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STOCK-BASED COMPENSATION PLANS

6 Months Ended

Jun. 30, 2020

(4) STOCK-BASED COMPENSATION PLANS

In June 2017, our stockholders approved the 2017 Stock Incentive Plan (the “2017 Stock Plan”) with a maximum of 5,000,000 shares reserved for issuance. Awards permitted under the 2017 Stock Plan include: Stock Options and Restricted Stock. Awards issued under the 2017 Stock Plan are at the discretion of the Board of Directors. As applicable, awards are granted with an exercise price equal to the closing price of our common stock on the date of grant and generally vest over four years. Restricted Stock Awards are issued to the recipient upon grant and are not included in outstanding shares until such vesting and issuance occurs.

During the three months ended June 30, 2020, no stock option awards were granted under the 2017 Stock Plan. During the six months ended June 30, 2020, 14,000 stock option awards were granted under the 2017 Stock Plan. During the three and six months ended June 30, 2019, 35,000 and 0.4 million stock option awards were granted under the 2017 Stock Plan, respectively. At June 30, 2020, the company had 1.2 million stock options outstanding and 0.6 million exercisable under the following plans:


	Outstanding	Exercisable
	Number of Options	Number of Options
	(in thousands)	(in thousands)
Plan Category
2005 Stock Option Plan	384		384
Equity Compensation Plans not approved by Shareholders	60		45
2017 Stock Option Plan	709		164
Total	1,153	$	593

During the three and six months ended June 30, 2020, 38,000 and 208,000 shares of restricted stock were granted to the Board of Directors and management under the 2017 Stock Plan, respectively. During the three and six months ended June 30, 2019, 5,000 and 10,000 shares of restricted stock were granted, respectively. The fair market value of restricted shares for share-based compensation expensing is equal to the closing price of our common stock on the date of grant. The vesting on the Restricted Stock Awards typically occur quarterly over three years for the Board of Directors and quarterly or annually over two to four years for management.

The following summarizes stock-based compensation expenses recorded in the consolidated statements of operations:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2020		2019		2020		2019
Cost of Revenue	$	2	$	5	$	9	$	10
Sales and marketing expense		98		52		127		94
General, and administrative		479		101		940		194
Total stock based compensation expense		579		158		1,076		298

During the six months ended June 30, 2020, there were 14,000 options granted at a weighted average exercise price of $10.15 per share. The weighted-average grant date fair value of options granted during the six months ended June 30, 2020 was $8.88. There were no options granted during the three months ended June 30, 2020. The Company issued 38,000 and 208,000 shares of restricted stock to management during the three and six months ended June 30, 2020, respectively.

During the six months ended June 30, 2019, there were 415,000 options granted at a weighted average price exercise price of $4.53 per share. The weighted-average grant date fair value of options granted during the six months ended June 30, 2019 was $4.01. The Company issued 10,000 shares of restricted stock to management during the six months ended June 30, 2019.

The Company received proceeds of $0.1 million and $0.3 million related to option exercises during the three and six months ended June 30, 2020, respectively. The Company received proceeds of approximately $0.1 million related to option exercises during both the three and six months ended June 30, 2019.

The Company used the Black Scholes option pricing model to determine the fair value of stock option grants, using the following assumptions for the three and six months ended June 30, 2020 and June 30, 2019.


	For the Three Months				For the Six Months
	Ended June 30,				Ended June 30,
	2020		2019		2020		2019
Expected term (years)	—		6.25		6.79		6.25
Risk-free interest rate	—	%	2.49	%	1.59	%	2.59	%
Expected volatility	—	%	121.49	%	116.76	%	121.95	%
Expected dividend yield	—	%	—	%	—	%	—	%

A summary of stock option activity under all equity compensation plans for the six months ended June 30, 2020, is presented below:


				Weighted-
				Average
		Weighted-		Remaining	Aggregate
	Number of	Average		Contractual	Intrinsic
	Shares	Exercise		Term	Value
	(in thousands)	Price		(Years)	(in thousands)
Outstanding at December 31, 2019	1,855	$	2.48	6.42	$	10,032
Granted	14	$	10.15	—		—
Expired	—		—	—		—
Forfeited	(206)	$	5.10	—		—
Exercised	(510)	$	0.99	—		—
Outstanding at June 30, 2020	1,153	$	2.77	6.79	$	25,497

Exercisable at June 30, 2020	593	$	0.70	5.30	$	14,341

A summary of restricted stock award activity under all equity compensation plans for the six months ended June 30, 2020, is presented below:


		Number of
		Shares
		(in thousands)
Granted but not vested at December 31, 2019		102
Granted		208
Forfeited		—
Vested		(49)
Granted but not vested at June 30, 2020		261

As of June 30, 2020, the Company had approximately $3.9 million of unrecognized compensation expense related to stock options and restricted stock awards that will be recognized over a weighted average period of approximately 2.4 years.