Effective October 16, 2014, the Company adopted the 2014 Stock Option Plan (the “2014 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 nine months ended September 30, 2020 is presented below.

At September 30, 2020, there was no intrinsic value as the exercise price of these stock options were greater than the market price.

During the nine months ended September 30, 2020 the Company granted stock options to employees to purchase a total of 1,035,637 shares of Common Stock for services to be rendered. The options have an average exercise price of $1.37 per share, expire in five years, and cliff vest over a period of 0.4 to 4 years from the grant date. The total fair value of these options at the grant date was approximately $1,242,000 using the Black-Scholes Option pricing model.

The total stock compensation expense recognized relating to vesting of stock options for the nine months ended September 30, 2020 amounted to $1,215,000. As of September 30, 2020, total unrecognized stock-based compensation expense was $3.8 million, which is expected to be recognized as part of operating expense through August 2024.

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.