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STOCK-BASED COMPENSATION PLANS | 12 Months Ended
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Dec. 31, 2019
STOCK-BASED COMPENSATION PLANS |
STOCK-BASED COMPENSATION PLANS | (5) STOCK-BASED COMPENSATION PLANS The Company’s 2017 Stock Incentive Plan (the “2017 Stock Plan”) is the Company’s equity compensation plan and provides for grants of stock-based awards to employees, directors and other individuals providing services to the Company. The 2017 Stock Plan authorizes the Company to award stock options and restricted stock. Awards issued under the 2017 Stock Plan are at the discretion of the Board of Directors. The 2017 Stock Plan mandates a maximum award term of 10 years and stipulates that stock options be granted with prices not less than fair market value on the date of grant. Stock option awards generally vest over four years. Restricted stock awards typically vest quarterly over three years for grants issued to members of our Board of Directors and quarterly or annually over four years for grants issued to employees. All awards granted under the 2017 Stock Plan are stock-settled with common stock issued upon the exercise of stock options or the vesting of restricted stock awards. At December 31, 2019, there were 1.2 million stock options and 0.1 million unvested restricted stock awards outstanding, and 3.7 million shares available for future grants under the 2017 Stock Plan. The Company previously reserved 3,000,000 shares of common stock for issuance under its 2005 Stock Option Plan (the “2005 Stock Plan”). The 2005 Stock Plan expired as of December 31, 2014. Vesting provisions of the expired plan were to be determined by the Board of Directors. All stock options under the 2005 Stock Plan expire no later than ten years from the date of grant. Options granted in 2015, 2016 and through May 2017 prior to the approval of the 2017 Stock Incentive Plan were approved and certified by the board of directors on September 6, 2017 under the existing 2005 stock option plan. At December 31, 2019, 0.7 million options remain outstanding under the 2005 stock option plan. The Company estimates the grant-date fair value of stock option awards using the Black-Scholes option pricing model and restricted stock awards at intrinsic value on the date of grant. The following assumptions were used in estimating the grant date fair value of stock options granted during the years ended December 31, 2019 and 2018:
|  | 2019 |  | 2018 |
Weighted average expected term |  | 6.25 years |  | 6.25 years |
Weighted average volatility |  | 122 | % | 123 | %
Weighted average risk-free interest rate |  | 2.30 | % | 3.00 | %
Dividend yield |  | 0 | % | 0 | %
The weighted average expected term of stock options represents the period of time that the stock options granted are expected to be outstanding based on historical exercise trends. The weighted average expected volatility is based on the historical price volatility of the Company’s common stock. The weighted average risk-free interest rate represents the U.S. Treasury bill rate for the expected term of the related stock options. The dividend yield represents the Company’s anticipated cash dividend over the expected term of the stock options. Forfeitures are accounted for as they occur. The following table summarizes stock-based compensation expenses recorded in the condensed consolidated statements of operations (in thousands):
|  | For the Years Ended December 31,
|  | 2019 |  | 2018
Costs of revenue - devices and supplies |  | $ | 21 |  | $ | 33
Sales and marketing expense |  |  | 205 |  |  | 127
General, and administrative |  |  | 594 |  |  | 210
Total stock based compensation expense |  | $ | 820 |  | $ | 370
