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STOCK OPTIONS | 12 Months Ended
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Dec. 31, 2019
Share-based Payment Arrangement [Abstract] |
STOCK OPTIONS | STOCK OPTIONS On October 30, 2007, our stockholders approved and the Board of Directors adopted an amendment to the 2003 Executive and Employee Stock Option Plan (the “Plan”) to increase the maximum aggregate number of shares of common stock reserved for issuance under the Plan from 1.2 million shares (already reserved against outstanding options) to 1.7 million shares. Except for the increase in the number of shares covered by the Plan, the Plan remained otherwise unchanged. In 2001, the Board of Directors adopted the 2001 Executive and Employee Stock Option Plan which reserved for issuance 1.2 million stock options. Stock options to employees typically have a ten-year life and currently vest over periods between one and seven years. In July of 2012, our stockholders approved the 2012 Share Incentive Plan covering a total of 750,000 shares of common stock issuable upon exercise of options to be granted under the plan. At December 31, 2019 approximately 160,000 are available to be issued in this plan. In July of 2015, our stockholders approved the 2015 Executive and Employee Stock Option Plan covering a total of 2,000,000 shares of common stock issuable upon exercise of options to be granted under the plan. At December 31, 2019 approximately 900,000 are available to be issued in this plan. In August of 2017, our stockholders approved the 2017 Executive and Employee Stock Option Plan covering a total of 3,000,000 shares of common stock issuable upon exercise of options to be granted under the plan. At December 31, 2019 approximately 480,000 are available to be issued in this plan. In August of 2019, our stockholders approved the 2019 Share Incentive Plan covering a total of 2,000,000 shares of common stock issuable upon exercise of options to be granted under the plan. At December 31, 2019, all 2,000,000 are available to be issued in this plan. On January 15, 2020, the Company granted employees approximately 1,300,000 options to purchase common shares of the Company's stock. All options granted were pursuant to the plans noted above. The options vest over a period of three years. The status of our stock options and warrants are summarized as follows:
| Number of options and warrants |  | Weighted average exercise price
Outstanding at December 31, 2016 | 3,526,287 |  |  | $ | 3.17 |
Granted | 1,728,000 |  |  | 3.09 |
Exercised | (176,750 | ) |  | 2.41 |
Canceled and forfeited | (443,302 | ) |  | 3.95 |
Outstanding at December 31, 2017 | 4,634,235 |  |  | $ | 3.10 |
Granted | 225,000 |  |  | 2.40 |
Exercised | (1,378,615 | ) |  | 2.43 |
Canceled and forfeited | (225,841 | ) |  | 2.10 |
Outstanding at December 31, 2018 | 3,254,779 |  |  | $ | 3.18 |
Granted | 1,379,500 |  |  | 7.70 |
Exercised | (410,635 | ) |  | 2.99 |
Canceled and forfeited | (256,785 | ) |  | 4.76 |
Outstanding at December 31, 2019 | 3,966,858 |  |  | $ | 4.67 |
| Number of options |  | Weighted average grant date fair value
Non-vested at December 31, 2018 | 1,436,429 |  |  | $ | 1.68 |
Granted | 1,379,500 |  |  | 4.57 |
Vested | (1,119,000 | ) |  | 1.90 |
Forfeited | (212,000 | ) |  | 2.31 |
Non-vested at December 31, 2019 | 1,484,929 |  |  | $ | 4.11 |
Common shares required to be issued upon the exercise of stock options would be issued from our authorized and unissued shares. Prior to 2019, options issued were valued utilizing a trinomial lattice model. During the current year, the Company began granting stock option awards deeper within the Company. The Company does not have the relevant history with grants to these employees to support the inputs required in a trinomial valuation model. Accordingly, the Company adopted the use of the Black-Scholes model in 2019. For employee grants, we calculate expected life via the simplified method as we do not have sufficient history to determine actual expected life. For, non-employee grants, we calculate expected life using a combination of past exercise behavior, the contractual term and expected remaining exercise behavior. Inputs used in the valuation models are as follows:
