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Stock-Based Compensation

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

NOTE 13. STOCK-BASED COMPENSATION

The Company recorded pretax compensation expense related to the grant of stock options and restricted stock issued of $2,112,090 and $2,272,656 for the years ended December 31, 2019 and 2018, respectively.

As of December 31, 2019, the Company had adopted seven separate stock option and restricted stock plans: (i) the 2005 Stock Option and Restricted Stock Plan (the “2005 Plan”), (ii) the 2006 Stock Option and Restricted Stock Plan (the “2006 Plan”), (iii) the 2007 Stock Option and Restricted Stock Plan (the “2007 Plan”), (iv) the 2008 Stock Option and Restricted Stock Plan (the “2008 Plan”), (v) the 2011 Stock Option and Restricted Stock Plan (the “2011 Plan”), (vi) the 2013 Stock Option and Restricted Stock Plan (the “2013 Plan”), (vii) the 2015 Stock Option and Restricted Stock Plan (the “2015 Plan”) and (vii) the 2018 Stock Option and Restricted Stock Plan (the “2018 Plan”). The 2005 Plan, 2006 Plan, 2007 Plan, 2008 Plan, 2011 Plan, 2013 Plan, 2015 Plan and 2018 Plan are referred to as the “Plans.”

These Plans permit the grant of stock options or restricted stock to its employees, non-employee directors and others for up to a total of 4,175,000 shares of common stock. The 2005 Plan terminated during 2015 with 19,678 shares not awarded or underlying options, which shares are now unavailable for issuance. Stock options granted under the 2005 Plan that remain unexercised and outstanding as of December 31, 2019 total 8,063. The 2006 Plan terminated during 2016 with 24,662 shares not awarded or underlying options, which shares are now unavailable for issuance. Stock options granted under the 2006 Plan that remain unexercised and outstanding as of December 31, 2019 total 42,812. The 2007 Plan terminated during 2017 with 88,401 shares not awarded or underlying options, which shares are now unavailable for issuance. Stock options granted under the 2007 Plan that remain unexercised and outstanding as of December 31, 2019 total 6,250. The 2008 Plan terminated during 2018 with 8,249 shares not awarded or underlying options, which shares are now unavailable for issuance. Stock options granted under the 2008 Plan that remain unexercised and outstanding as of December 31, 2019 total 32,250.

The Company believes that such awards better align the interests of our employees with those of its stockholders. Option awards have been granted with an exercise price equal to the market price of its stock at the date of grant with such option awards generally vesting based on the completion of continuous service and having ten-year contractual terms. These option awards typically provide for accelerated vesting if there is a change in control (as defined in the Plans). The Company has registered all shares of common stock that are issuable under its Plans with the SEC. A total of 629,186 shares remained available for awards under the various Plans as of December 31, 2019.

The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model.

Activity in the various Plans during the years ended December 31, 2019 and 2018 is reflected in the following table:

Options	Number of Shares			Weighted Average Exercise Price
Outstanding at January 1, 2018		350,269		$	13.44
Granted		160,000			2.20
Exercised		—			—
Forfeited		(76,257	)		(45.52	)
Outstanding at December 31, 2018		434,012		$	4.62
Exercisable at December 31, 2018		354,012		$	5.17

Options	Number of Shares			Weighted Average Exercise Price
Outstanding at January 1, 2019		434,012		$	4.62
Granted		180,000			3.01
Exercised		—			—
Forfeited		(24,887	)		(13.78	)
Outstanding at December 31, 2019		589,125		$	3.74
Exercisable at December 31, 2019		499,125		$	3.87

The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model. The total estimated grant date fair value stock options issued during the year ended December 31, 2019 and 2018 was $436,217 and $284,384, respectively.

The Company has utilized the following assumptions in its Black-Scholes option valuation model to calculate the estimated grant date fair value of the options during the years ended December 31, 2019 and 2018:.

	2019			2018
	Assumptions			Assumptions
Volatility – range		107.6	%		107.5	%
Risk-free rate		2.23	%		2.74	%
Contractual term		5.5 years			5.5 years
Exercise price	$	3.01		$	2.20

The Plans allow for the cashless exercise of stock options. This provision allows the option holder to surrender/cancel options with an intrinsic value equivalent to the purchase/exercise price of other options exercised. There were no shares surrendered pursuant to cashless exercises during the years ended December 31, 2019 and 2018.

At December 31, 2019 and 2018, the aggregate intrinsic value of options outstanding was approximately $-0- and $76,800, respectively, and the aggregate intrinsic value of options exercisable was approximately $-0- and $76,800, respectively. No options were exercised in the years ended December 31, 2019 and 2018.

As of December 31, 2019, the unrecognized portion of stock compensation expense on all existing stock options was $181,757 and will be recognized over the next five months.

The following table summarizes the range of exercise prices and weighted average remaining contractual life for outstanding and exercisable options under the Company’s option plans as of December 31, 2019:

		Outstanding options			Exercisable options
Exercise price range		Number of options		Weighted average remaining contractual life	Number of options		Weighted average remaining contractual life

$	0.01 to $3.49		470,313	8.4 years		380,313		8.1 years
$	3.50 to $4.99		66,875	4.3 years		66,875		4.3 years
$	5.00 to $6.49		—	— years		—		— years
$	6.50 to $7.99		8,437	1.8 years		8,437		1.8 years
$	8.00 to $9.99		2,500	1.4 years		2,500		1.4 years
$	10.00 to $19.99		39,750	1.0 years		39,750		1.0 years
$	20.00 to $24.99		1,250	0.1 years		1,250		0.1 years

			589,125	7.3 years		499,125		6.9 years

Restricted stock grants. The Board of Directors has granted restricted stock awards under the Plans. Restricted stock awards are valued on the date of grant and have no purchase price for the recipient. Restricted stock awards typically vest over one to four years corresponding to anniversaries of the grant date. Under the Plans, unvested shares of restricted stock awards may be forfeited upon the termination of service to or employment with the Company, depending upon the circumstances of termination. Except for restrictions placed on the transferability of restricted stock, holders of unvested restricted stock have full stockholder’s rights, including voting rights and the right to receive cash dividends.

A summary of all restricted stock activity under the equity compensation plans for the years ended December 31, 2019 and 2018 is as follows:

	Number of Restricted shares			Weighted average grant date fair value
Nonvested balance, January 1, 2018		791,725		$	4.37
Granted		484,500			2.27
Vested		(470,175	)		(3.83	)
Forfeited		(33,900	)		(4.04	)
Nonvested balance, December 31, 2018		772,150		$	3.40

	Number of Restricted shares			Weighted average grant date fair value
Nonvested balance, January 1, 2019		772,150		$	3.40
Granted		522,110			2.91
Vested		(774,015	)		(3.35	)
Forfeited		(5,370	)		(3.46	)
Nonvested balance, December 31, 2019		514,875		$	2.97

The Company estimated the fair market value of these restricted stock grants based on the closing market price on the date of grant. As of December 31, 2019, there were $379,623 of total unrecognized compensation costs related to all remaining non-vested restricted stock grants, which will be amortized over the next 12 months in accordance with their respective vesting scale.

The nonvested balance of restricted stock vests as follows:

Years ended	Number of shares

2020		264,750
2021		250,125