STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK-BASED COMPENSATION

15. STOCK-BASED COMPENSATION

Under the Company's 2018 Stock Incentive Plan (the “2018 Plan”), 2017 Stock Incentive Plan (the “2017 Plan”), 2016 Stock Incentive Plan (the “2016 Plan”) and the 2012 Stock Option Plan, as amended (the “2012 Plan”) (collectively, the “Plans”), options may be granted to employees, officers, consultants, service providers and directors of the Company. The Plans, as amended, provide for the issuance of a maximum of 868,632 shares of the Company’s common stock. The Company also has 1,500 outstanding options that were granted between 2009 and 2011 pursuant to the terms of the Company's 2002 Stock Option Plan (the “2002 Plan”). Options granted pursuant to the 2002 Plan expire between December 2020 and February 2021.

Options granted under the Plans have an exercise price equal to or greater than the fair value of the underlying common stock at the date of grant and become exercisable based on a vesting schedule determined at the date of grant. Typically, options granted generally become fully vested after four years. Any options that are forfeited or cancelled before expiration become available for future grants. The options expire between 5 and 10 years from the date of grant. Restricted stock awards granted under the Plans are subject to a vesting period determined at the date of grant. As of December 31, 2018, an aggregate of 507,789 of the Company's options are still available for future grant.

During the year ended December 31, 2018, the Company granted 50,000 options to its employees from the Plans and also granted 144,875 options outside of the Plans. During the year ended December 31, 2017, the Company granted 40,500 options from the Plans. These options become fully vested after four years. The Company estimated the grant date fair value of options granted utilizing the Black-Scholes option pricing model during the year ended December 31, 2018 and 2017 was $513,510 and $482,055, respectively, which is being recognized as stock-based compensation expense over the requisite four-year service period. During the year ended December 31, 2018 and 2017, the Company also issued 79,153 and 97,440, respectively, shares of common stock to its consultants and service providers pursuant to the Plans. The Company estimated the grant date fair value of these shares of common stock was $2,640,102 and $1,532,702, respectively, which was determined from the closing price of the Company’s common stock on the date of issuance.

The Company has valued the options at their date of grant utilizing the Black-Scholes option pricing model. This model is dependent upon several variables such as the options’ term, exercise price, current stock price, risk-free interest rate estimated over the expected term and estimated volatility of our stock over the expected term of the options. The risk-free interest rate used in the calculations is based on the implied yield available on U.S. Treasury issues with an equivalent term approximating the expected life of the options as calculated using the simplified method. The estimated volatility was determined based on the historical volatility of our common stock.

During the year ended December 31, 2018 and 2017, the Company estimated the fair value of stock options granted using the Black-Scholes option pricing model with the following weighted average assumptions:

	2018	2017
Weighted average risk-free interest rate	2.41% — 2.80%	1.73% — 2.14%
Weighted average life (in years)	4.70	5.0
Volatility	124.7% — 131.7%	98.4% — 115.8%
Expected dividend yield	0%	0%
Weighted average grant-date fair value per share of options granted	$                      15.61	$                      12.00

The options outstanding as of December 31, 2018, have been classified by exercise price, as follows:

Outstanding				Exercisable
x		Weighted
		Average	Weighted		Weighted
		Remaining	Average		Average
Exercise	Number	Contractual	Exercise	Number	Exercise
Price	Outstanding	Life (Years)	Price	Exercisable	Price
$11.40 - $16.00	161,500	7.54	$13.37	92,876	$13.32
$20.00 - $27.60	8,500	8.52	$27.46	3,031	$27.20
$30.20 - $33.80	3,125	3.71	$32.73	3,125	$32.73
$11.40 - $33.80	173,125	7.52	$14.41	99,032	$14.35
Issuances outside of Plans
$16.00 - $46.40	199,875	7.39	$26.09	36,842	$29.36
Total Options
$11.40 - 46.40	373,000	7.45	$20.67	135,874	$18.42

The total stock-based compensation expense related to stock options and stock awards issued pursuant to the Plans to the Company’s employees, consultants and directors, included in reported net loss for the years ended December 31, 2018 and 2017, is comprised as follows:

	2018		2017
Cost of revenues	$	4,874	$	8,466
Engineering and product development		13,650		21,449
Selling and marketing		11,922		46,431
General and administrative		2,921,532		1,501,544
Stock-based compensation from Plans	$	2,951,978	$	1,577,890
Stock-based compensation from issuances outside of Plans		1,767,287		253,395
Total stock-based compensation	$	4,719,265	$	1,831,285

The combination of stock-based compensation of $2,951,978 from the issuances of equity-based awards pursuant to the Plans and stock-based compensation attributed to stock awards of $965,220 and warrants and options of $802,066, which were issued outside of the Plans, resulted in aggregate stock-based compensation of $4,719,265 during the year ended December 31, 2018. During the years ended December 31, 2018 and 2017, the Company issued 144,875 and 55,000 options, respectively, to purchase shares of common stock at an average exercise price of $26.09 per share to its directors and officers. During the year ended December 31, 2017, stock-based compensation was comprised of $1,577,890 from the issuances of equity-based awards pursuant to the Plans and stock-based compensation attributed to stock awards of $130,000 and warrants and options of $123,395, which were issued outside of the Plans. 

A summary of option activity under the Company's stock option plans as of December 31, 2018 and 2017, and changes during the years ended are as follows:

				Outstanding Options
								Weighted
							Weighted	Average
	Shares						Average	Remaining	Aggregate
	Available			Number			Exercise	Contractual	Intrinsic
	for Grant			of Shares			Price	Life (years)	Value
January 1, 2017		161,382			118,300		$16.59	9.08	$0
Adoption of 2017 SIP		100,000			—
Restricted stock awards		(97,440	)		—
Granted		(40,500	)		40,500		$16.84
Forfeited		3,500			(3,500	)	$12.57
Exercised		—			(18,175	)	$31.26
December 31, 2017		126,942			137,125		$15.43	8.80	$6,688
Adoption of 2018 SIP		500,000			—
Restricted stock awards		(79,153	)		—
Granted		(50,000	)		50,000		$14.00
Forfeited 1		10,000			(11,000	)	$20.27
Exercised		—			(3,000	)	$32.60
December 31, 2018		507,789			173,125		$14.41	7.52	$0

¹ Includes 1,000 options that were issued pursuant to the Company’s 2002 Plan and are not available for future issuance.

The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the Company's closing stock price on December 31, 2018 of $2.00 and the exercise price, multiplied by the number of in-the-money-options).

As of December 31, 2018, there was $752,529 of unrecognized compensation cost related to non-vested stock-based compensation arrangements granted under the Plans. That cost is expected to be recognized over a weighted average period of 3.2 years.