| 2019 Grants |  | 2018 Grants |  | 2017 Grants
Option value | $7.15 | - | $7.91 |  | $1.46 | - | $3.04 |  | $1.73 | - | $2.34
Risk-free rate | 1.7% | - | 2.6% |  | 1.9% | - | 2.5% |  | 1.5% | - | 1.9%
Expected dividend yield | —% |  | —% |  | —%
Expected volatility | 64.9% | - | 66.4% |  | 60.9% | - | 68.8% |  | 62.1% | - | 68.0%
Expected term (in years) | 4.5 | - | 6 |  | 6 |  | 6
We recognized approximately $3,581,000, $2,224,000 and $871,000 in stock-based compensation expense during the years ended December 31, 2019, 2018 and 2017, respectively. The intrinsic value of each option share is the difference between the fair market value of our common stock and the exercise price of such option share to the extent it is “in-the-money”. Aggregate intrinsic value represents the value that would have been received by the holders of in-the-money options had they exercised their options on the last trading day of the year and sold the underlying shares at the closing stock price on such day. The intrinsic value calculation at December 31, 2019 is based on the $8.46 closing stock price of our common stock on December 31, 2019, the last trading day of 2019. As of December 31, 2019, there were 3,772,139 stock options outstanding and expected to vest with an aggregate intrinsic value of approximately $14,820,000. These options have a weighted average exercise price of $4.53 and a weighted average remaining contractual term of approximately 7 years. As of December 31, 2019, there were 2,481,929 stock options outstanding and exercisable with an aggregate intrinsic value of approximately $12,730,000. These options have a weighted average exercise price of $3.33 and a weighted average remaining contractual term of approximately 6 years. The total intrinsic value of in the money options exercised during the years ended December 31, 2019, 2018 and 2017, was approximately $1,420,000, $4,460,000 and $220,000, respectively. Intrinsic value of exercised shares is the total value of such shares on the date of exercise less the cash received from the option holder to exercise the options or other consideration paid. The total fair value of options granted during the years ended December 31, 2019, 2018 and 2017, was approximately $6,300,000, $540,000, and $3,140,000, respectively. The weighted average fair value of options granted during the years ended December 31, 2019, 2018 and 2017, was $4.57, $2.40, and $1.82, respectively. The total fair value of option shares vested during the years ended December 31, 2019, 2018, and 2017, was approximately $2,130,000, $1,440,000 and $810,000, respectively. The Company allows employees to exercise stock-based awards by surrendering stock-based awards with a fair value of the stock-based awards exercised, referred to as net settlements. These surrenders are included in stock options exercised in the options rollforward above. During the years ended December 31, 2019, 2018 and 2017, the Company received 125,948, 570,343, and 129,378 options as payment in the exercise of 222,601, 720,772 and 47,372 options, respectively. During the years ended December 31, 2018 and 2017, the Company received 22,711 and 34,687 warrants as payment in the exercise of 17,289 and 19,688 warrants, respectively. During the year ended December 31, 2018, the Company modified the terms of awards granted to two employees by immediately vesting the remaining unvested options at the modification dates. The modifications resulted in the recognition of approximately an additional $190,000 in compensation cost due to the revaluation of the stock options. As of December 31, 2019, there was approximately $3,520,000 of total unrecognized stock-based compensation cost, related to unvested stock options granted under the Amended Plan. This cost is expected to be recognized over a weighted-average period of approximately 1 year. During October 2015, the Company granted 225,922 restricted stock units that vest ratably over a period of 5 years. As of December 31, 2019, 180,740 of the shares had vested, with the remaining shares vesting in October 2020. At December 31, 2019, the Company has approximately $70,000 of stock-based compensation expense to be recognized through October 2020.

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