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Stock-Based Compensation

9 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement [Abstract]

Note 8. Stock-Based Compensation

The Company has granted options/warrants to consultants. GAAP requires that all stock-based compensation be recognized as an expense in the financial statements and that such costs be measured at the fair value of the award at the date of grant. These awards generally vest ratably over 12 to 60 months from the date of grant and the Company charges to operations quarterly the current market value of the options using the Black-Scholes method. During the three and nine months ended September 30, 2019 and 2018 there were no charges related to options granted to consultants.

During the nine-month period ended September 30, 2018, the Company granted 150,182 fully vested options to employees and recorded share-based compensation of $69,309. All of the options granted to employees during the nine-month period ended September 30, 2018 occurred during the second quarter of 2018. The Company valued these grants using the Black-Scholes option pricing model with the following assumptions:

Fair value on grant date	$	0.462
Expected dividend yield		0
Expected volatility		51	%
Risk free interest rate		2.77	%
Expected term of the option		5 years

During the nine-month period ended September 30, 2019, the Company granted 233,500 fully vested options to employees and directors and recorded share-based compensation of $356,228. All of the options granted to employees during the nine-month period ended September 30, 2019 occurred during the second quarter of 2019. The Company valued these grants using the Black-Scholes option pricing model with the following assumptions:

Fair value on grant date	$	1.5256
Expected dividend yield		0
Expected volatility		61	%
Risk free interest rate		1.84	%
Expected term of the option		5 years

There was no compensation expense recorded relating to restricted stock grants to employees and directors during the three and nine months ended September 30, 2019 and 2018.

As of September 30, 2019, there were 1,166,500 shares available for future grant under our 2019 Equity Incentive Plan, which was approved by the Company’s shareholders in June 2019.