average Weighted Average

Range of Currently Exercisable Remaining Exercise Price of Options and

Exercise Prices at June 30, 2021 Contractual Life Warrants Currently Exercisable

$0.51 - $1.69 9,002,292 5.04 Years $0.86