The excess tax benefit associated with our stock-based compensation plans for the years ended December 31, 2019 and 2018, was approximately $0.8 million and $0.3 million, respectively. A combined summary of stock option activity for the 2017 Stock Plan and the 2005 Stock Plan for the years ended December 31, 2019 and 2018 is presented below:
|  |  |  |  |  |  | Weighted |  |  |
|  |  |  | Weighted |  | Average |  | Aggregate
|  |  |  | Average |  | Remaining |  | Intrinsic
|  | Number of Shares |  | Strike |  | Contractual |  | Value
|  | (in thousands) |  | Price |  | Life (Years) |  | (in thousands)
Outstanding at December 31, 2017 |  | 2,142 |  | $ | 0.56 |  |  |  |  |
Granted |  | 215 |  | $ | 2.99 |  |  |  |  |
Exercised |  | (357) |  | $ | 0.44 |  |  |  |  |
Forfeited |  | (115) |  | $ | 1.48 |  |  |  |  |
Outstanding at December 31, 2018 |  | 1,885 |  | $ | 0.80 |  | 6.32 |  | $ | 4,085
Outstanding at December 31, 2018 |  | 1,885 |  | $ | 0.80 |  |  |  |  |
Granted |  | 653 |  | $ | 5.81 |  |  |  |  |
Exercised |  | (503) |  | $ | 0.44 |  |  |  |  |
Expired |  | (6) |  | $ | 1.00 |  |  |  |  |
Forfeited |  | (174) |  | $ | 2.64 |  |  |  |  |
Outstanding at December 31, 2019 |  | 1,855 |  | $ | 2.48 |  | 6.42 |  | $ | 10,032
Exercisable at December 31, 2019 |  | 965 |  | $ | 0.60 |  | 4.15 |  | $ | 7,022
|  | Outstanding |  | Weighted average |  |  |  |  |  |  |  |  |  |
|  | Number of |  | Remaining |  |  |  |  |  |  |  |  | Weighted Average
|  | Options |  | Contractual |  | Weighted Average |  | Exercisable Number of |  | Remaining Exercisable |  | Exercisable
Range |  | (in thousands) |  | Life (years) |  | Strike Price |  | Options (in thousands) |  | Contractual Life (years) |  | Strike Price
$0 to $2.00 |  | 1,040 |  | 4.33 |  | $ | 0.42 |  | 889 |  | 3.80 |  | $ | 0.41
$2.01 to $4.00 |  | 367 |  | 8.68 |  | $ | 3.11 |  | 76 |  | 8.26 |  | $ | 2.78
$4.01 to $6.00 |  | 210 |  | 9.18 |  | $ | 5.35 |  | — |  | — |  | $ | —
$6.01 to $8.00 |  | 200 |  | 9.56 |  | $ | 7.87 |  | — |  | — |  | $ | —
$8.01 to $10.00 |  | 38 |  | 9.86 |  | $ | 8.96 |  | — |  | — |  | $ | —
|  | 1,855 |  | 6.42 |  | $ | 2.48 |  | 965 |  | 4.15 |  | $ | 0.60
A summary of our unvested stock options as of December 31, 2019 and 2018 and related activity is presented below:
|  | Non-vested |  |  |
|  | Shares |  | Weighted
|  | Under |  | Average
|  | Option |  | Grant Date
|  | (in thousands) |  | Fair Value
Non-vested at December 31, 2017 |  | 658 |  | $ | 0.81
Granted |  | 215 |  | $ | 2.65
Vested |  | (256) |  | $ | 0.72
Forfeited |  | (48) |  | $ | 1.98
Non-vested at December 31, 2018 |  | 569 |  | $ | 1.44
Non-vested at December 31, 2018 |  | 569 |  | $ | 1.44
Granted |  | 653 |  | $ | 5.12
Vested |  | (169) |  | $ | 1.24
Forfeited |  | (163) |  | $ | 2.44
Non-vested at December 31, 2019 |  | 890 |  | $ | 4.03
A summary of restricted stock award activity under the 2017 Stock Plan for the years ended December 2019 and 2018 are presented below:
|  | Number of Shares |  | Weighted Average
|  | (in thousands) |  | Grant Date Fair Value
Outstanding at December 31, 2017 |  | 15 |  | $ | 1.10
Granted |  | 80 |  | $ | 3.56
Vested |  | (19) |  | $ | 3.09
Outstanding at December 31, 2018 |  | 76 |  | $ | 3.19
Outstanding at December 31, 2018 |  | 76 |  | $ | 3.19
Granted |  | 55 |  | $ | 8.10
Vested |  | (29) |  | $ | 3.24
Outstanding at December 31, 2019 |  | 102 |  | $ | 5.81
As of December 31, 2019, there was approximately $3.5 million of total unrecognized compensation costs related to unvested stock options and restricted stock. These costs are expected to be recognized over a weighted average period of 2.9 years. The total intrinsic value of stock option exercises for the years ended December 31, 2019 and 2018 was $4.4 million and $1.1 million, respectively. The total fair value of restricted stock awards vested during the years ended December 31, 2019, and 2018 was $0.1 million and $0.2 million, respectively.

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