NOTE 5  STOCK-BASED COMPENSATION

On June 29, 2016, the Board of Directors amended the 2015 Stock Option Plan (the “Plan”)  authorizing the Company to grant awards to certain executives, key employees, and consultants under the Plan, which was approved by shareholders at the Annual Meeting held on September 6, 2016.  Currently, the total number of shares of Common Stock, with respect to which awards may be granted pursuant to the Plan, may not exceed 4,000,000.  On February 20, 2019, our Board of Directors approved an increase to the number of shares authorized under the Plan to 6,000,000, subject to shareholder approval at the 2019 Annual Meeting of Shareholders.

As of March 31, 2019, the Company had 3,469,000 options outstanding to certain executives, key employees and consultants under the Plan, of which 1,050,000 were issued during the three months ended March 31, 2019.

On February 20, 2019, the Board of Directors of the Company approved an increase in compensation for each non-employee director from $25,000 to $50,000 annually effective January 1, 2019 and an additional $10,000 annually for the chair of each Board committee effective February 20, 2019, in each case to be paid quarterly half in cash and half in common stock at the end of each fiscal quarter.

Pursuant to Daniel S. Goldberger’s employment agreement dated October 12, 2018, on February 1, 2019, when Donald B. Pettigrew was appointed to President and Chief Executive Officer, Mr. Goldberger was awarded a performance bonus in the amount of $270,000 to be paid half in cash and half in stock on April 1, 2019.  The number of shares to be issued is based upon the closing price of the Common Stock of the Company on February 1, 2019 as reported by the OTCQX.

The per share weighted average fair value of stock options granted during the three months ended March 31, 2019 and March 31, 2018 was $1.10 and zero, respectively.  The fair value of each award is estimated on the grant date using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in the three months ended March 31, 2019 and March 31, 2018. Historical information was the primary basis for the selection of the expected volatility, expected dividend yield and the expected lives of the options.  The risk-free interest rate was selected based upon yields of the U.S. Treasury issues with a term equal to the expected life of the option being valued. 

The following table summarizes the status of the Plan: 

Total stock-based compensation expense was $121,875 and $12,183 for the three months ended March 31, 2019 and March 31, 2018, respectively.

The weighted-average grant-date fair value of options granted during the three months ended March 31, 2019 and March 31, 2018, was $1.2 million and zero, respectively.  There were no options exercised during the three months ended March 31, 2019 and March 31, 2018.

The following table presents information pertaining to options outstanding at March 31, 2019: 

As of March 31, 2019, there was $2.1 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of 38 months. The total fair value of shares vested as of March 31, 2019 and March 31, 2018, was $293,373 and $156,425, respectively.