On December 20, 2019, the Company adopted its 2019 Omnibus Incentive Plan (the “Plan”).

At its discretion, the Company grants share option awards to certain employees and non-employees under the Plan and accounts for it in accordance with ASC 718, Compensation – Stock Compensation.

A summary of option activity for the three months ended March 31, 2021 is presented below.

At March 31, 2021, the intrinsic value of the outstanding options was $387,000.

During the quarter ended March 31, 2021, the Company granted stock options to employees to purchase a total of 664,000 shares of Common Stock for services rendered. The options have an average exercise price of $1.76 per share, expire in five years, vesting one and four years from grant date. The total fair value of these options at grant date was approximately $1,103,000 using the Black-Scholes Option Pricing model. The total stock compensation expense recognized relating to the vesting of stock options for the quarter ended March 31, 2021 amounted to $448,000. As of March 31, 2021, the total unrecognized stock-based compensation expense was $4,059,000, which is expected to be recognized as part of operating expense through March 2025. In addition, a total of 332,730 shares of stock options were exercised. As a result of the exercise of the option, the Company issued 332,730 shares of common stock and received cash of $377,000.

The fair value of share option award is estimated using the Black-Scholes option pricing method based on the following weighted-average assumptions:

The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of measurement corresponding with the expected term of the share option award; the expected term represents the weighted-average period of time that share option awards granted are expected to be outstanding giving consideration to vesting schedules and historical participant exercise behavior; the expected volatility is based upon historical volatility of the Company’s Common Stock; and the expected dividend yield is based on the fact that the Company has not paid dividends in the past and does not expect to pay dividends in the future.