Quarterly report pursuant to Section 13 or 15(d)

Stock Options

v3.20.2
Stock Options
 6 Months Ended
Jun. 30, 2020
Share-based Payment Arrangement [Abstract]  
Stock Options
14. STOCK OPTIONS

 

Effective October 16, 2014, the Company adopted the 2014 Stock Option Plan (the “Plan”) under the administration of the board of directors to retain the services of valued key employees and consultants of the Company.

 

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 six months ended June 30, 2020 is presented below.

 

                Weighted-        
          Weighted-     Average        
          Average     Remaining     Aggregate  
          Exercise     Contractual     Intrinsic  
    Options     Price     Life (Years)     Value  
                         
Outstanding at December 31, 2019     4,233,722     $ 1.75       2.54     $ 995,000  
Granted     346,637       1.39       -       -  
Forfeited     (70,000 )     1.36       -       -  
Exercised     -       -       -       -  
Outstanding at June 30, 2020     4,510,358     $ 1.71       2.54     $ 2,000  
                                 
Vested June 30, 2020     2,175,383     $ 2.33             $ -  
                                 
Exercisable at June 30, 2020     1,447,626     $ 2.16             $ -  

 

During the six months ended June 30, 2020 the Company granted stock options to employees to purchase a total of 346,637 shares of Common Stock for services to be rendered. The options have an average exercise price of $1.39 per share, expire in five years, and vests in 4 equal installments during the four years from the grant date. The total fair value of these options at the grant date was approximately $463,000 using the Black-Scholes Option pricing model.

 

The total stock compensation expense recognized relating to vesting of stock options for the six months ended June 30, 2020 amounted to $773,000. As of June 30, 2020, total unrecognized stock-based compensation expense was $3.6 million, which is expected to be recognized as part of operating expense through March 2024.

 

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

 

    Six Months Ended June 30,  
    2020     2019  
Risk-free interest rate     0.29% - 0.39 %     1.91% - 2.75 %
Average expected term     5 years       5 years  
Expected volatility     270.10 - 270.41 %     201.30 - 241.77 %
Expected dividend yield     -       -  

 

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.