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Stock Options and Warrants

12 Months Ended

Dec. 31, 2019

Stock Options And Warrants [Abstract]

Note 16. STOCK OPTIONS AND WARRANTS

Stock-Based Compensation

Stock Options

In July 2017, the Board of Directors adopted the Company's 2017 Equity Incentive Plan ("2017 Plan") which authorized the grant of rights with respect to up to 1,200,000 shares. The 2017 Plan was approved by affirmative vote of the Company's stockholders on October 3, 2017.

During the year ended December 31, 2018, the Company granted options to purchase 88,000 shares of common stock to certain of its employees and directors. The weighted average fair value of the granted options was estimated using the Black-Scholes option pricing model with the following assumptions: risk free interest rate of 2.69%; expected volatility factor of 66%; expected dividend yield of 0%; and estimated option term of 5 years.

During the year ended December 31, 2019, the Company granted options to purchase 613,000 shares of common stock to certain of its employees and directors. The weighted average fair value of the granted options was estimated using the Black-Scholes option pricing model with the following assumptions: risk free interest rate of 1.87% to 2.60%; expected volatility factors of 65.8% to 72.4%; expected dividend yield of 0%; and estimated option term of 5 years.

The Company recorded stock based compensation expense of $378,000 and $293,000 in its consolidated statement of operations for the years ended December 31, 2019 and 2018, respectively, and such amounts were included as a component of general and administrative expense.

The fair values of stock options granted were estimated using the Black-Sholes option-pricing model with the following assumptions for the years ended December 31:

	2019			2018
Risk-free interest rates		1.87% - 2.60	%		2.69	%
Expected life (in years)		4.90 - 6.80			4.90
Expected volatility		65.8% - 72.4	%		66	%
Dividend yield		0.00	%		0.00	%

Weighted-average grant date fair value per share	$	0.50		$	0.72

The expected life is the number of years that the Company estimates, based upon history, that the options will be outstanding prior to exercise or forfeiture. Expected life is determined using the "simplified method" permitted by Staff Accounting Bulletin No. 107. In addition to the inputs referenced above regarding the option pricing model, the Company adjusts the stock-based compensation expense for estimated forfeiture rates that are revised prospectively according to forfeiture experience. The stock volatility factor is based on the Company's experience.

A summary of the status of the Company's stock options as of December 31, 2019 and 2018, and changes during the two years then ended are presented below.

	Options			Wtd. Avg. Exercise Price
Balance, January 1, 2018		1,048,627		$	3.20
Granted during the period		88,000			1.56
Exercised during the period		-			-
Terminated/Expired during the period		(298,478	)		3.04
Balance, December 31, 2018		838,149		$	3.08
Granted during the period		613,000			0.96
Exercised during the period		(15,000	)		0.88
Terminated/Expired during the period		(66,500	)		7.46
Balance, December 31, 2019		1,369,649		$	2.01

Exercisable at December 31, 2019		1,269,649		$	2.06

The following table summarizes information about stock options at December 31, 2019:

Range of Exercise Prices	Number Outstanding		Wtd. Avg. Life	Wtd. Avg. Exercise Price
$ 0.00 - $ 5.00		1,224,000	5.20 years	$	8.18
$ 5.01 - $ 20.00		145,000	1.60 years		1.56
$0.00 - $20.00		1,369,000	4.40 years	$	3.08

As of December 31, 2019, there was $28,000 of unrecognized compensation cost related to non-vested stock option awards, which is to be recognized over the remaining weighted average vesting period of 1.7 years.

The aggregate intrinsic value at December 31, 2019 was based on the Company's closing stock price of $2.30 was approximately $1,300,000. The aggregate intrinsic value was calculated based on the positive difference between the closing market price of the Company's Common Stock and the exercise price of the underlying options. The total number of in-the-money options exercisable as of December 31, 2019 was 1,206,000.

The weighted average fair value of options granted during the years ended December 31, 2019 and 2018 was $0.50 and $0.72 per share, respectively. The total intrinsic value of options exercised during the years ended December 31, 2019 and 2018 was $0 and $0, respectively. The total fair value of shares vested during the years ended December 31, 2019 and 2018 was $1,210,000 and $224,718, respectively.

Warrants

During the year ended December 31, 2019 and 2018, the Company issued 0 and 535,600 warrants, respectively, in connection with convertible notes payable and common stock issuances.

The following tables summarize the Company's outstanding warrants as of December 31, 2019 and changes during the two years then ended:

	Warrants			Wtd. Avg. Exercise Price		Wtd. Ave. Remaining Contractual Life (years)
Balance, January 1, 2018		1,704,102			2.66		4.04
Granted during the period		535,600			1.45		4.35
Terminated/Expired during the period		-			-		-
Balance, December 31, 2018		2,239,702		$	3.10		3.35
Granted during the period		-			-		-
Terminated/Expired during the period		(56,800	)	$	10.80		-
Balance, December 31, 2019		2,182,902		$	2.90		2.43

Exercisable at December 31, 2019		2,182,902		$	2.90		2.43

The fair values of warrants granted were estimated using the Black-Sholes option-pricing model with the following assumption for the years ended December 31:

	2019			2018
Risk-free interest rates		2.33	%		2.69	%
Expected life (in years)		4.9			4.9
Expected volatility		116.0	%		66	%
Dividend yield		0.0	%		0.0	%
Weighted-average grant date fair value per share		1.24		$	1.24