STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

Under our stock option plans, our board of directors may grant restricted stock and options to purchase common shares to our employees, officers, directors and consultants. We account for stock options in accordance with FASB ASC Topic 718, Compensation - Stock Compensation, with stock-based compensation expense recognized over the vesting period based on the fair value on the grant date utilizing a trinomial lattice model through 2018 and the Black Scholes model for grants in 2019 and 2020, both of which include a number of estimates that affect the grant date fair value and the amount of expense to recognize.

We recognized approximately $1,063,000 and $3,209,000, respectively, in stock-based compensation expense during the three and nine months ended September 30, 2020, as compared with $543,000 and $2,594,000, respectively, for the three and nine months ended September 30, 2019.

Stock option activity is summarized as follows:


	Number of options	Weighted average exercise price




Outstanding at December 31, 2019	3,966,858	$	4.67
Granted	1,376,900	7.94
Exercised	(81,131)	3.03
Canceled and forfeited	(234,600)	7.57
Outstanding at September 30, 2020	5,028,027	$	5.45

We allow stock option holders to exercise stock-based awards by surrendering stock-based awards with an intrinsic value equal to the cumulative exercise price of stock-based awards being exercised, referred to as net settlements. These surrenders are included in stock options exercised in the options rollforward above. For the three months ended September 30, 2020 and 2019, respectively, we received 16,140 and 26,572 options as payment in the exercise of 10,610 and 34,928 options. For the nine months ended September 30, 2020 and 2019, respectively, we received 29,149 and 118,170 options as payment in the exercise of 32,637 and 220,879 options.

Common shares required to be issued upon the exercise of stock options would be issued from our authorized and unissued shares. We calculated the grant date fair value of options granted in 2020 ("2020 Grants") utilizing a Black Scholes model with an expected life calculated via the simplified method.


	2020 Grants
Strike price	$4.98	-	$	8.18
Risk-free rate	0.3%	-	1.7		%
Expected dividend yield	—
Expected volatility	65.9%	-	70.1		%
Expected term (in years)	6