14. STOCK OPTIONS

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 nine months ended September 30, 2021 is presented below.

 SCHEDULE OF STOCK OPTION ACTIVITY

At September 30, 2021, the intrinsic value of the outstanding options was $1,939,000.

During the nine months ended September 30, 2021, the Company granted stock options to employees to purchase a total of 2,150,833 shares of Common Stock for services rendered. The options have an average exercise price of $1.69 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 $3,563,000 using the Black-Scholes Option Pricing model. The total stock compensation expense recognized relating to the vesting of stock options for the nine months ended September 30, 2021 amounted to $1,234,000. As of September 30, 2021, the total unrecognized stock-based compensation expense was $2,940,000, which is expected to be recognized as part of operating expense through September 2025. In addition, a total of 575,730 shares of stock options were exercised. As a result of the exercise of the option, the Company issued 509,465 shares of common stock and received cash of $569,000.

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

 SCHEDULE OF FAIR VALUE ASSUMPTIONS USING BLACK-SCHOLES METHOD

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.